Intraday Market Thoughts

Euro Regains 1.26, Aussie Retail Sales, HSBCs China PMI Next

by Adam Button
Jul 3, 2012 23:42

Pent up optimism and improved US economic data sparked risk assets ahead of the US holiday. Sizable gains in oil made the Canadian dollar the best performer while the yen lagged. The focus will be on AUD following the RBA decision and with retail sales data on deck. Tonights Premium Insights look at quadruple tops in Gold/Oil ratio & the resulting quadruple bottoms in equities. See more below.

EURUSD slumped to 1.2560 early in US trading but quickly rebounded on upbeat factory orders and auto sales. May factor orders climbed 0.7% compared to +0.1% expected. In the same report, durable goods orders were revised higher.

Throughout the day, US manufactures released stronger-than-expected sales figures that pointed to a better report on Thursday when retail sales figures are released. As US stock markets rose, the euro climbed as high as 1.2629 before closing near 1.26.

The IMF downgraded its US growth forecast for 2012 down to 2.0% from an already-modest 2.1% and Lagarde pushed lawmakers to tackle the fiscal cliff before its too late.

The largest mover on the day was oil, climbing $3.80 to $87.55 on reports that the US is building up forces in the Middle East in order to deter Iran from blocking the Strait of Hormuz.

France also unveiled plans for sweeping tax reforms while lowering the official 2012 growth forecast to 0.3% from 0.7%.

Markets are likely to be quiet for the next 24 hours in anticipation of the ECB and BOE decisions and with the US closed on Wednesday for a holiday.

At 0130 GMT, Australian May retail sales data will be released. The RBA held rates as expected yesterday so this report will be less of a market mover. The consensus is for a 0.2% rise after an equal sized fall in April.

At 0230 GMT, HSBC releases its China services PMI for June. The prior reading was 54.7.

Equities are already gaining as we made the case for risk-on in last nights webinar using the Gold/Brent ratio. Do triple tops really work? Or is that a quadruple top in the G/B ratio the mirror image of the Quadruple Bottom in Higher Lows in equities? Find out the latest Premium Insights for these trading ideas here: Non subscribers can join here:



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