Intraday Market Thoughts Archives

Here are the details on Ashrafs upcoming talks in New York (Mon-Tues) and London (Fri), discussing FX Strategies & the latest on the recent run-up in risk appetite and oil.

NEW YORK

http://www.moneyshow.com/tradeshow/new_york/traders_expo/speakers/speaker_details/?speakerid=129874OTE

LONDON: (scroll down in link to the left) http://www.londoninvestorshow.com/

Currencies consolidate; German PPI rose m/m but fell y/y; UK retail sales strong; Canadian CPI rose; German president resigns. Market turns to CPI and leading indicators. A new set of Premium trades is issued, focusing on oil, S&P500 mini & EURUSD. See details below.

The USD is little changed, trading within a narrow range. European equities are gaining about 1% and the relative strength loser is again JPY.

Reports that the ECB would swap its Greek bond holdings of roughly EUR 40 bln for newly issued debt combined with higher confidence that the Greek bailout would be signed on Monday boosted risk appetite yesterday. Even though retracements have been shallow, there has been no follow through and most currencies trade in a narrow range.

The common currency is little changed compared to yesterday's close despite comments from ex-IMF official Prasad who said that Greece will eventually exit the Eurozone.

Annual German PPI rose 0.6% from -0.4% m/m but declined in January to 3.4% from 4%. Sharply higher energy and natural gas prices contributed to the monthly increase.

UK Retail sales rose 0.9% from 0.6% in January significantly better than -0.3% forecast. The outlook remains uncertain due to worsening labor market and ongoing austerity measures but today's data brought back hopes of growing economy for Q1. GBPUSD rose after the release to 5860 but there has been no follow through.

Canadian CPI rose 0.4% in January from -0.6%. Core CPI rose 0.2% from -0.5%. USDCAD trades at session lows around 0.9950.

In other news, Germany's president Christian Wulff announced his resignation today over a home loan scandal and ECB deposits rose on Thursday to EUR 416.73 from Wednesday's EUR 391.55 bln.

Consumer inflation is due at 8:30 am ET and it is expected to rise in January 0.3% from previous unchanged reading m/m but decline to 2.8% from 3% y/y. Core CPI should rise 0.2% from 0.1% m/m and remain steady at 2.2% y/y.

January leading indicators are due at 10:00 am and are seen marginally higher at 0.5% from 0.4%.

GBP volatility could increase at 2:00 pm when MPC member Adam Posen speaks at the economic summit in Warwick.

The latest Premium Intermarket Insights focus on oil and the euro & S&P500 mini, while maintaining existing trades on USDCAD, AUDNZD and gold. To go directly to the piece, click here: http://ashraflaidi.com/products/sub01/access/?a=604 Nonsubscribers can click here http://ashraflaidi.com/products/sub01/

Growing indications that EU officials will affirm a Greek bailout on Monday sparked a euro reversal. GBP was the top performer while JPY continued to lag. The minutes of the BOJ meeting are a highlight of Asia-Pacific trading. A new set of Premium trades is issued, focusing on oil, S&P500 mini & EURUSD. See details below.

Greece found additional budget savings and appears to be on the cusp of a bailout deal that will clear the way for the PSI and avert a March default.

The euro fell below 1.30 midway through European trading on continuing speculation about a Greek default. Rumours about a secret plan for a re-introduction of the drachm and talk about deferring a large portion of the bailout until after the election weighed on the euro.

But those rumors were washed away as a Eurozone official was quoted as saying were almost there and Samaras said Greece has done what is needed. Progress was confirmed by an ECB debt swap that saw it replace its Greek debt with new paper that wont be subject to a collective action clause that politicians are expected to impose.

The result was a rapid euro rise to 1.3150 with similar climbs in other risk trades.

Asia-Pacific Preview

We will get additional details about the latest round of BOJ quantitative easing when the meeting minutes are released at 1850 GMT. Signs of further asset buying could push USD/JPY above 79.00. Otherwise, there are no significant events on the calendar.

