Intraday Market Thoughts Archives

Watch Ashraf's Video Market Analysis http://bit.ly/6OIyH discussing oil, USDX, GBPUSD, EURUSD, CADJPY and the implications of the latest rounds of US economic data. Those moving averages have proven vital in signalling the USD Index recovery.

DO not forget this monthly EURUSD chart http://chart.ly/bv3gtr stating that monthly reversals (declines) of greater than 4% have led to multi-month losses (at least 2) of at least 15%. And with private economists raising their US 2009 Q4 GDP forecasts to as high 5.7%, this could further boost USD yield spreads over DE & narrow it with the UK.

EURUSD gives in to fresh selling momentum after its prominent failure to regain the necessary $1.4580 figure needed to re-establish the uptrend. The combination of a veiled warning from JC Trichet to Greek finances and rumours of Chancellor Merkel resignation were the fundamental catalysts to the selling momentum. EURUSD weekly is now entering a potentially bearish flag and the next target stands at 1.4310. USD closely following JPY in the race of the days outperformers amid reduced risk aversion resulting from Merkel rumours & cautiouness ahead of JPM earnings (which turned out to beat earnings and missed revenues). CADJPY HotChart is in the green

http://bit.ly/700SYM

EURUSD tests 1.44 on rumours of Chancellor Merkel's resignation and renewed spike in Greek-German yield spread to 3 1/2 week highs. Readers of our IMT and our twitter page (twitter.com/alaidi) were told of prolonged USD support right after Thursday's US retail sales release. A NEW HOTCHART is up on CADJPY http://bit.ly/700SYM Bringing out fundamental & technical analysis on FX & global markets around the clock.

The PARAMETERS OF DOLLAR SUPPORT continue to improve as EURUSD drifts lower after failing to close above $1.4580 (denotes 38% retracement) and is vulnerable to enter a lower consolidation of $1.442050. GBPUSD still struggles at the $1.6330s trend line resistance extending from the Dec 17 high. US Dec CPI and industrial production due tomorrow are expected to prolong the neutral-positive trajectory of the greenback. Specifically, US capacity utilization, already at its highest since January 2009, has not had a single a monthly decline in 4 months. Any prolonged gains would regenerate the rallying ways of USD on positive figures. SEE CALENDAR for the forecasts http://ashraflaidi.com/economic-calendar/ THANKS FOR YOUR VOTES ! THE RACE IS TIGHTENING BY THE DAY and AND ONLY YOU can MAKE A DIFFERENCE http://shortyawards.com/ALAIDI

Falling EURUSD and falling USDCAD is leading to a tumbling EURCAD, sending the pair to 1/4887, which is below the 61.8% retracement of the rally from the Nov 07 low to the Dec 08 high. From a stochastic point of view, the pair is well into oversold territory, while fundamentally, the source of a rebound could emerge from weakened econ figuresas was the case sicne Friday (payrolls, housing, trade deficit). USDCAD proved unable to break 1.0420 trend line resistance, now looking to retest the 1.0240 low. Expect EURUSD to find a new territory at 1.4420-50, while cable still capped at 1.6330 resistance from yesterday's chart.

The ECB Press conference at 13:30 GMT will coincide with the release of the US jobless claims and Dec retail sales. Headline sales are expected at 0.3% from 1.4% and core sales expected at 0.4% from 1.2%. Also watch the sales ex-autos, ex gasoline figure. ECB president Trichet is not expected to issue an overly hawkish tone, and all eyes will be on what he answers to questions regarding Greece. FX traders are dragging EURUSD further below $1.4450, and any sign of status-quo on monetary policy risks dragging the pair towards $1.4400. Cable remains capped at $1.6330 and Aussie has yet to breach above 0.9350 despite those explosive job figures.

Ashraf''s interview on ForexTV analyzing , EURUSD, USDCAD, CADJPY double tops in JPY crosses as well as PREVIEWING tonight's KEY AUSTRALIAN JOBS REPORT

http://bit.ly/6oR3Es

USDX SUPPORT STILL HOLDS: EURUSD & GBPUSD charts http://bit.ly/5VxBMQ . 38% fibonacci in EURUSD intact

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USD-YIELDS CORRELATION: The correlation between the USD index and US-10 year yields pushes to +0.56, its highest since May 2009, recovering from a low of -0.85 in August. Although care must be paid in following these correlations, the recent rebound underpins our focus on yield differentials. 3.90% proves a vital obstacle to bond yields. Prolonged losses below 3.70% could result from reduced risk appetite/weak econ figures, so watch out from Thursdays retail sales and Friday's CPI from the US. But USDX remain comfortably supported above both of its 55 and 100 day moving averages--76.28 and 76.47 respectively. Were still bearish EURUSD aiming for a prelim target of $1.4430.

