Intraday Market Thoughts Archives

Both the Dow-30 & S&P500 testing their 55-DMA for the first time in 2 months but are also respecting their June trendline. Also watch the GRAVESTSONE DOJI on WEEKLY Dow-30 and SP500, which could be a potentially bullish reversal. The EURGBP trading idea featured in Tuesday's Premium Insights remains in progress, therefore we recommend taking another look at the rationale of those trades & charts against the price action of the last 3 days. The WEEKLY Gold testing its 55-DMA for the first time in 2 months, while oil continues to respect its 200-WMA for the 4th consecutive week. Both EURUSD in progress. CADJPY hit all targets and so did 1 of 2 GBPUSD, with the other in progress. 1 of 2 EURJPY remaining in progress after missing the final target of 104.20 by 6 pips, while the other remaining unfilled (missed entry by 7 pips). USDJPY and AUDUSD were stopped out. EURGBP in progress. 1 of 2 gold in progress, the other stopped out and silver remaining in progress. US crude oil remains in progress. For direct access to these trades and the technical rationale to that featured EURGBP play and charts, click here: http://ashraflaidi.com/products/sub01/access/?a=688 NONsubscribers can join here: http://ashraflaidi.com/products/sub01

Risk aversion climbed Thursday on indications the EU Summit will focus on a banking union, not aid for Spain. The US dollar was the best performer while the Canadian dollar lagged. The Asia-Pacific trading week winds down with comments from BOJ leader Shirakawa. Tuesday nights Premium Insights include 9 new trades and 4 trades in progress, alongside an emphasis on the confluence of support points across 5 segments of the Intermarket space. Cable longs hit all targets. We also have 5 new charts with a special technical focus on EURGBP.

The euro slide back to 1.3060 from 1.3120 in US trading as rumors that Spain will activate aid mechanisms were dashed. EU leaders huddled in Belgium but the focus of the meetings has shifted to a banking union, not the crippling debt and growth problems in the periphery.

Spains government is facing regional elections and is likely aiming to win support at home. The bond market has also turned in Spains favor with 10-year yields down to 5.34% indicating that Rajoy has time on his side.

In the US, the market got an answer to last weeks unusually strong jobless claims report it was a seasonal skew. This weeks number shot to 388K compared to 365K expected. The overall trend remains lower the market is cautious about trading around the release.

Similarly, the Philly Fed climbed into positive territory for the first time since April. The October reading was +5.7 compared to +1.0 expected. The key components of the report, however, were much weaker with expectations, employment and new orders all lower.

USD/JPY rallied to a fresh one-month high of 97.45 immediately after the Philly Fed and a WSJ report saying the BOJ will consider introduce fresh easing at the Oct 30 meeting, according to two unnamed sources. Governor Shirakawa may offer more hints in a 0635 GMT speech.

Tuesday night Premium Insights are out. Direct Access can be found here: http://ashraflaidi.com/products/sub01/access/?a=688 NONsubscribers can join here: http://ashraflaidi.com/products/sub01

-AB

In each of the last six cases since 2002, whenever EUR/USD broke above one of its three main long-term moving averages (55, 100 or 100 week MAs) the following happenned: http://www.cityindex.co.uk/market-analysis/market-news/904682012/history-favouring-euros-trend-breakout/

The euro rallied to one month high and the yen fell to a one month low on optimism about a Spanish bailout and better economic data. The Australian dollar was also a top performer ahead of third quarter Chinese GDP. Tuesday nights Premium Insights include 9 new trades and 4 trades in progress, alongside an emphasis on the confluence of support points across 5 segments of the Intermarket space. Cable longs hit all targets. We also have 5 new charts with a special technical focus on EURGBP.

The Spanish bond market surged on Wednesday, sending yields to the lowest since March. Finlands PM said he expects Spain to take a precautionary credit line in a compromise that will allow the ECB to intervene without the onerous ESM obligations.

