Intraday Market Thoughts Archives

EURUSD may end the week off its Friday's lows but will likely close above the 6-week downward channel, which raises questions about further upside going into a data/event packed week. GBPUSD survived our short stop after yesterday's dual long ht all targets. USDJPY tests the week trendline and raises questions about the foundation of the 94.70/80. In our Latest Premium Insights, we added a new trading note on EURUSD with 3 multi-timeframe charts to clarify the balance of power between short-term positive dynamics and the mixed picture on the medium term, especially as we near the volatility of the FOMC on Wednesday.  German ZEW on Mar 19, followed by the FOMC on Mar 20 (FOMC Statement at 14:00 ET, 18:00 London/GMT & Bernanke Press Conference 30 mins later. Eurozone Flash PMIs on Mar 21 & IFO on Mar 22

Prospective Governor Kuroda and the nominees Bank of Japan deputy find out today if they will win approval from Parliament. USD/JPY was flat coming into the session while cable posted its largest one-day gain in a month. The US economy once again showed signs of strength with jobless claims beating expectations. There are 15 trades currently in progress in the latest Premium Insights. The strategy of buying the dip in GBPUSD and AUDUSD paid off, now awaiting the second part of these dual trades. The long in EURUSD to enter at 1.2910 and exit at 1.3010 missed the fill by 1 pip as today's EURUSD low was 1.2911.

All eyes will be on the Japanese Upper House votes on the BOJ nominees at 0100 GMT. Kuroda and Nakaso appear to have the numbers for comfortable approval but Iwata – who favours non-traditional methods – may be a close call.

Indications for Japanese parties suggest Iwata has 119 favourable votes with 118 as the absolute minimum. Several lawmakers, however, may not vote alongside party lines. There are also 5 independents in Parliament and two parties holding 7 seats which have no committed.

Given those numbers, it appears likely Iwata will get the necessary votes and that could spark another round of USD/JPY strength. The pair formed a minor double-bottom at 96.59 on Thursday which could act as a springboard.

The main mover in the past day was cable, which shot above 1.51 from 1.4930. There was no clear catalyst for the jump although there was plenty of chatter about options-related activity and orderflow. Fundamental news came from the BOE's King who said the pound was “properly valued” after saying a strong GDP was unwelcome in November.

King's comments, however, were published after the rise in cable. It's possible (but unlikely) they were leaked and, even if they were, wouldn't be expect to have such a powerful impact. The main takeaway from the strength is that GBP was badly oversold and due for a bounce.

One bounce that keeps on going is the strength in the US economy. On Thursday it was jobless claims, which fell to 332K compared to 350K. The four-week moving average of claims is now at the lowest since the crisis.

The 175% plunge in Japanese net purchases of foreign stocks from October 2012 to the first week of March 2013. Over the same period, foreign net inflows to Japanese stocks soared 550%.  How did the Nikkei rise 23% rally in all of 2012, and it rallied 22% from October to December? Here is an analysis and charts of the dynamics in Japanese demand for foreign equities versus foreign demand of Japanese equities.

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Stellar Aussie jobs figure showed the biggest monthly rise in 13 years, lifting AUDJPY to 99.97, while AUDUSD stabilized around 1.04. EURUSD's latest slide found support at 1.2911, above the confluence of the 55-WMA AND 200-DMA, but the woes are far from over as the pair fears next week's FOMC meeting, which is likely to upgrade the US outlook, following last month's payrolls and today's jobless claims. If gold fails to regain 1600 following the FOMC, then selling could trigger a fresh round towards low 1500s. AUDUSD and AUJPY hit all targets, leaving 1 of each unfilled and awaiting progress. New trades on EURUSD, gold and US crude oil have been issued after yesterday's EURUSD was stopped out. For the complete trades and charts, please see latest Premium Insights.