The latest Premium Intermarket Insights focus on oil and the euro & S&P500 mini, while maintaining existing trades on USDCAD, AUDNZD and gold. To go directly to the piece, click here: http://ashraflaidi.com/products/sub01/access/?a=604 Nonsubscribers can click here http://ashraflaidi.com/products/sub01/

Possibility of a bridging loan; Moody's warns of a downgrade; solid Spanish and French auctions fail to improve confidence; ECB deposits fell sharply. US session will bring PPI, housing data and Philly FED index. Ashraf is on the road, readying for next weeks appearances at the NY Traders Expo. Todays Premium piece will be released after the US close. See more detail below on Mondays Premium trades.

USD pushes higher across the board. European equities lose about 1% and the JPY is the loser in relative strength.

The sharp reversal of sentiment that started yesterday continued throughout the Asian session and brought EURUSD back below 1.30 where the common currency continues to consolidate. Fears that Greek aid will not be secured before bond redemption on 3/20 were not alleviated by reports of a possible bridging loan that would provide enough funds to avoid default in case the bailout is delayed.

News of Moody's warning that it may cut rating of 17 global banks and 114 European institutions weighted further on the sentiment.

Not even two solid auctions were able to bring optimism back into the market. Spain sold EUR 4.07 bln worth of bonds today (EUR 3 4 bln target) and according to MNI completed 34.2% of its 2012 funding needs. French auction also went well a France sold EUR 8.45 bln worth of bonds (EUR 7 8.5 bln target).

ECB deposits fell sharply on Wednesday to EUR 391.55 bln. On Monday deposits were still well over half a trillion.

The US session starts at 8:30 am ET with PPI that is expected to decline to 4.1% in January from 4.8% y/y but rise 0.3% from -0.1% m/m. Building permits and housing starts should rise in January to 0.68M from 0.67M and 0.68M from 0.66M respectively. Jobless claims are seen marginally higher at 364K from 358K and

At 9:00 am FED chairman Bernanke delivers a speech on community banking in Arlington but it is unlikely to have a strong impact on the market.

Philly fed index is due at 10:00 am and it is anticipated to grow in February to 9 from previous 7.3.

Canadian data include manufacturing sales that are seen lower in December at 1% from November's 2% and international securities transactions that are expected to decline considerably to CAD 7.98 bln in December from previous CAD 14.99 bln. Both reports are due at 8:30 am.

Our PREMIUM INTERMARKET INSIGHTS trades in GBPJPY, oil AUDNZD hit all targets, while EURUSD and EURGBP were stopped out. Trades remaining in progress are gold, silver and USDCAD. Direct Access http://ashraflaidi.com/products/sub01/access/?a=603

Continuing concerns about the ability of Greece to meet the growing list of demands from European leaders weighed on the euro on Wednesday. On the day, NZD led and EUR lagged. The Australian jobs report is the key upcoming event.

It now appears, at the very earliest, that Greek bailout approval will come Monday with the bond swap beginning at the same time. The risks are growing that those deadlines will be pushed back and there are even rumours that bailout funds will not be fully released until after a Greek election.

The uncertainty sent the euro from 1.3160 at the start of US trading down to 1.3060 after falling as low as 1.3043.

So far, the risks appear to be contained to Europe as other risk trades improved despite the growing uncertainty. Economic data also helped sentiment as the Empire Fed improved to 19.5 from 7.5 last month. Industrial production was unchanged but December data was revised to +1.0% from +0.4%. Even housing is showing some life as the NAHB home builders sentiment survey rose to a four-year high.

The FOMC minutes were highly anticipated but did not offer a conclusive reading on QE3. A few members advocated for more asset purchases but more wanted to wait for a decline in inflation. There was also some positive talk about economic improvements. Separately, the Fed Fisher said QE3 was a fantasy of Wall Street. With many Fed members this would be a revelation but Fisher is an arch-hawk and speaks only for himself.

Asia-Pacific Preview

The first data point to watch for comes at 1900 GMT with the Melbourne Institutes measure of consumer inflation expectations. There is no consensus estimate but a reading significantly below the 2.8% expected could re-invigorate talk about rate cuts.

The more important report comes at 1930 GMT when January employment figures are released. The consensus calls for a 10.9K rise after a 23.3K contraction last month. Despite the improvement, the unemployment rate is expected to climb to 5.3% from 5.2%.