In the US, housing starts surged to 872K compared to 770K expected. Building permits also improved considerably in a sign that the long-anticipated housing recovery has finally materialized.

EUR/USD marched to 1.3120 and USD/JPY climbed above 79.00. The Canadian and Australian dollars also posted their largest one-day gains in a month.

The Japanese press reported that the BOJ is likely to ease further at the Oct 30 meeting.

The focus of trading is squarely on the 0200 GMT release of third quarter Chinese GDP. The consensus is for a 7.4% rise.

Signs point to a better number. Yesterday, Chinese Premier Wen said he was confident of meeting the full-year growth target and that Q3 GDP was relatively good. The trade data released on the weekend also adds an upward bias.

Other Chinese data to be released alongside GDP include September retail sales, which are expected up 13.2% and industrial production, which is forecast to rise 9.0%.

The risks may be skewed to further AUD gains because a disappointing number may lead to immediate rumors/speculation about Chinese rate cuts or stimulus.

Tuesday night Premium Insights are out. Direct Access can be found here: http://ashraflaidi.com/products/sub01/access/?a=688 NONsubscribers can join here: http://ashraflaidi.com/products/sub01

-AB

Cross-market correlations continue to take precedence over individual fundamental factors in the functioning of equity, currency and commodity markets. The risk-on/risk-off dynamics are most accentuated when event-risk is either omni-present or thoroughly out of the headline. Click here for full analysis: http://www.cityindex.co.uk/market-analysis/market-news/854282012/intermarket-dynamics-still-ruling-the-game/

UK jobless claims and unemployment rate fell; MPC minutes; Eurozone construction output rose; Swiss ZEW higher; EU summit. Focus turns to US real estate market data. Tuesday nights Premium Insights include 9 new trades and 4 trades in progress, alongside an emphasis on the confluence of support points across 5 segments of the Intermarket space. Cable longs hit all targets. We also have 5 new charts with a special technical focus on EURGBP.

USD is lower across the board in the ongoing session. European equities are gaining about 0.5% and the relative strength winner is AUD while USD is the weakest.

GBP pushed higher after the labor market data showed that UK jobless claims fell in September by 4K from previous decline by 14.2K and the ILO unemployment rate fell in August to 7.9% from previous 8.1% which is the lowest level in over a year. The improvement is somewhat surprising as it would have been reasonable to assume that jobless claims would rise when the temporary hiring for the Olympics ended.

The minutes from the latest MPC revealed unanimous voting to keep rates and the QE unchanged. The minutes from the next MPC meeting (November 8th) that are due on 11/21 are likely to be more interesting as some members have already expressed opposition to more QE. GBPUSD trades near session highs around 1.6160 and EURGBP trades around 0.8115.

Other data showed that Eurozone construction output rose 0.7% in August from previous 0.1% and Swiss ZEW economic expectations survey improved in October to -28.9 from -34.9. Focus will turn to the EU economic summit that begins tomorrow in Brussels. One of the main topics is likely to be the formation of the banking union. MNI has quoted a source who said that there will be no decision on the bank supervisor at the upcoming summit. EURUSD trades around 1.3120.

The US data calendar is limited to building permits that are expected to rise slightly to 0.81M in September from previous 0.80M and to housing starts that are seen higher at 0.77M from 0.75M. Both reports are due at 8:30 am ET.

Tuesday night Premium Insights are out. Direct Access can be found here: http://ashraflaidi.com/products/sub01/access/?a=688 NONsubscribers can join here: http://ashraflaidi.com/products/sub01

Tuesday nights Premium Insights include 9 new trades and 4 trades in progress, alongside an emphasis on the confluence of support points across 5 segments of the Intermarket space. We also have 5 new charts with a special technical focus on EURGBP. Premium subscribers click here for direct access http://ashraflaidi.com/products/sub01/access/?a=688

The euro neared 1.31 on signals Spain could ask for bailout funds. The euro was easily the top performer Monday and started strong on Tuesday while CAD and NZD lagged. The Asia-Pacific calendar is light but the Presidential debate will add intrigue. Tuesday night Premium Insights are out, with focus on EURGBP. See details in final paragraph.

