Intraday Market Thoughts

Onto the Philly Fed Survey & Existing Home Sales

by Patrik Urban
Jul 19, 2012 14:38

Spanish weak auction; EFSF to buy Spanish bonds; UK retail sales below estimates; Swiss trade surplus lower. Jobless Claims rose by 34K. Existing home sales and the always important Philly Fed survey is next. Yesterdays longs in Aussie, cable, USDCAD and US crude oil were not filled even though their stated targets were all hit shortly after publication. See more below on those in progress and status of the unfilled trades.

USD weakness is diminishing somewhat ahead of key US data. EURUSD is 90 pips below its 1.2324 session high. US equities are up across the board but beware of the impact from the Philly Fed survey, which last hit 1-yr low.

Spain had a weak auction today as it sold EUR 2.98 bln vs. 2-3 bln target. Average yields rose and cover declined substantially. The 10 year yield jumped through the 7% level and continues to trade near session highs around 7.03%. EURUSD lost over 40 points as it fell to 1.2265 when the result was announced but spiked higher later on reports that the EFSF will set aside funds to buy Spanish bonds on the primary as well as the secondary market. EURUSD continues to trade around the 1.23 handle.

UK retail sales were below expectations as they grew mere 0.1% in June from 1.5% in May. Core sales rose 0.3% from previous 1.0%. The wettest June since 1910 is partially blamed for the weak result. GBPUSD initially pushed lower to 1.5635 but quickly reversed and trades around 1.5685.

Other reports showed that Swiss trade surplus narrowed in June to CHF 2.25 bln from previous 2.52 bln and that Eurozone current account surplus rose to EUR 10.9 bln in May from EUR 5.5 bln in April.

Focus is still on German parliament that will vote on EU help for Spain and on Italian lower house that votes on the ESM approval. The fiscal compact has already been ratified by the lower house. Market attention will shift to tomorrow's Eurogroup teleconference as a final step to the approval of the Spanish aid program.

US jobless claims rose by 34K to 386K vs an expected 365Kprevious 350K followed by existing home sales due at 10:00 am that are seen higher in June at 4.64M from previous 4.55M.

Philly FED index that is also due at 10:00 am is anticipated to improve to -7.9 in July after plunging to -16.6 in June.

3 of the 4 EURUSD shorts are in progress, while USDCAD, cable & oil were not filled. Gold remains unfilled. Click here for direct access: Non Subscribers click here:


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