Intraday Market Thoughts Archives

Chinese warning of fiscal cliff; EZ current account declined but trade account rose; Japanese lower house dissolved. Focus is on TIC flows; capacity utilization and industrial production. The 2 Premium charts on cable explain the reason why 2 longs are in progress, 1 of which is nearing the final target. 1 of 2 USDJPY Premium Insights and the remaining CADJPY hit all targets. The 3 charts on USDJPY cover more ground on the pair. See more below.

The greenback is higher across the board in the ongoing session. European equities are losing around 0.5% and the relative strength winner is USD while NZD is the weakest.

The fiscal cliff is in the spotlight again and it is unlikely to change any time soon. Chinese vice finance minister Guangyao said that a failure to solve it would be disastrous to the US, it would be a serious shot to the world economy and it would drag Chinese growth by 1.2 percentage points, MNI reports.

On the data front we learned that Eurozone current account balance declined in September to EUR 0.8 bln from EUR 10.9 bln while the trade surplus rose to EUR 11.3 bln from EUR 8.9 bln.

In other news, UK chancellor Osborne is about to start the second round of interviews for BOE's governorship and Japanese lower house was dissolved which paves way for elections on 12/16.

The US session begins at 8:30 am ET with Canadian foreign securities purchases that are expected to rise to CAD 7.45 bln in September from previous CAD 6.9 bln. US TIC flows are due 30 minutes later and they are seen lower at USD 75 bln from USD 90 bln.

Capacity utilization will flash on traders' screens at 9:15 am and it is anticipated marginally higher in October at 78.4% from 78.3% while industrial production is expected to slow to 0.2% from 0.4%.

This week's last risk event is the FOMC member Dennis Lockhart's speech on the economic outlook and monetary policy that is scheduled to start at 3:45 pm ET.

Gold survived one of the 2 stop and is nearing the 1700 figure. The 2 Premium charts on cable explain the reason why 2 longs are in progress, 1 of which is nearing the final target. 5 new charts were added to last nights Premium Insights, including quarterly chart of USDJPY. Timing the new and existing EURUSD insights as well as new GBPUSD ideas. Direct Access to today's Premium Insights is found here: http://ashraflaidi.com/products/sub01/access/?a=694 Non- subscribers can have a free trial here: http://ashraflaidi.com/products/sub01/

Patril Urban

Thursdays US economic data slumped badly but Hurricane Sandy was the likely culprit. The euro was the best performer for the second consecutive day while the yen lagged badly. The Asia-Pacific calendar is bare except for a speech from the Feds Dudley who could hint that QE3 will be expanded to Treasuries in the new year. 1 of 2 USDJPY Premium Insights and the remaining CADJPY hit all targets. 5 new charts were added to last nights Premium Insights, including quarterly chart of USDJPY. Timing the new and existing EURUSD insights as well as new GBPUSD ideas. See more below.

US initial jobless claims surged to 439K compared to 375K expected but officials said that the superstorm was probably behind the surge, which was the largest in three years. Similarly, the Philly Fed fell to -10 from +5 due to manufacturing shutdowns in the area.

One slightly positive surprise was the Empire Fed, which was at -5.2 compared to -8 expected. US CPI figures were close to expected at +2.2% y/y.

It will be difficult to get an accurate reading on US economic data points in the coming weeks due to the hurricane.

The euro briefly topped 1.2800 but was capped by the 200-day moving average at 1.2811 and later slipped back to 1.2760. An implausible report suggesting Spain would bypass the OMT by going directly to the IMF was denied.

Rallies in the yen crosses were the dominant move for the second day, even with risk trades struggling. The market latched on to comments from LDP leader Abe who said that if he wins the election he will instruct the BOJ to do unlimited QE in order to beat deflation.

The USD/JPY rally stalled just short of 81.50, which is the 61.8% retracement of the March-September decline.

5 new charts were added to last nights Premium Insights, including quarterly chart of USDJPY. Timing the new and existing EURUSD insights as well as new GBPUSD ideas. Direct Access to today's Premium Insights is found here: http://ashraflaidi.com/products/sub01/access/?a=694 Non- subscribers can have a free trial here: http://ashraflaidi.com/products/

-AB

JPY falls further; European GDP above expectations; UK retail sales disappointed. Busy session ahead includes CPI, jobless claims; empire state and Philly fed manufacturing and Bernanke's speech. 1 of 2 USDJPY Premium Insights and the remaining CADJPY hit all targets. 5 new charts were added to last nights Premium Insights, including quarterly chart of USDJPY. Timing the new and existing EURUSD insights as well as new GBPUSD ideas. See more below.

