Intraday Market Thoughts Archives

SILVER reclaims its 200-day moving average to headback towards its 12-month trend line resistance. Look for a break of 13.52--50% retracement of the 14.6-12.4 move, which would pave the way for the 14.00 figure. Silve is up 62% off its lows versis only 42% for gold, but the technical upside remains greater. As gold resumes its path towards $1,050, silver carries is likely to ride into these gains. Support stands at 13.0.

EURGBP UPSIDE? GBP falling to session lows below $1.4090, boosting EURGBP towards the 89.90s. EURGBP trend line resistance extending from the Dec 31 high. Reiterating recent Hot-Chart on EURGBP, keep an eye on an evolving rising channel, which could reach towards the interim resistance of 90.40s, followed by 90.75. but selling likely to re-emerge at 91.70s

The 8.1% unemployment rate (highest in 25 yrs) and 651K in net job losses (highest since 1949) underlines the escalation in US but does not yet imply a peak in the US dollar, partly because of the onset of further easing (quantitative and policy) in the G10, and the prospects for further banking losses in Eurozone and UK. My expectations for Anticipation of prolonged gains in US treasury yields (due to supply not growth) is likely to further support the US dollar, but not at the expense of gold. EURUSD to accumulate temp gains at $1.28 figure, but renewed selling towards $1.25 and $1.23 is expected. Similarly, GBPUSD increasingly capped at $1.44 before recalling $1.40 and $1.37.

Although strength emerges in the low yielding JPY and CHF on weak risk appetite following deteriorating damage in US and Asian equities, USD weakens amid expectations of the biggest monthly US job loss in 60 years. Beating the expectations element remains the only source of upside as neither the establishment survey (payrolls) nor the household survey (unemployment rate) show any sign of stability. Expectations point to a 640-680K decline in payrolls from the previous -598K and a 7.9% print in the jobless rate from 7.6%. To ACCESS TODAY's HOT-CHART on GOLD, sign in with your email and password at the top of the website.

Watch Ashraf explaining the relationship between stocks and gold at last week's TRADERS EXPO in NEW YORK: http://www.moneyshow.com/video/video.asp?wid=3482&t=3&scode=013770 Readers of this website have persistently read my forecasts since December that global equities will drop below the November lows. Many of you have been inundated by "expert" opinion claiming that stocks were a "great buy" due to large cash holdings on the sideline and that a "great rally is coming up soon". My articles since January have persistently reminded that equities have more selling ahead as long as rebounds were limited to 20-25%. We've had 2 of such rebounds since Nov. Stay tuned for more insights from AshrafLaidi.com

Reiterating the points made on GOLD and CAD, with the precious metal eyeing a renewed rally after proving its ability to hold within the upward channel with key support at $890. Yesterdays Intraday Market thought stated $905 was well within the existing uptrend. Today gold is at $927. CAD persists in its strong positive correlation with equities. USDCAD dropped back to 1.2725 on equities bounce, but today the pair is back up at 1.29 as global stocks resume their damage. Worse than exp US jobs figures (8.0% unemp rate, 650K job losses) may once again prove USD positive, CAD negative. CADJPY may extend to as low as 75 in the event of fresh equity damage.

MNI reports traders in London discusssing the 4 pm London fixing due up and worry a bit about the lack of liquidity in the market at a time when some hefty orders can be muscled through the market. While normal procedure is to near enough guarantee to match the published mid-rates, traders say dismal liquidity due to the platform outage makes many banks reluctant to agree to such an arrangement today "Best efforts," seems to be the M.O. that we are hearing thus far. from -- Market news International.

BoE/ECB cut rates by 50-bps to 0.50% and 1.50%, while BoE announces purchase of 75 bln of assets in govt and corporate bonds. BoE was given authority to buy as much as 150 bln, which it will gradually use over time. The unexpected show of details supported cable around $1.4090s. Todays Hot-Chart (accessed via password not by email) indicates the prospects for GBPJPY ahead. Euro watchers await ECB conference at 13:30 GMT on the extent of the downgrade in 2009 GDP growth. Expect -2.0% GDP from previous fcst of -1.0%.

A positive GBP scenario would be for the BoE to cut by only 25-bps along with a detailed plan (in quantity, pace and type of bonds) by which the BoE will adopt quantitative easing. The worst scenario for sterling would be for the Bank to slash by at least 50-bps without announcing any tangible plans for the next step of monetary policy. Negtaive bias remains amid renewed losses in FTSE. GBPUSD eyes $1.4050, a break fo which could extend towards $1.36. ECB decision follows at 12:45 pm GMT. Market expects 50-bps but I'm leaning toards 75-bps as downward revisions will be on the low side.

Ashraf Laidi Explaining the the Gold/Crude Ratio at last week's Traders Expo in New York: http://www.moneyshow.com/video/video.asp?wid=3481&t=3&scode=013770

More interviews coming up soon...

