Intraday Market Thoughts

US Shifts to US GDP, EUR Eyes 1.2380s

by Patrik Urban
Jul 27, 2012 12:29

Bundesbank against ESM banking license and ECB bond buying; Italian auction; Spanish and Italian 10 year yield declining; Swiss KOF rose; Spanish unemployment rate record high. Market turns to Q2 GDP. Thursdays Premium Insights issued 10 new trades, with 1 remaining unfilled (USDJPY), 1 of 2 EURUSD longs in progress (other unfilled by 9 pips). More on EURJPY, GBPJPY, GBPUSD and metals below.

FX consolidated yesterday's gains and traded within a narrow range throughout Asia. The common currency briefly declined during the London session on headlines that the Bundesbank is still opposing giving the ESM a banking license and also on comments that it has not changed view on ECB buying government bonds. Nevertheless it recovered against the USD and trades off the lows. Relative strength winners are GBP and NZD and European equities trade within the -0.25% to 0.1% range.

Italy reached a full take up as it sold EUR 8.5 bln 6 month BOT bill. The average yield declined to 2.454% from 2.957% and cover was steady at 1.61. Italian and Spanish 10 year yields are declining, currently at 5.96% and 6.81% respectively, on story in Le Monde that the ECB is preparing for debt purchases on the secondary market while the EFSF would be used to buy debt in the primary market.

Other reports showed that Swiss KOF economic barometer exceeded expectations as it rose to 1.43 in July from previous 1.15 and Spanish unemployment rate ticked higher to 24.6% from 24.4% which is the highest print on record.

German CPI is being collected and results should be released at 2:00 pm. Market anticipates monthly inflation to rise 0.4% in July after -0.1% while the annual figure is seen steady at 1.7%.

The key event of today's session will be Q2 GDP that is due at 8:30 am ET. Analysts forecast a weaker 1.4% growth compared to 1.9% in Q1. Personal consumption is seen lower at 1.3% from previous 2.5%.

Final reading of University of Michigan consumer confidence is due at 9:55 am and market expects unrevised result at 72.

Premium subscribers who may have missed on the entries of Thursdays Premium Insights can take another look at the current market levels after the price moves in early Friday Asian trade. We issued 10 new trades, with 1 (USDJPY) remaining unfilled. 1 of 2 EURUSD longs are in progress (other unfilled by 9 pips). USDJPY short awaiting fill. USDCAD short unfilled (need 1.0120). 1 of 2 GBPUSD longs in progress, other unfilled. GBPJPY, AUDUSD, EURJPY, silver and oil are all in progress. DIRECT ACCESS to today's Premium Trades is found here: Non subscribers can click here:


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