The common currency pushed higher on rumor that Spain would ask the IMF for a credit line instead of requesting an official bailout. Spanish economy minister rejected this notion and added that Spain has not decided whether to request ECB aid.

JPY pairs continue to push higher on comments from Japan's main opposition leader Shinzo Abe who wants to work with the BOJ to reverse the trend of JPY strength and who also suggested that the BOJ could set interest rates below zero to enhance lending. Abe is leading in polls and could become the next PM.

A slew of Q3 GDP data was released during the European session. French and German GDP both rose 0.2% which was better than analysts expected. On the other hand Italian GDP contracted -0.2% and the whole Eurozone economy fell 0.1%. Nevertheless even these results were slightly above expectations. Eurozone CPI remained steady at 2.5% and the core stayed at 1.5%

UK retailers experienced the largest sales decline in six months as the volume fell 0.8% in October after growing 0.5% in the prior month. GBPUSD initially weakened to 1.5827 but quickly recovered and trades around 1.5850. EURGBP trades higher around 0.8055.

Busy US session kicks off at 8:30 am ET with CPI that is expected to rise to 2.1% in October from previous 2.0% y/y. The core figure is seen steady at 2.0%. Jobless claims are seen higher at 372K from last week's 355K and empire state manufacturing is seen lower in November at -7.2 from previous -6.2. Philly FED manufacturing is due at 10:00 am and it is anticipated to decline to 1.1 from previous 5.7.

Markets are also awaiting the FED chairman Bernanke's speech on housing and mortgage markets in Atlanta that is scheduled to start at 1:20 pm ET.

5 new charts were added to last nights Premium Insights, including quarterly chart of USDJPY. Timing the new and existing EURUSD insights as well as new GBPUSD ideas. Direct Access to today's Premium Insights is found here: http://ashraflaidi.com/products/sub01/access/?a=694 Non- subscribers can have a free trial here: http://ashraflaidi.com/products/

A soft US retail sales report and missile attacks in the Middle East sparked another round of risk aversion despite dovish Fed talk. The S&P 500 slumped 1.5% but FX was relatively subdued with the euro leading and yen lagging. Japan called a national election for Dec 16 with leaders pledging to weaken the yen. 5 new charts were added to tonights Premium Insights, including quarterly chart of USDJPY. Timing the new and existing EURUSD insights as well as new GBPUSD ideas. See more below.

US consumers may be heading into the holiday season on a weak note. October retail sales excluding autos and gas fell 0.3%, much worse than the 0.4% rise expected. The Commerce Department couldnt estimate the impact of Hurricane Sandy but said there were indications it had positive and negative effects.

In a separate report, Fitch said US credit card delinquencies rose for the first time in a year.

Oil prices rose and sentiment deteriorated after Israel assassinated a Hamas leader and shelled the Gaza strip. There were no immediate signs of the violence spreading to other countries but risks are certainly heightened.

The minutes of the October FOMC meeting showed that a number of members favored additional Treasury purchases when Operation Twist expires at the end of the year. If fiscal cliff risks continue to rise and stocks continue falling, expect an open-ended QE announcement.

The euro rose to 1.2780 after the minutes but later slipped back to 1.2730.

The yen weakened throughout the session despite its safe haven status. The election will be fought partially on which party can end the era of yen strength. Expect grand promises to spook the market.

The events on the Asia-Pacific calendar include Australian consumer inflation expectations and new vehicle sales.

5 new charts were added to tonights Premium Insights, including quarterly chart of USDJPY. Timing the new and existing EURUSD insights as well as new GBPUSD ideas. Direct Access to today's Premium Insights is found here: http://ashraflaidi.com/products/sub01/access/?a=694 Non- subscribers can have a free trial here: http://ashraflaidi.com/products/

-AB

Focusing on Yen pairs, and timing the new and existing EURUSD as well as new GBPUSD ideas. Direct Access to today's Premium Insights is found here: http://ashraflaidi.com/products/sub01/access/?a=694 Non subscribers can have a free trial here: http://ashraflaidi.com/products/

Japanese PM Nodas indications that he could dissolve the House of Representatives on Friday if the opposition agreed to plans to reduce the number of seats and to lower lawmakers salaries weighed on the yen across the board. Wat it means for JPY pairs and why? http://www.cityindex.co.uk/market-analysis/market-news/2218442012/yen-hurts-ahead-of-another-regime-change/

UK labor market data mixed; MPC sees higher CPI; Eurozone industrial production fell; JPY declines due to politics. The surprise decline in US retail didnt stop S&P futures from gaining 5 pts at time of writing. Market turns to the FOMC meeting minutes. Latest Premium Insights are due at the London close.Both GBPUSD sorts hit all targets, while 1 of 2 EURUSD dual trades hit all targets and the 2nd in progress from the latest Premium Insights.

