Intraday Market Thoughts Archives

Global markets further stabilize as the escalating superlatives in the US unemployment gloom increase the likelihood that the Senate will pass the $920 billion fiscal stimulus package as early as today. Stocks rise 8% from their Nov lows, with the S&P500 testing the 50-day MA, set for the first weekly gain of the year. Next resistance seen at 890, Additional gains vs JPY seen in AUD and NOK, while Cable seen capped at $1.4950.

As warned in previous Intraday Market Thought, CAD is damaged across the board after Canada's 129K plunge in Dec jobs was the biggest on record. Unemp rate jumped to 7.2% from 6.6% . See the ST and MT implications for CADCHF in today's HOT-CHART. Gold may rally past the $923 TL resistance after today's US jobs report due to bullish moving avearge cross-over in Intraday gold chart. Hot-Chart section can only be acessed via password.

My targets for AUDJPY (60.00), AUDCAD (0.81) and AUDCHF (0.7720s) published over the last 3 days (in main article and Hot-Chart section) have already been hit overnight, reflecting the Aussies rally resulting from the passing of the stimulus package and the latest aggressive easing of 100-bps. While both AUD and NZD dominate the top FX rank for the last 12 hours, the AUD gets the best out of NZD due to more optimistic economic data and the boost from gold. This suggests the possibility for further gains in AUDCHF towards 0.79 and 0.8050. CANADIAN JOBS REPORT NEXT (exp -40K from prev -20K jobs) could prolong CAD losses vs AUD, NZD and USD.

Both AUDCHF and GBPUSD rally towards the targets called in today's HOTCHARTS section as the Aussie, sterling and Kiwi accumulate risk participation on improved appetite. You must have a username (your email address) and a password to access HOTCHARTS, which are updated daily and are not sent by email.

Gold makes a fresh recovery towards the $920s after 2 quiet sessions as cenl banks further cut the price of their currencies, further sending the price of non-currency assets higher, especially amid constant reminders of a deteriorating jobs picture in the US. SWISS FRANC remains the worst performing currency (only currency to lose against the falling yen) since the close of Wed NY session, while the GBP,NZD and AUD are the top winners. TODAY's HOTCHART CONFRIMS this thought.

BoE cuts rates by 50 bps to 1.00% as expected, raising the rate differential between the Eurooean and the UK to 1.00%, which is a new high in the 10-year life of the euro. GBPUSD seen broadening its gaisn towards $1.4720 as BoE reiterates the fiscal and monetary stimulus combo to the economy, which could hint at a slower pace of easing to come. log in to access HOTCHARTS for the latest on GBPUSD and AUDCHF.

Watch Ashraf today at 9:50 am GMT on CNBC's World Wide Exchange discussing FX, the Bank of England, European Central Bank and the G7 meeting. Thanks for those who turned up at yesterday's seminar in Bloomberg in London. It was nice to connect the names with the faces. And once again, best to get the book from Amazon.com and take advantage of the discount.

Fresh recovery in risk appetite, bond yields and the subsequent pullback in the VIX are in line with today's HOTHCHART based on expectations that US data to show slower deterioration. Neither the ISM nor the ADP projected a strong economy, but both reports showed an improvement from their December data, thereby, lending support to the notion of the data becoming less bad i.e. a valid foundation for accumulation of positions in risk trades (equities, metals and higher yielding currencies such as CAD, AUD, NOK all against the JPY and USD). AUDCAD & AUDJPY calls remain valid.

US figures on January ADP payrolls and services ISM are likely to show slower deterioration, which may give an added boost to global equities and further drag down volatility measures. The CBOEs VIX closed lower at 43.06, is set to extend declines towards the 40 level but support seen cropping up just above the 200-day moving average (currently at 36.74), which has not been breached since September. Higher US 10 year yields and a lower EURUSD may be the order of the US session, with the risk of sub $1.28 seen ahead.

Stocks rally and yen declines along with the VIX as seen in today's article, paving the way for powerful advances in higher yielding FX. AUDCAD & AUDJPY nearing today's targets. A positive feed through to the Asian session would amplify these gains. GBPUSD has yet to close above $1.47 to break away from the pattern addressed in today's HotChart.

REGISTER FOR ASHRAF's SEMINAR in London Tomorrow Feb 4th held at Bloomberg offices and watch Ashraf's 2009 Outlook for Forex, Interest Rates, Gold, Oil and Equity Indices. REGISTER HERE: http://www.cmcmarkets.co.uk/en/content/education/seminar_calendar.html For those in the New York area, I will hold workshops, lectures and a book signing at the NY Traders Expo on Feb 21-23. See the banner in the homepage for further detail.

Cheers

Ashraf

JPY is the main loser and AUD the big winner as BoJ takes a page from 2002 and buys shares in top banks, supporting risk assests, equities and dragging the yen. Aussie's broad gains emerge ahead of incoming RBA decision and following the latest gvt stimulus package of A$42 billion. AUDJPY may extend towards 59 cts as big RBA cut combined with stimulus could give jolt to risk appetite. HOTCHART updated for today.

The RBA is widely expected by market consensus to cut rates by 100-bps to 3.25% on Tuesday morning, bringing rates below those of NZ. Last week's 150-bp rate cut from the RBNZ to 3.50% took rates below those of Australia for the first time in 10 years. The RBA will have to cut by 100-bps to keep its rates below the RBNZ's. Despite weak Aussie data on CPI, confidence and GDP, I see the possibility for a smaller than expected 75-bp rate cut to 3.50%, which is likely to boost AUDNZD back towards 1.28 and 1.960. A 100-bp cut is likely maintain AUDNZD supported at 1.21. AUDUSD support stands at 0.628. NEW HOTCHART is UP.

SNOWED IN STERLING. Cable may have broken above the $1.44 resistance on Friday but Moodys downgrade of Barclays quickly sent the pair back towards the $1.4050 support. Expectations of a 1.00% interest rate in the UK coupled with further risk reduction appetite from the week's set of event risk is seen extending losses towards $1.3930. GBPJPY eyes a return to the 124 support as the week's array of event risk sources augurs poorly for the risk-senstive pair.