Aussie Feb Employment is due at 12:30 GMT. Upbeat US retail sales boosted the US dollar at the expense of the euro on Wednesday. The RBNZ held rates at 2.50% but lamented the pain of a strong New Zealand dollar. Headlines from the session ahead will be dominated by the selection of a new Pope but a pair of key economic data points will also be released.See our Latest Premium Insights for the AUDJPY and AUDUSD trades.

The US economy continues to add momentum. On Wednesday it was from consumers, who boosted retail sales 1.0% in February compared to 0.5% expected. A rise in business inventories also caused analysts to hike Q1 GDP forecasts.

The euro broke below 1.30 on the release and continued as low as 1.2922 but later bounced to 1.2960. USD/JPY also gained a half-cent but later retreated to 96.00.

The action started early in Asia-Pacific trading as New Zealand's central bank surprised markets with a dovish statement. The RBNZ noted signs of stronger growth since December but warned that the 'overvalued' NZD undermines export profits and committed to keeping rates unchanged for the remainder of the year. Governor Wheeler said the RBNZ could even cut rates if the New Zealand dollar rose for reasons not justified by economic fundamentals.

The kiwi dollar immediately fell a full cent after the release

The focus now shifts to a key release for Australian as AUD/USD flirts with 1.03. At 0030 GMT, the February Australian employment report is expected to show 9K new jobs and the unemployment rate ticking to 5.5% from 5.4%. The full-time/part-time split is always important with the Aussie jobs report and a disappointing number could reverse recent AUD optimtims.

At 0430 GMT, the focus shifts to Japanese industrial production, which is expected to rise 1.0% month-over-month.

EURUSD tests its 55-WMA for the first time since November, a base long held as a key support. Uncertainty with Italy's bond auction and ongoing election limbo in Rome may be excuses, but today's stronger than expected US retail sales are prompting speculation of a clearer upgrade in the lanuguage from the FOMC next week, which may further bolser the case for the USD even if the QE remains as is for another 3-5 months. We issued a new set of Premium Insights  and 2 new EUR charts, including AUDSD & AUDJPY ahead of tonight's Aussie jobs Gold, silver and oil will be added later this evening.

Apple's share is down 39% from its September high, posting six consecutive monthly declines. Its fundamental woes may intensify after this Friday's release of Samsung's Galaxy S4. Here is how Apple stacks up against S&P500, Nasdaq, Gold, Oi &  Samsung since the lows of March 2009. Click here for Charts & Analysis   A new edition of the PremiumInsights will be released ahead of the US Wednesday session.

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Ashraf discusses the record highs in the Dow-30 relative to its US peers, partly due due to rallying banking stocks such as JP Morgan $15 below its all time high, while some technology stocks continue to lag. Making the point that US employment dynamics and GBPUSD following disappointing manufacturing data. View interview/synopsis here

Quiet markets tend to boost low-volatility leveraged trades like the carry trade and that's what took place on Monday as NZD/JPY led the FX markets. A busy day on the Japanese calendar could spark increased volatility. Both Premium longs in AUDUSD, all 3 USDJPY and the single EURUSD remain in progress. Aussie money markets are pricing the RBA's cash rate to fall by only 28 bps by end of December. See our latest Premium Insights for the existing trades in progress.

The week started with a quiet tone but commodity currencies made some solid gains. The driver was a turnaround in the S&P 500 after an early decline. The index closed up 0.3% to a fresh cycle high as it continues to close-in on the 2007 record high.

The Australian dollar opened the day lower on concern about soft Chinese data but it crept higher throughout the session and closed at 1.0280.

Early in Asian trading there was a rumour that incoming BOJ Governor Kuroda could hold an emergency meeting before the scheduled April 3 meeting. It's only a rumour but it might be a clever move that would solidify his reputation as an arch-dove bent to defeating deflation.

At 2350 GMT, he could get more ammunition with the release of the domestic corporate goods price index. Expectations are for a 0.1% year-over-year decrease.

