Intraday Market Thoughts

Eurozone CPI Rises; Chicago PMI & CAD GDP Next

by Patrik Urban
Sep 28, 2012 12:55

Out of the last 17 quarters (including Q3), gold had only 3 falling quarters, Risk rally pushes further but a part of gains was lost; Spanish bank stress test due; EZ CPI higher; German retail sales improved. Market turns to core PCE, personal income and spending, Chicago PMI, UoM consumer confidence and Canadian GDP. Mondays Aussie & silver calls hit all targets, while gold was stopped out. See the final paragraph for more detail.

The risk rally that started yesterday after Spain released its budget figures continued throughout the Asian and at the beginning of the London session. The common currency was able to push to 1.2955 but it gave up a part of its gains and now trades around 1.2930. The buck started to recover against other majors as well.

The door to the ECB bond buying is more open now and market participants assume that there would not be further austerity measures required. However, Spanish bank stress test results are due later today so the sentiment could easily turn again. Furthermore, MNI reports that Moody's could change Spanish ratings as they said in June that they would do so within three months. Rating is now one notch above junk and on review for a downgrade.

Eurozone CPI was significantly above expectations as it rose to 2.7% from 2.6% y/y while analysts predicted easing to 2.4%. Higher price level is attributed to rising energy prices, higher prices of services and also increases due to higher sales tax that were introduced as part of measures designed to cut budget deficits. CPI further above the ECB 2% target makes a rate cut less likely.

Other data showed that German retail sales rose 0.3% in August after 1.0% decline seen in July which translates to -0.8% from -1.6% improvement on annual basis. Swiss KOF economic barometer index rose in September to 1.67 from 1.59.

The US session starts at 8:30 am ET with core PCE that is expected to rise 0.1% in August from previous unchanged figure but remain steady at 1.6% on annual basis. Personal income is seen lower at 0.2% yet personal spending is anticipated to rise 0.5%. Canadian GDP is expected to slow in July to 0.1% from 0.2% m/m and to 2.0% from 2.4% y/y.

Chicago PMI is due at 9:45 am and it is seen marginally lower at 52.9 from previous 53.0. Final result of UoM consumer confidence comes 10 minutes later and revision lower to 79.0 from 79.2 is expected.

1 AUDUSD and 1 silver hit all targets while both EURUSD, 1 GBPUSD, 1 silver,1 EURJPY, 1 CADJPY are in progress. 1 gold and 1 EURJPY were stopped out. Direct access to trades, charts and rationale can be found directly in here: Non subscribers can join here:



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