Intraday Market Thoughts

Fight For Eurobonds Starts

by Patrik Urban
May 21, 2012 13:29

French President Hollande to propose Eurobonds; Swiss consumer confidence and Eurozone construction output improved; FOMC Lockhart cannot rule out QE3 but not appropriate now; German auction. Kiwi continues to slump as carry trades unwind. Thursdays shorts in EURUSD have been filled. Thursdays shorts in EURUSD are filled, while the trades in USDCAD, CADJPY and gold remain in progress. More info on rest below.

USD little changed compared to London open and European equities are trading within 0.1% to 0.6%. G8 meeting ended without any surprises as the usual comments about promoting growth and jobs were repeated again. Perhaps the only noteworthy statement came from the French president Hollande who said that he would propose Eurobonds at the upcoming European summit on Wednesday 5/23. The French president claimed that he would not be alone in this proposition.

German resistance to Eurobonds has been strong so it is not going to be an easy task but should president Hollande be able to lift Berlin's veto on this issue an important step towards overcoming the European crisis would be made.

Today's data calendar was short. We only learned that Swiss SECO consumer confidence improved in April to -8 from previous -19 and annual money supply M3 rose 6.3%. Eurozone construction output slowed the rate of its decline as it printed -3.8% in March from previous -16.3%.

Atlanta FED president and FOMC member Dennis Lockhart said during his speech in Tokyo that QE3 cannot be ruled out given the risks posed by the European crises but it is not appropriate in current circumstances, MNI reports.

Germany sold EUR 2.91 bln worth of 12 month bills, nearly reaching EUR 3 bln target. The average yield declined to 0.026% from 0.074% and cover fell to 2.1 from 2.3.

There are no reports due during the US session today. CAD traders should note that Canadian banks are closed in observance of Victoria day so liquidity might be thin.

THIS WEEK'S This weeks array of economic data releases from the G7 include several key indicators from the UK, namely, April CPI (Tuesday), May CBI industrial survey (Wednesday), April retail sales and 2nd estimate of UK Q1 (Thursday). Key releases in other countries include US new home sales, Eurozone flash services and manufacturing PMIs, German IFO, final reading of German Q1 GDP, US existing and new home sales, as well as consumer sentiment survey.

All of Thursdays Premium trades but AUDUSD have been filled. EURUSD, USDC AD, CADJPY, gold and US crude are all in progress. Make sure you note our reminder on EURUSD & those similar conditions. Nonsubscribers visit here:


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