Eurozone GDP declines; UK claimant count rose and unemployment steady; BOE predicts CPI below target range and stronger GDP by 2013. Market turns to Empire state manufacturing; TIC flows; Industrial production; capacity utilization and later to FOMC minutes. More details on Ashraf's appearances at the New York Traders Expo.

The greenback is mixed. It is weaker against AUD, NZD and CAD and stronger against EUR, GBP and CHF. European equities are gaining between 0.3% and 0.9% and relative strength winners are NZD followed by AUD.

BBC reported that Greek leaders signed a pledge to implement bailout terms as demanded by Eurozone which should increase the chances of a successful outcome for the Eurogroup conference call that should start at 11:00 am ET. EURUSD was not able to gain traction and trades lower around 1.3150.

Today's data showed that Eurozone Q4 growth contracted on q/q basis but slowed across the region on annual basis. French GDP declined to 1.4% from 1.5%, German GDP fell to 1.5% from 2.6% and Italian GDP contracted 0.5% from previous +0.3%. Eurozone as a whole slowed to 0.7% from 1.3% y/y and printed -0.3% from 0.1% q/q. Data confirmed that five members already entered into a recession.

In the UK, claimant count rose by 6.9K in January, considerably above December's 1.9K. The claimant count rate kept steady at 5% and ILO unemployment rate remained in December at 8.4%. GBPUSD was able to recover a portion of the previous losses and trades back around 1.57.

In the inflation report governor King reiterated that CPI should fall to 2% by the end of 2012 a reach 1.8% by the end of 2013. GDP should grow 3% in 2013.

Data-rich NY session starts at 8:30 am ET with Empire state manufacturing index that is seen higher in February at 14.7 from 13.5 followed at 9:00 am by net TIC flows that are expected to increase in December to USD 62.3 bln from USD 59.8 bln.

January industrial production and capacity utilization are due at 9:15 and are anticipated higher at 0.6% from 0.4% and 78.6% from 78.1% respectively.

Minutes from January FOMC meeting are due at 2:00 pm and could provide insights into the level of disagreements over more QE.

ASHRAFs 2 TALKS IN NEW YORK TRADERS EXPO http://www.moneyshow.com/tradeshow/new_york/traders_expo/speakers/speaker_details/?speakerid=129874OTE

Europe continues to press its foot against Greeces throat, demanding more before releasing bailout funds. The Canadian dollar was the top performer Tuesday while the yen lagged. Asia trading has been quiet but USD/JPY continues to rise. Markets await UK Jan unemployment and Eurozone Q4 GDP.

AT9:30 GMT, UK Jan claimant count unemployment is expected at 3.0K from 1.2K. Dec ILO unemployment seen at 8.5% from 8.4%.

Dec average weekly earnings expected +1.8% m/m from prior +1.9%.

At 10 am GMT, Eurozone Dec flash Q4 GDP expected at -0.3% q/q, (+0.7% y/y) from previous +0.2% q/q (+1.4% y/y).

The Bank of England presents its quarterly inflation report at 10:30 GMT. This follows yesterdays fast drop in inflation. Here is Ashrafs take on charting UK inflation vs GBPUSD. http://ashraflaidi.com/hot-chart/?a=3117

Traders were hoping the Eurogroup would approve the Greek bailout at a meeting on Wednesday but Juncker called off the meeting as Greece failed to meet a number of conditions. Those were an additional 325B euros in spending cuts and commitments from party leaders to uphold the austerity agreement after the elections.

Those concerns knocked EUR/USD below 1.31 but it later rebounded to 1.3120 after Greek officials said they met those conditions. New Democracy leader Samaras was reportedly holding out on signing the austerity pledge but officials said he would deliver a letter of support on Wednesday.

In any case, the Eurogroup in-person meeting was cancelled and a conference call was scheduled instead. The FT is reporting that approval for the bailout funds may not come until March 2, suggesting two more weeks of uncertainty.

The FT also reported that several northern European nations have lost patience with Greece. The recent developments are making it more difficult for bondholders to participate in the PSI swap, which could begin as soon as Friday.

