Intraday Market Thoughts

GBP Nears Session Highs, Home Sales Next

by Patrik Urban
Apr 26, 2012 13:16

GBP edges up on UK Nationwide consumer confidence hitting 9-month highs, while mortgage applications fell and CBI realized sales declined. Eurozone confidence measures declined; German CPI still being collected. Market turns to jobless claims and pending home sales. Longs in USDCAD & shorts in AUDUSD are among Wednesdays Premium Intermarket Insights, both of which are in progress. These also include 3-in-1 charts of EURUSD/GOLD/APPLE.

The post-FOMC risk rally continued throughout Asia and at the beginning of the London session. Market sentiment then deteriorated and the USD along with the JPY started to gain. Large moves were seen especially on JPY crosses.

GBP bounced back despite yesterday's weak GDP data and continues to rise, partially underpinned by March Nationwide consumer confidence hitting a 9-month high last night at 53 from 44. BBA mortgage approvals declined to 31.9K in March from 32.8K in February which is the lowest level since 4/2011. CBI realized sales also disappointed as they fell to -6 in April from 0 in March. Despite these developments, GBPUSD continues to trade just below the 1.6200 resistance.

Euro came under pressure after Eurozone confidence weakened in April more than anticipated. Economic confidence declined to 92.8 from 94.5, industrial confidence fell to -9 from -7.1 and services confidence dropped to -2.4 from -0.3. Persistently high unemployment, weak growth and fiscal problems that induced severe austerity measures predict that the euro area is unlikely to experience a quick recovery. EURUSD fell from 1.3261 to 1.3200 but has since erased a portion of its losses.

German CPI is still being calculated and the final result which is expected to slow to 2.0% from 2.1% y/y should be published at 2:00 pm.

The data calendar for the NY session is limited today to jobless claims at 8:30 am ET that are seen at 374K from last week's 386K followed by March pending home sales at 10:00 am that are expected to rise 1.3% from previous -0.5%.

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