Intraday Market Thoughts

Awaiting Bernanke & BoC

by Patrik Urban
Jul 17, 2012 12:50

Markets are trading within relatively narrow ranges ahead of Bernanke's testimony. Also must watch the Bank of Canadas interest rate announcement and any notable shift in rhetoric with regards to its outlook. European equities remained within -0.3% to 0.4% range. Latest developments in latest Premium Insights on EURUSD, EURJPY, AUDUSD gold, oil and silver are found below.

Data during the Asian session showed that New Zealand CPI was below expectations at 1.0% from 1.6% y/y which is the lowest since 1999. AUD meeting minutes noted low inflation, rates being at an appropriate level and slower global growth. Both AUD and NZD moved higher but so far failed to break through 1.03 and 0.80 resistance levels.

GBPUSD sold off after UK CPI eased in June to 2.4% from 2.8% which is the lowest level since 11/2009. Core CPI eased slightly to 2.1% from 2.2%. GBPUSD weakened to 1.5609 while EURGBP move higher to 0.7874.

European data disappointed again as German ZEW economic sentiment declined further in July to -19.6 from previous -16.9 and the Eurozone counterpart fell to -22.3 from -20.1. EURUSD struggles at the 1.23 level.

The US session starts at 8:30 am ET with June CPI that is expected to ease to 1.6% from previous 1.7% while the core figure is seen at 2.2% from 2.3% on annual basis. Monthly CPI is seen flat after previous -0.3% and core is anticipated steady at 0.2%.

The much anticipated semi-annual FED chairman Bernanke's testimony before the banking committee in Washington DC starts at 10:00 am. Markets are waiting for a hint of an additional stimulus as data continues to deteriorate. The last time markets were bracing for some QE hints from Bernanke, they were disappointed. And so if the Fed Chairman once again refrains from indicating towards the prospects of further QE while Operation Twist is in play, then the US dollar may well get a fresh boost.

The BOC will announce its overnight rate decision at 9:00 am and the majority of analysts see rates unchanged at 1%. Given the ongoing uncertainty, hawkish bias is likely to be gradually removed.

US crude hit final 88.80 target, AUDUSD stopped out, both EURUSD & 1 EURJPY in progress. Long cable & short EURJPY hit all targets. Long gold nearing 1600 target. Silver awaits. For direct access to these Premium Insights, click here: Non Subscribers can please click here:



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