Intraday Market Thoughts

USD Regains Part Of Yesterday's Losses

by Ashraf Laidi
Aug 23, 2012 12:22

ECB not revealing yield cap; German GDP unrevised; Manufacturing PMIs from Germany, Eurozone and France improve; UK mortgage approvals rose and CBI sales fell. Market turns to jobless claims, markit manufacturing PMI and new home sales. Thursday's Premium Intermarket Insights include EURUSD, AUDUSD, silver and oil.

The post FOMC minutes EUR rally continued as the common currency pushed to 1.2560. However, other major currencies are trading slightly lower against the USD. European equities are in the green but gaining only about 0.1%.

German magazine Die Welt reported that the ECB could decide to cap yields on Eurozone's countries but not reveal what exact level they target. This approach would be more flexible as the ECB could accept short term deviations without risking its credibility.

German GDP for Q2 was unrevised and remained at initial estimates of 0.3% q/q and 0.5% y/y. German manufacturing PMI rose in August to 45.1 from previous 43 and the Eurozone counterpart improved to 45.3 from previous 44. French PMI also surprised to the upside as it rose to 46.2 from 43.4. Stronger PMIs from core countries lowers the need for an aggressive decision by the ECB on September 6th.

In other news, UK mortgage approvals rose in July to 28.4K from June's 25.9K, CBI realized sales dropped to -3 in August from previous 11 and Swiss trade surplus exceeded expectations in July and rose compared to June to CHF 2.92 bln from 2.19 bln. GBPUSD trades slightly lower around 1.5873, EURGBP pushed to 0.7910 and USDCHF fell to 0.9560.

Spanish and Italian 10 year yields are pushing higher today, trading around 6.42% and 5.70% respectively. Periphery spreads are also widening.

The US session starts at 8:30 am ET with jobless claims that are seen marginally lower at 365K from previous 366K followed by Markit manufacturing PMI at 9:00 am. A slight rise to 51.5 in August from July's 51.4 is expected.

July new home sales are due at 10:00 am ET and an increase to 0.36M from 0.35M is anticipated. Eurozone consumer confidence is due at the same time and a steady print of -22 is seen.

Focus will also be on chancellor Merkel that meets president Hollande in Berlin at 1 pm ET.

Thuradays Premium Intermarket Insights on EURUSD, USDJPY, GBPUSD, AUDUSD, silver and oil Direct Access to these Insights are found here: Nonsubscribers can have a 1-week trial here:


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