Intraday Market Thoughts

EURUSD Struggles At 1.22, US Consumer Sentiment Next

by Patrik Urban
Jul 13, 2012 14:45

Chinese GDP in line with expectations; Troika's patience with Greece; Swiss PPI declined; Italian auction. US PPI surprise son the upside; UoM consumer sentiment is next. Thursdays Premium Insights have now been fully updated. See details below.

The greenback trades in a narrow range off its previous highs. European equities are gaining about 0.75% and commodity dollars are the relative strength winners in the ongoing session.

Risk trades started to recover even before the release of Chinese GDP that showed 7.6% growth in Q2 compared to 8.1% in Q1 y/y. AUD pushed higher along with NZD after the figures as rumors were circulating ahead of the releases of a 7% print. Nevertheless, this is still the weakest growth in three years. AUDUSD that responds to Chinese data the most trades near session highs around 1.0180.

"The patience of the Troika might be at its end" said German's finance minister after reports showed that Greece performed only a fraction of reforms that it agreed to, MNI reports. EURUSD ignored the comments and continues to trade around the 1.22 figure.

European data was limited to Swiss producer and import prices that declined in June 0.3% m/m and 2.2% y/y and to UK construction output that fell 6.3% y/y.

Italian 10 year yield declined from 6.07% to 5.92% after Italy reached a full take up as it sold EUR 3.5 bln of 2015 BTPs. The average yield declined to 4.65% from previous 5.30% and cover improved to 1.73 from 1.59. This was a solid result considering that last night Moody's downgraded Italy by two notches to Baa2 with negative outlook.

June PPI edged up 0.1%, surprising forecasts of a 0.5% decline, following a 1.0% decrease in May. PI ex food & energy rose 0.2% in line with expectations and the prior reading.

UoM consumer sentiment is due at 9:55 am and it is anticipated to rise marginally in July to 73.5 from previous 73.2. The market could also react to Atlanta FED president and FOMC member Dennis Lockhart's speech on the economy that starts at 1:20 pm.

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