The euro jumped above 1.3050 on a Bloomberg report suggesting top German lawmakers were open to extending a precautionary credit line to Spain. Such a move may allow the ECB to purchase bonds without forcing Spain to accept the onerous terms of the ESM.

The euro rally stalled when one of the lawmakers told Reuters his comments about Spain were misinterpreted. The euro fell further, to 1.3014, when Greek domestic media reported that talks with the Troika had collapsed.

The twists continued, and the euro climbed back toward the daily highs when the IMF said significant progress had been made in Greek talks, although there are some outstanding issues. Finally, the euro raced close to 1.31 early in Asian trading after Moodys affirmed Spains credit rating.

The surprise move led to speculation that credit agencies have been tipped off about a Spanish bailout, something that seems unlikely in Europe, where secrets always leak.

US news was inconsequential for the market. CPI rose to 2.0% y/y compared to 1.9% expected but core numbers were softer. Industrial production was stronger than forecast but only due to a downward revision to the prior numbers. Citigroup CEO Pandit also quit (or was fired) in a surprise move.

The Canadian dollar was roundly weaker in a delayed reaction to the less hawkish comments from BOC Governor Carney that we wrote about yesterday.

The Asia-Pacific calendar is light ahead of Thursdays highly-anticipated GDP report. At 2330 GMT, Westpac releases its leading index for Australia. The prior reading was +0.4%.

The second US Presidential debate begins at 0100 GMT.

Tuesday night Premium Insights are out, with focus on EURGBP technical and the monthly breakout. Direct Access can be found here: http://ashraflaidi.com/products/sub01/access/?a=688 NONsubscribers can join here: http://ashraflaidi.com/products/sub01

-AB

Whether it takes the form of applying for credit line under the 500bn European Stability Mechanism (but not necessarily tapping it), or a full-fledged activation of the ESM, Spain is intending to stabilize market sentiment-without triggering the Outright Market Transactions. Here are 3 charts that matter for now: http://www.cityindex.co.uk/market-analysis/market-news/803912012/revisting-euros-1-35-fx-yields-spreads-dax/

UK CPI at 3-yr lows, Improving ZEW Boosts EUR; EZ CPI lower. Focus turns to CPI, TIC flows, capacity utilization and industrial production. Both of Thursdays EURUSD longs hit all targets. See below in the final paragraph, which of the others were unfilled and stopped out.

The greenback is mixed in the ongoing session. It is weaker against EUR and CHF, stronger against CAD and NZD and unchanged against the rest of the majors. European equities are gaining around 0.75% and EUR leads while CAD lags.

The downtrend in consumer inflation has resumed in the UK as CPI slowed to 2.2% in September from previous 2.5% which is the lowest rate since 11/2009. MNI reports that the effect of falling utility prices is likely to be short lived as suppliers announced large price increases which will show up in the CPI figures over the next few months. GBPUSD weakened about 30 points to 1.6071 and currently trades around 1.6090.

German ZEW economic sentiment bested expectations as it improved in October to -11.5 from previous -18.2. The ZEW noted decreasing risks to the German economy due to lower uncertainty on the financial markets but nearly half of the experts see the economic situation six months ahead more or less the same.

Eurozone CPI eased to 2.6% in September from previous 2.7% but the core figure was steady at 1.5% y/y and the ZEW economic sentiment improved to -1.4 from -3.8. EURUSD trades right above the 1.30 handle.

Up ahead is a busy session that kicks off at 8:30 am ET with consumer inflation that is expected to slow in September to 0.5% from 0.6% m/m but to rise 1.9% from 1.7% y/y. The core figure is seen rising 0.2% m/m and 2.0% y/y. Net long term TIC flows are due at 9:00 am ET and are anticipated to decline to USD 45.3 bln in August from USD 67.0 bln. Industrial production and capacity utilization come 15 minutes later and are expected to rise in September by 0.2% and to 78.4% respectively.