GBPUSD the top performer of the day after positive UK exploited USD weakness to lift cable above $1.6230s. $1.6320 stands as the trend line resistance from the Nov 17 high, which is deemed as the focal point for the NY close. A break above it can pave the way for $1.6430 and $1.66. Otherwise, downside remains intact. Meanwhile, GBPCAD extends recovery towards its 200-day MA of 1.6990, but only a close above 1.69 will pave the way for further upside. ASHRAF WILL HOLD AN INTERVIEW ON FOREX TV at 15:30 GMT

listen live here :

http://www.forextv.com/Forex/ForexTVLive/Video.jsp

More disappointing figures from Canada. Todays unexpected shift to a trade deficit, Mondays bigger than exp decline building permits and Fridays disappointing jobs figures are increasingly eroding loonies flight and raising USDCAD faces a ripe fundamental set-up for further gains, which is supported by nearly perfect trend line resistance at 1.0410 (from Dec 17 high), requiring a close towards 1.0420 to pave the way for 1.0480 and 1.0540. IT IS AFTER MIDNIGHT and we contine to SEND YOU THE INSIGHTS tha give you the heads up in global markets. WE MERIT YOUR NOMINATION TO THE SHORTY AWARDS in the Finance Category http://shortyawards.com/alaidi THANK YOU

VIX DID NOT LIE SO FAR: The VIX chart we warned about in yesterday's IMT http://chart.ly/94xpw7 showing a BULLISH Gap DOWN (bullish means that close was higher than open and down means the open was lower than the previous days low) led to further gains today, translating into falling equities and a rising JPY. USD did end little changed vs EUR and GBP but was able to drag down GOLD, to 1,124 after yesterdays failed rally above the 61.8% retracement of 1,168. Gold vulnerable to 1,110, followed by 1070. YOUR VOTE IS NEEDED as the race for the TWITTER AWARDS is getting close. Please cast your vote in http://shortyawards.com/alaidi

LOONIE PULLBACK Broad losses for the Canadian dollar after the trade figures unexpectedly returned to deficit in Nov at -C$0.3 bln from +C$0.4 bln. USDCAD faces 5-week trend line resistance at 1.0420, a break of which is necessary for a clawback towards 1.0465-70. CADJPY extends losses below 88 after failing at 90.1038% retracement of the fall from the 124.90 high in Nov 2007 to the 68.38 low of Jan 2009. Combining the capped weekly chart with a potential VIX bounce, CADJPY is vulnerable to 86.36 in the short-term.

The West would like China to revalue its currency, instead, Beijing is tightening monetary policy. Following last weeks bond yields rise and todays decision to raise the reserve requirements by 50%, global risk appetite is being dampened, especially as JPY firms up against major currencies, followed by the USD. GBPUSDs downside was limited at $1.6065, missing our $1.6045 target and recovering after stronger than expected UK BRC sales figures and international trade figures. Cable is expected to remain limited at $1.6235-40 as USD stability emerges on uncertain risk appetite. Gold drops below $1,140 after failing $1,170, eyeing interim trend lime of 1,135, a break of which could lead to 1,100.

A BULLISH GAP DOWN CHART IN THE VIX ? http://chart.ly/94xpw7 started off with a deep gap down (open well below prev close) but also ended higher. The last time this occurred was in Aug 2008, but we also witnessed similar occurrences yet not quite gap downs (as seen in chart). Today marks the official kickoff with US earnings season, with Alcoa showing narrower loss but missing Wall St estimates. A potential snapback in VIX this week would be USD-positive at the detriment of equities. When all said done today, USD Index remained well above its 76.20 support (closed at 77.01), while gold struggles to hold above 1,150. Watch out for more signs of creeping USD strength such as short-lived rebounds in EURUSD, GBPUSD & gold. DO NOT GIVE UP & ROCK THE VOTE AT THE SHORTY AWARDS http://shortyawards.com/alaidi WE CAN DO IT !

INTERMARKET SUPPORT FOR USD. The US 10- year yield holds foundation at 3.75% (USD support), GOLD capped at 1,168 (61.8% retracement), EURUSD capped at that 1.4590 resistance and FINALLY USD INDEX remains well bid up above 76.25which is near the twin moving averages (50 & 100 day). USDJPY did break below 92.20 but will it close the NY session below it. next support stands at 91.30. Magnitude, aside, USDJPY has not closed lower for 3 consec. days since early Dec. Cable still capped at $1.6240, followed by $1.63.

Dollar drops across the board, followed by the yen on a combination of rising risk appetite from strong Chinese trade figures as well as disappointment from US payrolls. GBPUSD resistance remains at the $1.63 trend line from the Nov 17 high and USDJPY still intact at the 92.20 trend line foundation. Oil breaks out to 83.90 as we warned in the latest article More Euro Losses Ahead, but that also means USDCAD deviates further from our 1.038 target, now aiming for next support at 1.0230. CHF did move lower after remarks from SNBs Hildebrand said bank to continue to PREVENT EXCESSIVE FRANC appreciation vs. EUR but EURCHF is now retreating lower as FX traders require actual intervention. USDCHF capped at 1.02 for fresh push towatds 1.0130s.

DEUTSCHLAND-US YIELD SPREADS: Now that youve seen our chart on the correlation between UK-US Yield Spreads & GBPUSD, lets look at the resurging relationship between the German-US 10 year yield spread and EURUSD. http://chart.ly/m7mtf6 EURUSD remains capped at $1.45 as the WIDENING YIELD GAP continues to favour the US relative to Germany (DE-US spread = -0.44%). Chart below shows the correlation between 10 year yield spreads & EURUSD has recovered since November to hit 0.54 (STRONGER CORRELATION), highlighting credit markets' response to the Fed's intention to conclude its asset purchases next month. The Nov jobs report was instrumental in greasing the wheel for the US yield advantage, which is set to retest November's 2-year highs (in favour of USD). The sudden silence in the Eurozone regarding the credit and banking troubles may help back our expectations for $1.38 before quarter's end on the heels of further pro-USD yield gap. This is in line with Thursday's note on UK-US yield gap, which we expect to go into negative territory in May. The chart speaks for itself. We sent this chart to CMC Markets clients right after Fridays jobs report. Bloomberg now has an article about it in its home page. WE STILL NEED SUPPORT from those who haven't voted http://shortyawards.com/alaidi