At the same time, the minutes of the February BOJ meeting will be released. With the upcoming turnover at the BOJ, the minutes are unlikely to jar the market.

The final simultaneous release is the January tertiary index, which expected to fall 0.2% m/m.

Later, at 0030 GMT, the focus shifts to Australia for the February NAB business confidence survey. With AUD nearing a cluster of resistance at 1.0300, every data point bears watching.

Confirmation hearings for the BOJ also continue today.

Soft Chinese economic data released on the weekend sent the Australian dollar lower in early trading. The highlight on the calendar is Japanese machine tool orders. Weekly positioning data from the CFTC show a rush into the US dollar.4 trades in USDJPY, 1 EURUSD, 2 AUDUSD, 2 USDCAD, 2 EURJPY, 1 gold, 1 Crude oil are in progress. See all 13 trades & those awaiting fill in the latest Premium Insights

A series of data points showing slower growth and rising inflation muddy the monetary policy waters. The main concern is inflation, which rose to a 10-month high of 3.2% compared to 3.0% expected.

At the same time, industrial production and retail sales fell well short of expectations. The combination leaves policymakers little wiggle room if they want to further stimulate the economy. It could even mean action to slow the economy and curb price pressures.

One caveat is the effects of Golden Week holidays, which occurred in February. The year-over-year comparisons may have been skewed because in 2012 the holiday occurred in January.

The early effect on the market was a slump in the Australian dollar, which fell to 1.0211 from the 1.0236 close on Friday. The kiwi is also slightly softer while other currencies are basically unchanged.

The risk is that as Europe and North America digest the Chinese data, a larger selloff begins.

The lone risk event on the calendar is January preliminary Japanese machine orders at 2350 GMT. Expectatinos are for a 0.3% y/y decline. Typically, the market doesn't react strongly to this data point.

Another event to watch is a speech from the BOJ's Ishida at 0130 GMT.

Commitments of Traders

EUR net short 26K vs short 9K prior JPY net short 73K vs short 65K prior GBP net short 44K vs short 36K prior AUD net long 7K vs long 26K prior CAD net short 46K vs short 21K prior NZD net long 19K vs long 20K prior CHF net short 11K vs short 8K prior

Soft Chinese economic data released on the weekend sent the Australian dollar lower in early trading. The highlight on the calendar is Japanese machine tool orders. Weekly positioning data from the CFTC show a rush into the US dollar.4 trades in USDJPY, 1 EURUSD, 2 AUDUSD, 2 USDCAD, 2 EURJPY, 1 gold, 1 Crude oil are in progress. See all 13 trades & those awaiting fill in the latest Premium Insights

A series of data points showing slower growth and rising inflation muddy the monetary policy waters. The main concern is inflation, which rose to a 10-month high of 3.2% compared to 3.0% expected.

At the same time, industrial production and retail sales fell well short of expectations. The combination leaves policymakers little wiggle room if they want to further stimulate the economy. It could even mean action to slow the economy and curb price pressures.

One caveat is the effects of Golden Week holidays, which occurred in February. The year-over-year comparisons may have been skewed because in 2012 the holiday occurred in January.

The early effect on the market was a slump in the Australian dollar, which fell to 1.0211 from the 1.0236 close on Friday. The kiwi is also slightly softer while other currencies are basically unchanged.

The risk is that as Europe and North America digest the Chinese data, a larger selloff begins.

The lone risk event on the calendar is January preliminary Japanese machine orders at 2350 GMT. Expectatinos are for a 0.3% y/y decline. Typically, the market doesn't react strongly to this data point.

Another event to watch is a speech from the BOJ's Ishida at 0130 GMT.

Commitments of Traders

EUR net short 26K vs short 9K prior JPY net short 73K vs short 65K prior GBP net short 44K vs short 36K prior AUD net long 7K vs long 26K prior CAD net short 46K vs short 21K prior NZD net long 19K vs long 20K prior CHF net short 11K vs short 8K prior