CAD traders await foreign securities purchases that are due at 8:30 am ET and are seen higher in August at CAD 8.5 bln from July's CAD 6.6 bln.

The latest from Thursdays premium Insights, both EURUSD longs hit all targets. 1 of 2 EURJPY hit all targets, the other unfilled (missed by 24 pips). USDJPY in progress. 1 of GBPUSD longs in progress, the other unfilled. AUDJPY short was unfilled (missed by 6 pips) and so was CADJPY long.

Both gold stopped out, 1 of 2 XAGUSD in progress. 1 of 2 US Crude oil stopped out, the other in progress. The direct link to these Insights can be found here: http://ashraflaidi.com/products/sub01/access/?a=686 Non subscribers can join here: http://ashraflaidi.com/products/sub01

US retail sales beat expectations and bailouts for Greece and Spain inched closer. The antipodean currencies led the way while the yen lagged. The RBA minutes will highlight the dovish bias down under. Latest Premium Insights cover the multi-stochastic time frames in Spain's IBEX-35. Thursday's Insights see all EURUSD and cable longs in progress, with 2 gold and 1 of 2 silver stopped out. AUDUSD and CADJPY hit all targets.

US retail sales, excluding autos and gasoline rose 0.9% compared to a +0.4% reading expected. The other measures of spending in the report were also strong and the prior figures were revised upward.

The retail report points to a rebound in consumer spending but was tempered by talk that iPhone sales may have skewed the numbers upwards. Sales at electronics and appliance stores jumped 4.5% in the month the largest increase since Oct 2011, which was also the month the iPhone 4S was released.

Risk trades rallied to their best levels of the session after the report. EUR/USD touched 1.2980 and USD/JPY rose as high as 78.86.

Earlier, a Der Spiegel reported that the Troika recommended the release of the next tranche of Greek aid. The Spanish press also reported progress on the Spanish aid request.

The Canadian dollar was in focus after BOC Governor Carney did not repeat the usual hawkish refrain that: some modest withdrawal of the present considerable monetary policy stimulus may become appropriate.

Earlier in the day, a BOC business survey showed dramatically lower hiring and investment spending intentions at Canadian firms. Housing data was also worrisome.

USD/CAD climbed to 0.9800 after the comments (or lack of comments) but could strengthen to parity if/when the hiking bias is official removed.

The calendar is relatively light. At 2145 GMT, New Zealand CPI is expected up 1.0%y/y in the third quarter.

At 0030 GMT, the RBA will releases the minutes of the October meeting. It looks increasingly certain that the RBA will lower rates in November. What is surprising, and perhaps telling, is the resilience of the Australian dollar.

The latest Premium Insights with the G.C & multi-time frame / multi-speed stochastics highlight the outlook for the next 4 weeks. http://ashraflaidi.com/products/sub01/access/?a=687 Non Subscribers click here: http://ashraflaidi.com/products/sub01

-AB

Spain's IBEX-35 now showing a Golden Cross. Here is the latest Premium Insights with the G.C & multi-time frame / multi-speed stochastics to highlight the outlook for the next 4 weeks. http://ashraflaidi.com/products/sub01/access/?a=687 Non Subscribers click here: http://ashraflaidi.com/products/sub01

No surprises from Tokyo; EU summit ahead; Chinese CPI slows; Swiss PPI mixed. Focus turns to retail sales; empire fed manufacturing and business inventories. The latest of the Premium Insights includes EURUSD, EURJPY, GBPUSD, AUDUSD, CADJPY,oil and CADJPY. These also include detailed chart analysis on multi-timeframe stochastics on GBPUSD. Existing trades on gold and silver and intact. See direct link below.

USD was bid after the Asian open but all gains were lost when London traders got to their desks to rally on the back of the strong China trade data and soft CPI figures. European equities are gaining around 1% and the relative strength winner is EUR while JPY is the weakest.

