Intraday Market Thoughts

UK CPI Jumps, ZEW Drops, Gold Capped, Cable Supported

by Patrik Urban
Nov 13, 2012 13:16

UK consumer inflation at five month high; German and EZ ZEW disappointed; Italy reached a full take up. US calendar contains only second tier reports today. AUDUSD remains in progress while 1 of 2 EURUSD hit all targets and the other in progress. More on gold and GBPUSDs triple confluence support in the final 2 paragrapghs.

USD lost all its gains in the ongoing session across the board except JPY. European equities are losing around 0.4% and the relative strength winner is EUR while JPY is the weakest.

The IMF said it is against Eurogroup's deal to give Greece additional two years to reach budget targets and that more talks are needed. EU finance ministers gather in Brussels today for their monthly meeting and the focus is likely to remain on Greece. Next Eurogroup meeting is on 11/22-23.

UK consumer inflation rose sharply in October reaching 2.7% from 2.2% on annual basis. Rising tuition fees and food costs pushed the CPI to the highest level in five months. Core CPI rose to 2.6% which is the highest level in nearly a year. The BOE doves will have a harder time pushing more QE through in December and should tomorrow's labor market data disappoint, fears of upcoming deflation could rise. GBPUSD rose from 1.5860s to 1.5910 while EURGBP fell to 0.7969 before bouncing to 0.7995.

ZEW economic sentiment indices for November disappointed. German ZEW declined further to -15.7 from -11.5 and the Eurozone counterpart fell to -2.6 from -1.4. EURUSD fell to 1.2661 but later bounced to 1.2710s.

Italy reached a full take up as it sold 12 month BOTs totaling EUR 6.5 bln. The average yield declined to 1.762% from 1.941% and bid to cover was little changed at 1.76 from 1.77. Italian 10 year yield pushed to 5.07% and now trades around 5.02%.

The US data calendar is limited to IBD/TIPP economic optimism index that is due at 10:00 am ET and that is expected to edge lower in November to 53.8 from 54.0. Federal budged balance is due at 2:00 pm that is anticipated to show USD 113.5 bln deficit in October from USD 75 bln surplus seen September.

1 of 2 gold trades in the Premium Insights remain in progress as the weekly trendline from the October high remain intact at 1738, coinciding with the 55-DMA and the previous support from the September base.

GBPUSD stabilizes near the triple confluence support of 100 DMA, 200 DMA and 50% retracement of the rally from the 1.5410 low to the 1.6304 high at 1.5860. 1 of 2 EURUSD dual trades hit all targets, the 2nd in progress. USDJPY stopped out. 1 of 2 CADJPY stopped out, the other in progress. AUDUSD remains in progress. EURJPY stopped out. GBPUSD hit all targets. EURGBP stopped out. (stopped out by 20 pips). 1 gold short stopped out after missing final limit by $3 and the other short remains in progress. 1 silver in progress. 1 oil long stopped out. DIRECT ACCCESS Nonsubscribers can click here to join


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