The greenback was initially losing across the board except JPY but as the session progressed, the buck was able to regain lost ground and currently trades stronger against most majors. European equities are losing around 0.3% and the weakest currency is JPY.

UK jobless claims rose sharply in October to 10.1K from previous 0.8K which is the fastest increase in over a year. At the same time, the ILO unemployment rate ticked lower to 7.8% from 7.9%. The BOE inflation report showed the MPC adjusted its CPI forecasts higher - CPI should reach 1.8% in two years and 1.9% in three years. GBPUSD initially pushed higher to 1.5901 but quickly sold off to current 1.5865.

JPY declined across the board on PM Noda's comments that he could dissolve the House of Representatives on Friday if the opposition agreed to plans to reduce the number of the seats and lower lawmakers' salaries, MNI reports. USDJPY pushed above the 80.00 handle and EURJPY touched 102.00.

In other news, Swiss ZEW economic expectations improved marginally to -27.9 from -28.9; Eurozone industrial production dropped 2.5% in September after growing 0.9% in August and Greek 3Q GDP contracted 7.2% after falling 6.3% in Q2. EURUSD trades around 1.2735.

US October retail sales fell 0.3% worse than the expected decline of 0.2% following revised increase of 1.3%. Sales less autos were flat vs the expected +0.2% following 1 .2% increase. Oct PPI fell 0.2% vs ex +0.2% following the oil driven +1.1%. Markets will then wait for the latest FOMC minutes that are due at 2:00 pm.

Both GBPUSD sorts hit all targets, while 1 of 2 EURUSD dual trades hit all targets and 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 http://ashraflaidi.com/products/sub01/access/?a=693 Nonsubscribers can click here to join http://ashraflaidi.com/products/sub01/

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 http://ashraflaidi.com/products/sub01/access/?a=693 Nonsubscribers can click here to join http://ashraflaidi.com/products/sub01/

-AB

Unlike this same time last year, when EU officials were unanimously pressuring Greece to pursue a referendum on staying in the Eurozone, todays rift has shifted to Troikas positions on Greece and whether it should do more in recognizing Athens efforts (Victory of pro-Eurozone parties over the summer and Parliaments passing of austerity measures despite ongoing violent street protests). Read more here with charts on EURJPY http://www.cityindex.co.uk/market-analysis/market-news/2170722012/athens-delivered-awaiting-lagarde/

UK consumer inflation at five month high; German and EZ ZEW disappointed; Italy reached a full take up. US calendar contains only second tier reports today. 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 paragrapghs.

USD lost all its gains in the ongoing session across the board except JPY. European equities are losing around 0.4% and the relative strength winner is EUR while JPY is the weakest.

The IMF said it is against Eurogroup's deal to give Greece additional two years to reach budget targets and that more talks are needed. EU finance ministers gather in Brussels today for their monthly meeting and the focus is likely to remain on Greece. Next Eurogroup meeting is on 11/22-23.

UK consumer inflation rose sharply in October reaching 2.7% from 2.2% on annual basis. Rising tuition fees and food costs pushed the CPI to the highest level in five months. Core CPI rose to 2.6% which is the highest level in nearly a year. The BOE doves will have a harder time pushing more QE through in December and should tomorrow's labor market data disappoint, fears of upcoming deflation could rise. GBPUSD rose from 1.5860s to 1.5910 while EURGBP fell to 0.7969 before bouncing to 0.7995.

ZEW economic sentiment indices for November disappointed. German ZEW declined further to -15.7 from -11.5 and the Eurozone counterpart fell to -2.6 from -1.4. EURUSD fell to 1.2661 but later bounced to 1.2710s.

Italy reached a full take up as it sold 12 month BOTs totaling EUR 6.5 bln. The average yield declined to 1.762% from 1.941% and bid to cover was little changed at 1.76 from 1.77. Italian 10 year yield pushed to 5.07% and now trades around 5.02%.

The US data calendar is limited to IBD/TIPP economic optimism index that is due at 10:00 am ET and that is expected to edge lower in November to 53.8 from 54.0. Federal budged balance is due at 2:00 pm that is anticipated to show USD 113.5 bln deficit in October from USD 75 bln surplus seen September.

1 of 2 gold trades in the Premium Insights remain in progress as the weekly trendline from the October high remain intact at 1738, coinciding with the 55-DMA and the previous support from the September base.

