Intraday Market Thoughts

Spain to Unveil Reforms; Canadian CPI Next

by Patrik Urban
Sep 21, 2012 12:22

EU commission working with Spain on reforms; UK public sector borrowing rose; SNB does not surprise. Market turns to Canadian CPI and FOMC Lockhart speech. The latest on our Premium Insights is found below.

EUR regained the $1.30 figure today on reports that Spain is considering seeking assistance. The USD had been under pressure since yesterday across the board except JPY. GBPUSD broke to a new recent high 1.6309 while other majors strengthened to levels above Wednesday or Thursday highs. European equities are slightly in the green and the relative strength winner is NZD while USD is the weakest.

FT reports that the Spanish government along with the European commission authorities is preparing a set of economic reforms that will be unveiled next week. This would allow Spain to request a bailout which would consequently allow the ECB to start its bond buying program. Spanish 10 year yield is lower today, trading around 5.75%. EURUSD pushed back above the 1.3000 handle.

UK public sector net borrowing was at record high for the month of August as receipts continued to disappoint, MNI reports. Excluding financial sector interventions, borrowing rose to GBP 14.41 bln from GBP 14.36 bln a year ago. EURGBP trades right below the 0.8000 mark.

The SNB quarterly bulletin did not surprise at all as it only contained the usual comments about enforcing the Franc cap, continued downside risks and the readiness of the SNB to take further measures.

The data calendar for the US session is limited to Canadian consumer inflation that is expected to remain steady in August at 1.3% on annual basis. Core figure is seen lower at 1.6% from previous 1.7%.

Markets could also react to Atlanta FED president and FOMC member Dennis Lockhart that will speak about the economic outlook and monetary policy at 12:40 pm. Q&A session will follow after the speech.

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