French Socialists Edge over Sarkozy, IMF Counts Every Penny, Euro Shorts on the Rise
Francois Hollande, French Socialist challenger won 28.2% of the first 1st round elections ahead of centre right Sarkozy, who won 27%, both advancing into the 2nd round.The IMF announced it has raised more than $430 billion in new funds to fight the sovereign debt crisis. On Friday the Swiss franc was the top performer while the US dollar lagged. Weekly CFTC data showed a 17% rise in euro shorts. The latest on Thursday's Premium Insights are below.
Francois Hollande, French Socialist challenger won 28.2% of the first 1st round elections ahead of centre right Sarkozy, who won 27%, both advancing into the 2nd round. Whether the 20% votes for the far-right will abstain in the 2nd round, or vote for Sarkozy's centre right shall determine the balance of the 2nd round due next month. Markets are fearing that a large victory by Hollande's centre left may hamper the EU treaty and complicate the required austerity measures as required by the bond market.
Friday's US trading was extremely quiet as market participants watched headlines from the G20 spring meeting in Washington. The lone economic data point was Canadian CPI, which rose 1.9% y/y, just shy of the 2.0% expected.
Officials were tight lipped but sentiment improved on assurances the IMF would announce more than $400 billion. Those leaders may have been sandbagging as the amount announced was more than $430 billion with the BRIC countries expected to kick in around $70 billion more.
Draghi said the ECB has not discussed cutting interest rates of expanding other measures and Dow Jones reported that, behind the scenes, ECB officials were signalling there will be no more LTROs. The ECB’s Weidmann said the outlook is now more favourable with Nowotny saying inflation may overshoot the target for a period.
EUR/USD made some technical strides, climbing over the two-week high of 1.3213, set on April 12. It reached has high as 1.3225 as the US dollar was in broad decline.
On the week, the pound sterling was easily the best performer while JPY lagged. The S&P 500 closed the day 0.2% higher and was up 0.6% on the week.
The coming week should bring more volatility with the FOMC and Q1 GDP on tap. French elections will be held on Sunday but they are widely expected to end in a run-off with Sarkozy and Hollande.
CFTC Commitments of Traders
The overall US dollar long fell by 4% as the market piled back into euro shorts and commodity currency longs.
Net EUR shorts rise 17% to 118K versus 101K prior
Net JPY shorts falls to 58K versus 66K prior
Net GBP short to 13K versus 19K prior
Net CHF short to 14K versus 10K prior
Net AUD longs up to 48K versus 39K prior
Net CAD long to 38K versus 28K prior
Net NZD long to 12K versus 7K prior
Thursday’s Premium Intermarket Insights charts the periodicity of Eurozone bailouts and has trading ideas on EURJPY, AUDUSD, USDCAD, gold, and US crude oil. EURUSD shorts were stopped out. For direct access to these ideas, direct access is found here: http://ashraflaidi.com/products/sub01/access/?a=628 Non Subscribers, can click here to join: http://ashraflaidi.com/products/sub01
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