Intraday Market Thoughts

EUR up on ZEW, Onto BoC & US CPI

by Patrik Urban
Oct 16, 2012 12:46

UK CPI at 3-yr lows, Improving ZEW Boosts EUR; EZ CPI lower. Focus turns to CPI, TIC flows, capacity utilization and industrial production. Both of Thursdays EURUSD longs hit all targets. See below in the final paragraph, which of the others were unfilled and stopped out.

The greenback is mixed in the ongoing session. It is weaker against EUR and CHF, stronger against CAD and NZD and unchanged against the rest of the majors. European equities are gaining around 0.75% and EUR leads while CAD lags.

The downtrend in consumer inflation has resumed in the UK as CPI slowed to 2.2% in September from previous 2.5% which is the lowest rate since 11/2009. MNI reports that the effect of falling utility prices is likely to be short lived as suppliers announced large price increases which will show up in the CPI figures over the next few months. GBPUSD weakened about 30 points to 1.6071 and currently trades around 1.6090.

German ZEW economic sentiment bested expectations as it improved in October to -11.5 from previous -18.2. The ZEW noted decreasing risks to the German economy due to lower uncertainty on the financial markets but nearly half of the experts see the economic situation six months ahead more or less the same.

Eurozone CPI eased to 2.6% in September from previous 2.7% but the core figure was steady at 1.5% y/y and the ZEW economic sentiment improved to -1.4 from -3.8. EURUSD trades right above the 1.30 handle.

Up ahead is a busy session that kicks off at 8:30 am ET with consumer inflation that is expected to slow in September to 0.5% from 0.6% m/m but to rise 1.9% from 1.7% y/y. The core figure is seen rising 0.2% m/m and 2.0% y/y. Net long term TIC flows are due at 9:00 am ET and are anticipated to decline to USD 45.3 bln in August from USD 67.0 bln. Industrial production and capacity utilization come 15 minutes later and are expected to rise in September by 0.2% and to 78.4% respectively.

CAD traders await foreign securities purchases that are due at 8:30 am ET and are seen higher in August at CAD 8.5 bln from July's CAD 6.6 bln.

The latest from Thursdays premium Insights, both EURUSD longs hit all targets. 1 of 2 EURJPY hit all targets, the other unfilled (missed by 24 pips). USDJPY in progress. 1 of GBPUSD longs in progress, the other unfilled. AUDJPY short was unfilled (missed by 6 pips) and so was CADJPY long.

Both gold stopped out, 1 of 2 XAGUSD in progress. 1 of 2 US Crude oil stopped out, the other in progress. The direct link to these Insights can be found here: Non subscribers can join here:


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