Asian trading has been light so far with no major data on the schedule. Australias consumer confidence index from Westpac improved 4.2% to 101.2. Market participants are closely watching to see how Japan responds to the strong close in USD/JPY and technical momentum in the pair. If there is no significant selling interest, the pair could run higher in Europe and the US.

The sharp slowdown in UK inflation to a 14-month lowof 3.6% y/y in January from 4.2% y/y in December offers Bank of England Governor Mervyn King more vindication ahead of tomorrow's testimony before the treasury select committee immediately after the release of the BoEs quarterly inflation report. Our latest HotChart on charting Sterling vs UK CPI ahead of Wednesday's Bank of England Inflaion Report http://ashraflaidi.com/hot-chart/?a=3117

BOJ increases QE and sets inflation target; UK inflation continues to decline; German ZEW improved and Eurozone industrial production fell. Market turns to retail sales and business inventories. Todays Bank of Japan decision comes on the heels of disappointing GDP data. Monday evenings Premium Intermarket insights saw oil & GPJPY hitting all targets and one EURUSD stopped out by3 pips.

USD is weaker against all majors except JPY. European equities rose 0.5% and the relative strength loser is JPY.

JPY is lower as the BOJ unexpectedly increased the size of its asset purchase program by 10 trillion yen (nearly USD 130 bln) to 30 trillion yen and set a 1% inflation target. The overnight call rate was kept between 0 and 0.1%. USDJPY reached the key short term resistance at 78.20 but it failed to break it.

In light of tomorrows meeting of Eurozone finance ministers, it was surprising to hear German Finance minister Wolfgang Schaeuble who said that "if attempts to keep Greece in the Eurozone fail, we are better prepared than two years ago." Greek officials should present additional EUR 325 million savings that were required in order to secure the EUR 130 bln financial aid.

Annual consumer inflation in the UK declined in January to 3.6% (lowest since Nov 2010) from previous 4.2% (-0.5% from 0.4% m/m). BOE governor King reiterated his view today that the inflation will fall back to around 2% target by the end of 2012. GBP is the worst performing G10 currency after JPY.

The common currency along with other majors started to gain after German ZEW economic sentiment improved significantly as it printed 5.4 in February after -21.6 in January. The market ignored Eurozone industrial production that fell in December 1.1% from 0% m/m which translates to a 2% decline from 0.1% y/y.

Strong Italian auction also helped to improve the sentiment as Italy was able to sell EUR 6 bln worth of bonds (3.75 to 6 bln target). Average yields declined and bid to cover improved.

ECB deposits rose again and reached EUR 510.2 bln on Monday.

The NY session starts at 8:30 am ET with retail sales that are expected to grow 0.8% in January from December's 0.1%. Core sales are seen higher at 0.6% after contracting 0.2% a month earlier.

Business inventories are due at 10:00 am EST and should show 0.4% increase in December from previous 0.3%.

At the end of the session at 4:45 pm EST New Zealand will release Q4 retail sales that are seen lower at 1.3% from 2.2% (core exp. 1.1% from previous 2.4%).

Mondays Premium Intermarket Insights include the latest on charting yen-yield relation, and trades on EURUSD, GBPJPY, silver, Gold and oil. Direct Access to today's Premium Trades: http://ashraflaidi.com/products/sub01/access/?a=603

NonSubscribers can click here: http://ashraflaidi.com/products/sub01

The early excitement about a deal in Greece faded in US trading, leaving the euro unchanged on the day. NZD and AUD were easily the top performers while EUR and USD lagged. Australias NAB Coditions Index edges up. Todays Bank of Japan decision comes on the heels of disappointing GDP data. Monday evenings Premium Intermarket insights include EURUSD, GBPJPY, EURGBP, silver, gold and oil.

Its clear that many market participants were waiting for positive headlines in order to initiate fresh euro shorts. The euro opened US trading at 1.3260 but drifted lower throughout the session, finishing near the lows at 1.3187.

The bailout process for Greece is moving forward but not as quickly as the market hoped. The PSI deal is expected to be passed Wednesday but Germany indicated it will not approve bailout funds until early March, once it gauges the take-up in the PSI. The risk is that Greek bondholders dont participate in the PSI because they dont believe the bailout money is forthcoming.

