Intraday Market Thoughts

Fiscal Cliff Steals the Show as Greece Awaits IMF

by Adam Button
Nov 14, 2012 0:36

Sentiment continued to deteriorate in US trading with chatter about the US fiscal cliff dominating. Moves on the day were small and the euro trailed. The New Zealand dollar slumped in early Asia-Pacific trading after a weak retail sales report. 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 paragraphs.

One week after the election, politics remains the dominant story with the fiscal cliff creeping closer. Republicans and Democrats continue to sound hopeful of a deal, evidenced by Treasury Sec Geithner who said he is seeing encouraging signs from Republicans.

The gravity of US fiscal issues was underscored by deficit figures on Friday. The US reported a $120B deficit for October, worse than the $114B expected. That contrasts with Canada, which is one-tenth the size of the US. The finance department forecast a FY deficit of $26B a number that the US surpasses every 60 hours.

The S&P 500 was positive for most of US trading but slumped at the end of the day to close 0.4% lower. The late turn in sentiment underscores the weak sentiment.

Midway through US trading, the euro rallied to 1.2720 on a vague rumor that Spain was preparing to ask for bailout funds. Such rumors are common and will prove untrue 99% of the time unless they are reported in the financial press. At the moment, there is no urgency for Spain to trigger the OMT.

The NZD slide in early trading after retail sales fell 0.4% in the third quarter compared to a 0.2% rise expected. Finance Minister Bill English also lamented the strong kiwi.

The only other item on the calendar is the Australian Q3 wage price index at 0030 GMT. If the wage rise falls short of the 3.8% y/y expected, it would encourage the RBA to cut rates in December and weigh on the Australian dollar.

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



Latest IMTs