The G7, IMF & WB meeting in Tokyo did not reveal any surprises. Noteworthy is that central bankers attending the meeting signaled that the ECB will not cut interest rates or undertake any other non standard measures before Spain formally seeks a bailout. The market will start to focus on the EU economic summit that begins on Thursday. Main topics will be Greece and Spain (and subsequent activation of the OMT) but other projects are likely to be discussed as well, mainly the banking union and new fiscal rules, MNI reports. EURUSD pushed higher and trades around 1.2965.

Fundamental reports showed that Chinese consumer inflation eased in September to 1.9% from previous 2.0% y/y and Swiss PPI eased to 0.3% from 0.5% m/m but rose 0.3% from -0.1% y/y.

The NY session begins at 8:30 am ET with September retail sales that are expected to slow to 0.7% after rising at a solid pace the last two months while the core figure is seen at 0.6% from 0.8%. Empire state manufacturing is anticipated to improve to -4.5 in October from -10.4 and finally business inventories at 10:00 am are expected at 0.5% in August from 0.8%. Markets are also likely to react to the Richmond FED president and the FOMC member Jeffrey Lacker who delivers a speech at 12:45 pm on economic outlook.

CAD traders await the BOC business outlook survey due at 10:30 am and the BOC governor Mark Carney speech that begins at 3:20 pm. The text will released at 3:05 pm and the press conference that follows is scheduled to start at 4:10 pm.

The direct link to Thursdays Premium Insights can be found here: http://ashraflaidi.com/products/sub01/access/?a=686 Non subscribers can join here: http://ashraflaidi.com/products/sub01

Early indications point to a rise in risk trades as trading gets under way. Last week, the Australian dollar was the best performer while the euro lagged. Chinese CPI and comments from the BOJs Yamaguchi are the highlights on the calendar. Thursdays edition of Ashrafs Premium Insights is out, with new trading ideas on EURUSD, EURJPY, GBPUSD, AUDUSD, CADJPY,oil and CADJPY. In addition to the trading ideas from Thursdays Premium Insights, there are detailed chart analysis on multi-timeframe stochastics on GBPUSD. Existing trades on gold and silver and intact. See direct link below.

On the weekend, China released trade data that showed exports higher by 9.9% y/y, much better than the 5.5% expected. The caveat was that imports rose just 2.4%, matching expectations but underscoring worries that growth may not be sustainable.

Overall, the numbers resulted in a higher surplus, adding an upside bias to Thursdays Chinese GDP report. The Australian dollar opened the week 20 pips higher to 1.0250.

The top event on the calendar is Chinese CPI at 0130 GMT. The consensus is for a 1.9% inflation rate after a 2.0% rate in August. An unexpectedly higher number may dampen speculation about a cut in the required reserve ratio (RRR) and hurt risk trades.

Comments from Yamaguchi at 0120 GMT will also be scrutinized because of the ever-present threat of intervention or further BOJ action to weaken the yen.

Commitments of Traders

Speculative futures trading positions from the CFTC showed sizable swings in positioning with a general shift to the US dollar. The weekly numbers always reflect the close on Tuesday.

EUR net short increased 73K from 50K

JPY net long cut to 13K from 29K

GBP net long reduced to 23K from 30K

AUD net long cut to 40K from 63K

CAD net long pulled back to 96K from 101K

NZD long trimmed to 17K from 21K

Until this week, euro shorts had been scaling back but they have returned. Most of the new shorts will have been established around current levels are vulnerable to a rise in EUR/USD above 1.30.

The other takeaway is the continued rush to the exits in AUD/USD and the relative resilience of the Australian dollar. If we see another week of specs rushing out of AUD and the key 1.0150 and 1.000 levels hold, it could be a positive signal.

The direct link to Thursdays Premium Insights can be found here: http://ashraflaidi.com/products/sub01/access/?a=686 Non subscribers can join here: http://ashraflaidi.com/products/sub01

-AB