Gold rally remains intact. Each of the last two sell-offs (Nov and Jan) were limited to 10% declines before the uptrend extend ahead. Also since Nov, gold never fell below its 50-day MA (purple line). Finally, the latest retreat remains within the upward channel, suggesting support remains holding at 890.Only a breach below 888-887, will cast serious doubt on the current bull run. if there's one singular reason gold is unlikely to repeat the October selloff is that today central banks are either at or on their way to quantitative easing (Fed, BoE, BoJ & BoC), followed closely by the SNB.

Although USDNOK broke above the interim resistance of 7.2 last week, the weekly chart addressed in the Hot-Chart of Feb 11 remains unable to break above the 7.32 resistance, prevailing since Oct 2008. This may raise a discussion as to why would USDCAD break above its own 1.30 resistance prevailing since 2004 but not USDNOK above 7.32. The question lays in my favoured outlook for NOK relative to CAD (see my latest CNBC interview in media section for more detail). Todays improved risk appetite to drag USDNOK back towards 7.100, AUDJPY towards 64.50, AUDCHF towards 76.30, GBPUSD at 1.4205.

Yesterday's Hot-Chart remains valid into the medium term so no new Hot-Chart is shown today. Despite worse than expected declines in ADP survey), JPY may continue its current broad slide unless 15:00 GMT release of ISM release shows worse than expected 41. Another Geithner speech is due for the day, but resistance to 100 yen is increasingly waning, until 101.80 emerges as the next target.

CAD resumes sell-off as BoC cuts by 50-bps and signals the path towards quantitative easing. Markets recall the hit on USD and GBP after the Fed and BoE announced their own QE. USDCAD has not made a clear break above 1.30 since 2004. Whether the USDCAD chart in yesterdays article appears as bearish or bullish pennant, the analysis suggests that if theres a time for the 1.30 break to materialize, then it would be on the heels of the 3-6 months lag between US and Canadian econ erosion, which is currently unravelling. The 1.30 breach may not materialize at the current upleg, but instead on events such as negative CAD payrolls (next week) and subsequent selling in equities. Today's AUDCHF Hot-Chart already +25 pips. Access to HotCharts oobtained by password (not via email)

The 14:00 GMT BoC rate decision is widely expected to produce a 50-bp rate cut to a record low of 0.50%. USDCAD at 3-month highs, approaching the 1.30 resistance, which held since 2004. Considering the extent of the downside ahead for the US and Canadian economies as well as the case for renewed equity downside in the next 6 months, the 1.30 barrier appears increasingly vulnerable to a break, which would lead towards 1.34. A 50-bp rate cut may not be sufficient in attaining the break today, especially if risk appetite further improves ahead.

Aussie is the biggest currency winner in todays trading after the unexpected RBA decision to not cut rates earlier today. The combination of improved risk appetite and the no change in Aussie rates gave AUDUSD its biggest rally in 4 weeks, now eyeing the 65 cent resistance38% retracement of the 0.6847-0.6292 move. Considering weakness in USD and JPY in the midst of improved risk appetite, AUDJPY and AUDNZD are seen testing the 64 and 1.2970 respectively. Latter rate may be hit especially if RBNZ cuts rates by at least 50 bps today.

The gap down in today's S&P500 open suggests that the November lows of 741 will stand as a temporary resistance, followed by the trend line resistance of 755. Dow interim resistance stands at 7,356 and 7,500, to which bear market rally players will likely take the next rally. VIX made a remarkable gap higher at the open, trading at 51.31, while vital resistance is imposed at 53.70the trend line resistance extending from the Oct high thru the Nov high. Rebounds of less than 20% will undoubtedly occur, but I reiterate that no real intermediate low is in the works until July 2009. Until then , expect renewed losses in CAD, NZD and GBP.

Todaty's Hot-Chart on EURGBP is already up 60 pips since publication (password required for access). USDNOK breaks further to the upside, now targetting the 7.20s, which is the top of the weekly consolidation prevailing since October. Shorts are increasingly squeezed at the 7.2600-7.3000. Yen loses further ground vs USD, while other currencies also weakening vs JPY but far off their lows. USD shows least resistance in rallying during eroding risk aversion while JPY gains remain short-lived. CAD & GBP downside looms further.

An additional $30 billion in US govt capital into AIG, further stock dilution in HSBC (biggest issue coupled with 6.1K job losses) and last week's assistance to Citigroup (3rd in 4 months) is punishing world equities following the break of key support levels on Friday in US indices. UKs FTSE-100 finally breaks below its November lows to hit 3,654, its the lowest since April 2003, extending losses to 46% from the record high of Oct 2007. Germanys Dax index broke below its Nov lows 2 weeks ago and is now at its lowest since August 2004, also 46% from its 2007 highs.

The Aussie fared as the best performing currency in February, followed by the pound and the US dollar, while the yen and Canadian dollar were the worst performers amid a group of 10 currencies. Year-to-date, the dollar retains the lead in FX returns, followed by the pound and the Norwegian krone, while the New Zealand dollar and the euro trail at the bottom. Better than exp mortgage lending figures from the UK are failing to prop GBP this morning, while stocks around the world feel the weight of Friday's latest break of key support levels in US indices. JPY retains the lead as best perf curency since Friday as risk appetite is damaged across the board.