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 http://ashraflaidi.com/products/sub01/access/?a=693 Nonsubscribers can click here to join http://ashraflaidi.com/products/sub01/

Troika recommendations for Greece leaked and suggest more money and time are needed. US trading was quiet with banks closed for Veterans Day. The Asia-Pacific calendar features Japanese industrial production. More on those Premium Insights below.

The leaked Troika document said Greece may need another 32.6B euros by 2016 and suggested a two-year extension on fiscal targets. It will be difficult for Greece to secure the additional funds because of the waning appetite its Eurozone neighbours but last weeks budget could clear the way. European finance ministers continue to meet in Brussels.

The latest aid tranche will not be delivered this week and Greece may be facing an immediate cash crunch with 5B euros of debt coming due on Friday. The German press reported that the ECB may expand collateral rules to mitigate the crunch but that report was later denied.

The euro was marginally weaker in US trading, sliding to 1.2710 from 1.2725 but volatility was minimal due to the holiday. Fridays low of 1.2689 remains a key line on the chart.

Commodity currencies, led by the Australian dollar, were the top performers on the day after the upbeat Chinese trade data. We warn, however, that the recent slowdown in Chinese imports may be due to a lack of domestic or international demand. If so, exports will begin to show signs of weakening in early 2013.

Quiet trading may continue into the Tokyo session. The lone item of consequence on the calendar is September Japanese industrial production. A 4.1% y/y contraction is expected in another sign that Japan is slipping into recession.

EURJPY breaks below its 55 & 100-DMAs, showing vulnerability to testing the next support at 100-DMA ==>> 99.65. Upside move seen acing barrier at 101.80. 1 of With USDJPY deteriorating anew, the yen part of EURJPY continues to dominate for now. 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 http://ashraflaidi.com/products/sub01/access/?a=693 Nonsubscribers can click here to join http://ashraflaidi.com/products/sub01/

-AB

Another yen rally emerging despite fresh bad news from Japan. Q3 GDP shrank 3.5% y/y -- the sharpest since the earthquake-ravage of Q1 2011. More negative data in Q4 could sink the country into its 5th recession in 15 years especially as the dispute with China has hit exports badly. EURJPY breaks below its 55 & 100-DMAs, showing vulnerability to testing the next support at 100-DMA ==>> 99.65. Upside move seen facing barrier at 101.80. 1 of With USDJPY deteriorating anew, the yen part of EURJPY continues to dominate for now. 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 http://ashraflaidi.com/products/sub01/access/?a=693 Nonsubscribers can click here to join http://ashraflaidi.com/products/sub01/

Markets spent last week sorting through the election wreckage. The yen was the top weekly performer but CFTC positioning data showed that speculators continue to believe its overvalued. 1 of 2 EURUSD Premium Insights hit all targets, while oil long stopped out. See more details below. More detail is found below.

Greece Athens is thinking to avoid defaulting on a 5bn debt repayment via a treasury bill auction on Tuesday. but Greek banks expected to buy the issue can only raise about 3.5bn of collateral acceptable to the European Central Bank, according to two senior Athens bankers. Yet, Athens is expected to raise no more than 3.5bn in collateral from Greek banks.

Obama and Boehners sparring damaged market sentiment late on Friday and showed once again that the market is fixated on politics at the moment.

Lost in the overstated worries about taxes and the fiscal cliff, the US economy continues to show better signs of growth. The U Mich consumer sentiment survey rose to a five-year high ahead of the holiday spending season and wholesale inventories were also much stronger than expected.

That helped spark a brief risk rally that was snuffed out by politics.

Unfortunately, with the calendar light in the week ahead, politics will remain on the front pages and sentiment will remain vulnerable.

The S&P 500 and EUR/USD both closed below their respective 200-day moving averages on a weekly basis for the first time since June, albeit narrowly.

CFTC Commitments of Traders

The weekly data was gathered just before the election so it may not be a great representation of current positioning, although the rise in euro shorts probably continued.

Euro shorts increased to 67K from 58K last week

JPY shorts increased to 40K from 37K last week

AUD longs increased to 60K from 52K last week

CAD longs decreased to 75K from 79K last week

NZD longs increased to 19K from 16K last week

GBP longs decreased to 19K from 23K last week

Last nights the Premium Insights trades on EURUSD, USDJPY, GBPUSD, EURJPY, EURGBP, CADJPY, AUDUSD, gold, silver and oil. DIRECT ACCCESS http://ashraflaidi.com/products/sub01/access/?a=693 Nonsubscribers can click here to join http://ashraflaidi.com/products/sub01/

-AB