Intraday Market Thoughts Archives

Gold posts its second daily loss, touching as low as $865 (lowest since Jan 23) and is $12 away from its 200-day MA. This week's ECB data showed the falling gold, confirming our suspicions of central bank selling of the metal, aimed at stabilzing level of weakening USD. Gold likely to hold above its 200-day MA, but this may fail in event that Dow and Dow +26%, FTSE+19% & Nikkei-+28% from March lows. NASDAQ +33% and DAX +30%.

Cable will likely retest $1.4770 for a break below $1.4700 onto $1.4620 as bottom of the the upward channel from the March 11 low looms. More GBP losses next week ahead of the Budget. EURUSD has already hit the $1.3030 target from latest Hot-Chart. Aussie's relative strength is underlined by its limited declines during falling stocks. http://www.twitter.com/alaidi

Swiss Franc deterioration intensifies across the board, UBS dismal earnings/layoffs adds to the gloom. Despite turn in risk appetite, low yielding currency turns lower, faring another selling assault by the SNB. EURCHF 1.50 proved a sand in the line, eyes 1.53, followed by 1.5330s. USDCHF tests the 68% retracement at 1.660. GBPCHF amid least favorite short CHF plays. Check us out on http://www.twitter.com/alaidi

Euro finally breaks below that 5-week trend line support of $1.3130-40, to $1.3050, in line with Wednesday's Hot-Chart calling for $1.3090 and $1.3030 targets. The rift among ECB policy makers regarding whether to cut rates below 1.00% is reported to be a main reason, but the both the EUR and GBP came under pressure against USD before JC Trichets speech. Our calls for falling GBPUSD towards $1.4770 (see this weeks IMTs and Twitter updates) from $1.50 have materialized, and prolonged declines seen at $1.4690. USDCAD eyes 1.2230s.

A NEW SARBANES OXLEY for BANKS? Were hardly halfway through earnings season and the market is already mulling the US Treasurys stress test on US banks, which is due for release next weekas earnings season winds down. Treasury officials continue to keep details of the tests secret so that analysts would not draw their conclusions and release their own results to the market. The tests are will undergo a series of scenario analysis assessing banks capitalization in the event of developments in housing prices, credit/stock market volatility, consumer spending and unemployment. The most likely challenge will be whether the test results will be standardized to all banks and if so, will other banks be compelled to report under these rules. Could this be the New Sarbanes Oxley for US banks? Confusion is likely to be the name of the game and thats not necessarily bullish for stocks.

Falling trading volumes in the major US equity indices emerging despite the gains of the past 5 weeks reduce the conviction of the current rally. Now how volumes were on a rising trend during the selloffs of Oct-Nov and Jan-Mar, but were on the decline during rising prices. Reiterating my analysis about the 2-month cycle in equity indices, it is plausible to expect indices carrying through a consolidative move until earnings season ends on April 26.

Cable drops back below $1.49 while EURUSD pulls down to yesterday's lows, reflecting the emerging negative bias in risk currencies to the benefit of the USD and JPY. Bearish stochastic divergence in GBPUSD is now turning into a convergence, while EURUSD struggles to hold above the $1.31 trend line. JPY re-imposes strength across the board as nervousness grows ahead of JP Morgan in less than 30 mins. Citi, BoE and GE earnings also eyed later in week.

Sterling, loonie and Aussie lead the FX pack as US stocks push to highest levels of the day. Upcoming earnings from JP Morgan may surprise on the upside after the bank managed expectations last month by referring to losses in March. Chinas Q1 GDP figures due tonight seen +6.3%, which would be the slowest in 16 years. Any figure above 5.5% would be seen sufficient in meeting the 8% target for the full year. A positive surprise could bolster copper, gold and oil prices. GBPUSD reclaims $1.50, EURUSD regains $1.32, while USDJPY fails to regain 99.70, suggesting broadening USD weakness is magnifying FX flows in addiiton to broadening appetite.

EUR, GBP seen to extend losses especially in event of worse than expected US indus production as risk aversion weighs. NY Fed's Empire State jumped to highest level since Dec but it is a highly volatile figure. See today's EURUSD Hotchart. Despite earlier $1.5036 print in cable, bias remains negative and prospects for $1.4870 looms.

Kiwi is the weakest performing currency ahead of the Aussie, while JPY leads the dollar on the top of the days charts, reflecting the recent sell-off in NZDUSD, NZDJPY, AUDUSD and AUDJPY. NZDUSD daily chart still looks shaky (stochastics, RSI etcc). NZ inflation report due tomorrow evening could show Jan-Mar CPI up 0.3% after -0.5% in Sep-Dec. US Feb Indus production seen -0.9% after -1.5% in Jan. NY April Empire survey seen at -35 after -38.