Other European leaders welcomed the deal in Greece but the EUs Rehn continued to press saying he expects he expects more progress in the near future. Also pressuring the euro were Spanish bank downgrades from S&P and Fitch.

US politics were in focus as Obama unveiled a budget with fresh taxation measures to close the budget deficit. Republicans offered to extend the Bush-era tax cuts. The budget optimistically forecasts GDP growth of 2.7% in 2012 and 3.0% next year.

The S&P 500 gained 0.7% to 1352.

Asia-Pacific Preview

National Australian Banks business conditions index rose to +2 in January from zero in December. The Business confidence index rose to +4 from +3 in December but remains below the long-run average of +6 according to MNI.

The top event of the session comes at approximately 0330 GMT when the BOJ announces it latest policies. Yesterdays GDP data showed the economy contracting 0.6% in the fourth quarter, much softer than expected. The soft figures put unexpected pressure on the BOJ to act. Any new action will put downward pressure on the yen but further asset purchases would be particularly negative. There is also talk of an explicit inflation target. Japans Economics Minister called on the BOJ to do more on Monday, a rare push from the government during the two-day meeting.

At 0430 GMT, Japan releases January industrial production data. The consensus is for a 4.0% rise but given the weakness in GDP, the market may have priced in a lower reading.

Mondays Premium Intermarket Insights include the latest on charting yen-yield relation, and trades on EURUSD, GBPJPY, silver, Gold and oil. Direct Access to today's Premium Trades: http://ashraflaidi.com/products/sub01/access/?a=603

NonSubscribers can click here: http://ashraflaidi.com/products/sub01

EURUSD drifts around 1.32 despite chatter that National Central Banks of the Eurozone will accept selling their Greek bonds at below face value. Yet more credit downgrades of Spanish banks is weighing on EURUSD, in the face of fresh run-up in oil prices. We got the latest on charting yen-yield relation and trades on EURUSD, GBPJPY, silver, Gold and oil. Direct Access to today's Premium Trades: http://ashraflaidi.com/products/sub01/access/?a=603

NonSubscribers can click here: http://ashraflaidi.com/products/sub01

Ashraf's 2 appearances at next week's NY Traders Expo:

Feb 20: Time-Tested Forex Strategies for 2012 15:45-16:30 EST

Feb 21 Forex and Intermarket Outlook into H1 2012 17:00 -18:00 EST

For more detail: http://www.moneyshow.com/tradeshow/new_york/traders_expo/speakers/speaker_details/?speakerid=129874OTE

EUR is stronger after Greek parliament approves austerity; German WPI rose in January; Swiss PPI unchanged. Italian auction results in lower yield, German auction in higher yield. OECD sees positive change in momentum. Monday's Premium Intermarket Insights are due after the London Close.

The greenback is slightly weaker against all majors in the ongoing session. European equities are gaining between 0.5% and 0.9%. The relative strength winner is AUD followed by NZD.

Euro firmed along with other majors against the USD after the Greek parliament approved a new set of austerity measures that assured a ratification of the EUR 130 bln of financial aid. The ratification is likely to be completed at Eurozone finance ministers meeting on Wednesday. However, Greece will stay on traders' radars as the involvement of the private sector negotiations have not been concluded yet. EURUSD has not had any follow through and trades around 1.3250

European data calendar was short today as it had only two items. German wholesale prices that rose in January 1.2% from 0% m/m leaving the annual print steady at 3% and Swiss producer and import prices that were unchanged m/m and declined to 2.4% from 2.3% y/y.

Italy reached a full take up as it sold EUR 12 bln worth of two bonds today. The larger auction was for 2014 BOT and reached EUR 8.5 bln. The average yield declined to 2.23% from 2.735% but bid to cover fell to 1.09 from 1.47.

German auction resulted in higher yield at 0.076% from previous -0.012% and lower cover at 1.5 from 1.8. Germany sold EUR 3.01 bln vs EUR 4 bln target.

The OECD said today that composite leading indicators point to a positive change in momentum for the whole OECD driven primarily by the US and Japan while growth in the Eurozone is still sub-par. China's indicator points more strongly towards a slowdown.

ECB deposits crossed again the half a trillion mark as they rose on Friday to EUR 507.87 bln.

There are no reports due during the US session today.