Intraday Market Thoughts Archives

Watch Ashraf's CNBC interview with Maria Bartiromo on yield curves, forex, gold cycles, china & the UK http://bit.ly/dBrTMV #3gurus. Ashraf's book now RANKS 2nd in Amazon's FINANCE category http://bit.ly/aZHFAh

Ashraf's CNBC appearance pushed to about 1600 EST due to Obama's speech. Markets hovering around neutral territory, oil struggles to hold above $80 and gold unlikely to close above the 1123-5 resistance cited in previous IMT. 92.00 on USDJPY and 1.36 on EURUSD continue to limit any extende bounce in appetite. China's return to the markets next week must be weighed when evaluating the recent pullback in commodities.

Markets recover as US equities are able to absorb yesterdays discount rate hike with most of the damage emerging in Asia and Europe. Golds rebound looking similar to Tuesdays advances, which peaked at 1123-25, These were the congestion low of Jan 8-13 now acting as a high/resistance. Daily stochastics also pointing to a negative crossover. GBPUSD upside seen capped at $1.5480-90, but only a break above $1.5530 would get us to reconsider renewed losses towards $1.5430s. CADJPY testing the Oct 15-16 highwhich was attained when oil broke above 75. WATCH ASHRAF TODAY on CNBC's Closing Bell at 15:15 EST (20:15 GMT).

Another Friday, another central bank knocks Greece off the headline as the Fed raises its discount rate. Sticking to the script from Bernankes last speech, the next Fed move will likely consist of paying interest on reserves, and not raising the Fed funds rate. Bernanke will use next week's semiannual monetary policy testimony to tone down any overshoot in short term yields by reiterating exceptionally low levels of the federal funds rate for an extended period, but that will likely fail in dissuading USD bulls, especially as the ECB stays put. Any GBPUSD recovery is now seen capped at $1.5480 and $1.5530 before renewed testing of $1.5320 re-emerges. USDJPY seen testing 91.40.

FED RAISES DISCOUNT RATE today to 0.75% from 0.5% effective Friday, saying the change is "not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy". Unlike the discount rate, charged among banks. The discount rate is at which commercial banks are charged by the Fed's discount window. USD soars on the unscheduled decision. GBPUSD nears $1.5470, EURUSD on tap to $1.3460. Expect gold's downtrend to gradually pursue our 1020 target.

The 9-day consolidation in GBPUSD gives way to renewed testing of $1.5550, a drop below which calls up $1.5530. Risk for $1.5480 next week stands at more than 50%. Rebounds remain limited to $1.5680. Canadian dollar stands among the top performers of the day on higher than expected CPI, but the unfolding risk environment places a cap at 87.55 in CADJPY (61.8% retracement of 90.61-82.33 move) and a support at 1.0430 in USDCAD (61.8% retracement of 1.0233-1.077 rally).

While the Greek situation remains a fundamental force to maintain EUR shorts, the USD-side of the equation is supported by stabilizing of US data (Philly Fed, Indus production and retail sales). Yesterdays release of the FOMC minutes support expectations that more exit strategy will be detailed and implemented into Spring, while the 9-0 outcome from the Bank of Englands MPC open the door for renewed easing via QE. GBPUSD rebounds still seen back towards 1.5660s before retestiong 1.5530s while the EURUSD path towards $1.32 remains interspaced by limited rebounds.

The broken 5-day trendline support in $EURUSD likely to be become resistance near 1.3640s, which is especially enforced when adding the trend line resistance on the 4-hr chart. Our MED-TERM GOLD BEARISHNESS has been vindicated by todays IMF announcement that it would sell its remaining 191.3 tonnes of gold under a program launched last year to raise new resources for lending. Gold dropped $18 to 1105. Still sticking w/ 1020 target. Bank of Canadas Jan CPI could regain 1.9% from 1.5% y/y, but any negative risk environment may cap CADJPY at 87.70s before retreat towards 86.40s. ASHRAF's BOOK "Currency Trading & Intermarket Analysis" hits #7 rank in Amazon's OVERALL FINANCE category, right besides Mohammed ElErian's "When Markets Collide". Thank you all who got a copy !

Watch Ashraf discussing discussing Goldman, Greece, FOMC.

http://bit.ly/ai98vJ

EURUSD dropped to 9 pips away from the .3590 target addressed earlier.

USD extends recovery on stronger than expected US housing starts & Indus production. IMT subscribers received this EURUSD chart http://chart.ly/ncyrtt indicating the $1.3848 resistance, which capped EURUSD at $1.3789 before sending it +150 pips lower. Philadelphia Feds Plosser to speak at 12:45 EST (1745 GMT) before the minutes of the Jan FOMC meeting are out, which will shed light on the reasons Kansas Feds Hoenig dissented with the Committees view about keeping rates too low for a considerable period of time. EURUSD 4-hr eyes $1.3630 trend line support, a break of which to leads us to $1.3590.

As questions grow escalate regarding the euro bounce, we remind you of the 10-week channel imposing at $1.3915 http://chart.ly/ncyrtt as well as the clear and present uncertainty with Greece (solutions have yet to be provided). The absence of Asian markets due to Chinese New Year cannot be ignored during these FX retracements. Similar pattern occurred in the yen (selling) in the first trading day of Jan 2010 when Japanese markets were still in vacation. See prev IMT regarding GBPUSD. USDX failed at the 200-wk MA of 80.44. Look for 79.18 in next support. Catch Ashra on "Tom Keane on the Economy" Wednesday Bloomberg Radio/TV 8:30-8:55 am EST. Ashraf also speaking at the IB Times FX Conference in downtown Manhattah (Emassy Suites) 11:15 EST http://bit.ly/cWa1F8

GBPUSD posts enters the longest consolidation period since October, remaining in the 150-pip territory of $1.5580-1.5730. UK Jan CPI jumped to 3.5% from 2.9% (vs exp 3.6%. NY Empire manufacturing jumped to 25 from 16, may help sustain risk appetite, but as we mentioned these past few weeks, USDX benefiting from the win-win scenario of gaining from falling equities, improved US data and neutral-negative in times of rising equities. Wednesdays release of the minutes from the Jan Fed meeting will likely boost USDX as they provide more details on the hawkish dissent by Kansas Feds Hoenig. GBPUSD eyes $1.5625 trend support on 4-hr chart, with resistance holding at $1.5745-50. GOLD breaks the Dec 3 trend line at 1105. A NYC close above 1118-1119, takes us to the next target at 1133. But do recall the need to see a WEEKLY CLOSE above these key resistance levels. Ashraf is in the NYC Trading Expo presenting all day so updates will less frequent than usual.

Thin market liquidity due to US President Holiday. Minutes of RNA meeting later this evening, & tomorrow's release of UK CPI, Ger ZEW survey & US NY Empire survey will be key. Ashraf has been extremely busy at the NYC Expo http://chart.ly/me4e47 with presentations, answering questions & clarifying trends & analysis. Tomorrow is the last day of the 3-day expo.