Intraday Market Thoughts

Posen Reconsiders, VIX Tests 25, G8 Chat

by Patrik Urban
May 18, 2012 12:45

BoE Posen suggests QE still on the table; German PPI eased and Italian

industrial orders rose. Markets turn to Canadian CPI and headlines from G8 meeting. VIX eyes the 25 level, after touching its 55-WEEK MA for he first time since Dec. Thursdays Premium Intermarket Insights are starting to get filled after the market had ran away in Asian trade. USDCAD & CADJPY already filled, while both gold trades remain in progress. See below for more detail.

The greenback is giving up some of its recent gains in the ongoing session as it trades slightly weaker across the board. European equities are mixed, trading within -0.7% and +0.3%. The relative strength winner is CAD while JPY lags.

GBPUSD retraced to above 1.58 after dropping to 1.5732 earlier during the session after MPC member Adam Posen said that he was too optimistic about the economy and that it may have been premature to say that the BOE has done enough QE, MNI reports. This important opinion shift which suggests that QE is still on the table was further reinforced by comments that Mr. Posen was disappointed with the efficacy of the latest round of QE. Additional suggestions of more QE might be a way of preparing the markets for possible Greek EMU exit.

On the data front, German PPI eased to 0.2% in April from previous 0.6% m/m (2.4% from 3.3% y/y) which is the lowest level since June 2010 and monthly Italian industrial orders surprised do the upside as they grew 3.5% in March from previous -2.6%.

In other news, unconfirmed reports suggest that Spain could impose a ban on short selling on IBEX, Spanish government hired Goldman Sachs to provide Bankia's valuation and the ECB deposits continue to be elevated at EUR 762.42 bln on Thursday.

The NY session is limited Canadian CPI that is expected to ease to 0.3% in April from previous 0.4% m/m and remain steady at 1.9% y/y. Core CPI is seen at 0.1% from 0.3% m/m and unchanged at 1.9% y/y.

Markets are likely to respond to headlines coming from the G8 meeting that starts today in Camp David. Eurozone crisis will be the key topic for discussions but the focus will also include strategic oil reserves and global food accessibility.

Thursdays Premium Intermarket Insights include EURUSD, AUDUSD, USDC AD, CADJPY, gold and US crude. Also included is a chart outlining Philly Fed vs. ISM manuf, ISM services and Empire Fed. Premium subscribers get direct access here: Nonsubscribers visit here: :


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