Intraday Market Thoughts

GBP Jumps on Posen's Retreat, Onto BoC Report

by Patrik Urban
Apr 18, 2012 13:14

UK labor market improved; smaller chance of more QE in the UK after dovish Posen refrained from voting for more QE;; Eurozone current account in deficit; Swiss ZEW rose; German auction. Market turns to IMF report, BOC monetary policy report and press conference and crude oil inventories. Mondays Premium Trades saw our both EURUSD shorts and EURJPY longs hit all targets, with AUDUSD shorts in progress. See below for detail

USD firms across the board except against GBP in the ongoing session. European equity indices are losing over 1% and the relative strength winner is GBP while JPY is the weakest.

The GBP experienced soared after the labor market data showed a slight improvement. UK claimant count declined to 3.6K in March after 4.5K in February while the claimant count rate remained steady at 4.9% of the workforce. The ILO unemployment rate declined to 8.3% from previous 8.4%.

Also powering GBP were chances of diminishing QE after MPC meeting minutes revealed that the dovish Adam Posen voted to keep QE unchanged which keeps David Miles as the only member who wanted to increase asset purchases by GBP 25 bln. The decision to keep rates unchanged was unanimous. The BOE also noted that the CPI is likely to remain above 3% into the 2H while the MPC could not judge when the inflation will return to target.

In other news, Eurozone current account changed from EUR 3.7 bln surplus to EUR 1.3 bln deficit in February and the Swiss ZEW economic expectations rose to 2.1 in April from previously unchanged print.

German sold EUR 4.206 bln in 2 year bond vs. EUR 5 bln target. The average yield hit a record low at 0.14% from 0.31% and the cover remained unchanged at 1.8.

The calendar for the US session is short today. The IMF will publish the global financial stability report at 9:00 am ET, at 10:30 am ET the BOC will release its monetary policy report and the Energy Information Administration will publish the latest crude oil inventories that are expected to decline to 1.6M barrels from 2.8M barrels.

CAD traders will also focus on BOC press conference that starts at 11:00 am ET.

Mondays Premium Trades saw our both EURUSD shorts and $EURJPY longs hit all targets, with AUDUSD and shorts & 1 gold short in progress. 1 oil long done it all targets & 1 oil short stopped out. Direct Access : Nonsubscribers can join here:


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