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JPY crosses appearing increasingly bearish. USDJPY 98.80 target already hit and NZDJPY on its way. Daily candles on AUDJPY, EURJPY and CADJPY show negative engulfing pattern. Last hour of US equity trading usually involves a pick-up in volumes and clasing of positions in FX, which could speed up unwinding in high/low yielding FX pairs. JPY is the day's strongest perfomer, while NZD stands at other extreme losing against all FX. Watch the daily stochastics on the Nikkei-225 and the 8,770 mark.

The oft-mentioned 860-865 level in the S&P500 denoting the +30% rally mark from the March low was tested yesterday without closing above it, illustrating the significance of implications for the latest equity rally. Although the S&P500 breached above the 50 and 100-day MAs, the latter MA stands halfway between the 200-day MA (989) and the March low (666). The wide disparity between the 100 and 200 day MAs suggests the speed of the recent rally, which remains dwarfed by the longer-term trend. 101.65 in USDJPY and 865-870 in S&P500 continue to act as key barriers. Also note how the Dows gain from March lows was only 25%, compared to 28% for the S&P500.

Unexpectedly large decline in US Mar retail sales (-1.1% vs exp +0.3%) weighs on US and global stocks and further boosts JPY across the board. USDJPY, NZDJPY, EURJPY and GBPJPY are all vulnerable to prolonged downside today. Stochastics in USDJPY suggests the pair will target the 200-day MA of 99, while. EURUSD, eyes the 100-day MA at 1.3190, followed by 4-week TL support at 1.3155. NZDJPY HotChart target eyes 57.70, followed by 56.10. EURJPY target at 130.30.

Aussies latest 6-month high of 0.7320 draws nearer to the 200-day MA (currently at 0.7355). The long term benchmark has not been breached since August. The Aussie story is now well cemented into the retail sector and clients of major banks. The currencys strength is especially underscored via its limited pullbacks during risk aversion. Aussies outperformance of the Kiwi is partly explained by the limited scope of RBA easing relative to that of RBNZ. Aussie has yet more gains ahead of it, with 0.7450 standing as the key barrier.

Dollar regains footing in late Asian /early European trade after being falling sharply across the board in thin Holiday trade. USDJPY remains near session lows at 99.40 as yen strength dominates all major currencies. The timing of Goldman Sachs' decision to announce earnings after yesterday's closing bell and one day before schedule raises questions about the firms preference to reduce negative reaction to the dilutive effect of its $5 billion offering. While Q1 earnings were well above expectations, the decision to issue new shares pushed the stock lower in overnight trading. Wells Fargos decision to release earnings one week before schedule helped boost the stock during thin pre-holiday trade in an already rising market. US Mar retail sales due at 12:30 pm GMT.

NZ February retail sales at 22:45 GMT and Aussie March confidence figures at 1.30 GMT to determine the fate of the emerging bullishness in AUD and NZD against USD, but signs of toppishness in these two currencies against JPY may transition into pullback as Asian stocks take profits in the Tuesday session. AUDJPY eyes 71 yen.

Todays Hot-Chart on NZDJPY illustrates a looming decline, which is in line with the unfolding retreat in equities. Rather than capitalizing on a retreat in Aussie pairs, the weaker NZD and CAD stand ripe to be sold off against JPY and USD. USDCAD eyes 1.2375. S&P500 trend line support stands at 800 after shying away from key resistance of 860-70.

As USD pushes ahead against the JPY, it has yet to breach above the major resistance of 101.65, which is the 61.8% retracement of the decline from the August high of 110.7 to the to the January low of 87.13. Reiterating the call from the previous USDJPY HotChart (April 3rd), a breach above 101.65 is required for an extension of recent advances, before targeting 103.45. Thin holiday trading aided in speeding up the moves in FX pairs with high carry, but any catalyst leading to unwinding of these risk trades (earninngs, high CPI, weak indus production) is likely to concentrate into dragging USDJPY below 100 and onto the 200-day MA of 99.

Aussie traders continue to reveal the greatest show of improved risk appetite in currency markets at a time when equity traders may start profit-taking ahead of a flurry of financials earnings (Goldman Sachs on Tues, JP Morgan on Thurs, Citigroup and GE on Fri). Wells Fargo’s surprising decision last week to pre-announce better than expected earnings 2 weeks before its scheduled earnings call was effective in magnifying the stock’s upward run in a rising market—an effective way to absorb fresh optimism into the price. This leaves GS, JPM and Citi isolated in a week of returning market activity when players may be hesitant to add to the 27-28% rebound in global indices.