Intraday Market Thoughts Archives

CALIFORNIA SCREAMIN': Moodys' Puts California on Watch for a possible credit DOWNGRADE that could be by several notches. Dollar was deepenening weakness despite stocks paring their earlier gains as bond yields fall sharply. MORE UPDATES http://twitter.com/alaidi Bargain hunting is said to be behind the bond buying, but the Fed also bought Agency securities earlier today. Gold remains little changed at $930s while oil retains bid at $71.80s. Interestingly, Emerging markets retain strong footing as Brazils Bovespa and Indias Sensex +1.4% and 1.8% respectively, Note Swiss franc strengthening as EURCHF and CADCHF near session lows, while EURJPY also pushes lower. USDJPY eyes 95.70.

Bond yields push a higher, as 10year hit 3.86% despite Kansas Feds attempts to tone down inflation fears. USD Index daily chart well of its session highs but support testing the 80.2050% retracement of the rise from the 70.74 record low to the Match highs of 89.62. Oil about to snap a 4-week winning streak, while equities attempt to push higher before an eventual retracement early next week ahead of the FOMC. USDJPY remained below 97.40s, eyeing interim support at 96.30.

It is the third Friday of June, which means its triple witching hour in the US--simultaneous expiration of stock index futures, stock index options and individual stock options. Such days usually accompany extra volatility. Lack of economic data on both sides of the Atlantic likely to give way to technical trading but major directional shifts, especially ahead of next weeks FOMC. USDJPY seen capped at 97.40s, while EURUSD remain confined within the $1.4030-$1.3820 wedge. S&P500 set to make its first weekly close in 4 weeks. A possible intraday high seen capped at 930-935.

All sorts of rumors why USD is rallying despite rising stocks, while JPY remains weak. Ranging from more banks participating in LIBOR determination (besides London banks) to N.Korea detected to be shipping suspected of proliferating weapons in violation of UN resolution. But soaring US BOND YIELDS to 3.85% from 3.68% maybe helping boosting USD. Bank of Canada's Carney says watching CAD carefully where it moves MORE UPDATES http://twitter.com/alaidi

Rising equities extend franc weakness from its highs of the session, but it was the SNBs intervention that led us to issue a disclaimer on our short GBPCHF (see UPDATED HOTCHART). Recall, the franc was already strengthening when the SNB said it was satisfied with its past efforts to stabilize (weaken) franc strength, but shortly thereafter, it was forced to sell francs (possibly with the help of the ECB) which led weighed boosted all CHF crosses. USDJPY struggles surpasses interim resistance of 96.30 but likely to encounter pressure at previous support of 96.90. NOTE that USD strength is emerging DESPITE STOCKS RALLY as 10-year YIELDS REGAIN 3.8%.

Swiss National Bank gets back in the market again and intervenes by selling francs for euros after EURCHF fell back to 1.5. GBCHF also boosted by 200 pts to 1.7638. Resistance stands at previous support of 1.77. SEE GBPCHF HOTCHART for more details. Although weeky claims rose, continued claims fell for the first time since February, which is helping appetite at the expense of USD and JPY. Philly Fed survey in 30mins seen at -17 from -22.6. CABLE capped at 1.6420.

GBCHF shows the biggest move (downward) due to BROAD CHF STRENGTH after an unexpected decline in UK retail sales and the Swiss National Bank said it has achieved the aim of its franc-selling intervention. Further risk aversion should also help CHF. GBPCHF eyes 1.7420, followed by 1.72 as medium term target. EURCHF risks breaking below 1.50 to 1.4930. GBPUSD eyes $1.6170.

Intraday moves increasingly turning to the price of US crude as a dirty gauge of appetite momentum, with the $70 figure in focus. Over the last 5 trading days, Dow and oil futures moved opposite to one another, with oil pullbacks benefiting JPY and USD vs oher currencies. AUDUSD downside mey extend towards 0.7830, whithe trend line resistance weighing on 0.7970 and NZDUSD capped at 0.6360. USDJPY capped at 96.30 and finds temp support at 95.50 TLine.

Sterling extends losses as BoE puts QE to use and buys 5-10 yr guilts and S&drops below its 100-day MA. FTSE-100 already dropped below its 200-day MA of 4289. $1.6170 target seen with resistance seen holding at 1.6355. USDCAD attempts retest of 1.1430, followed by resistance of 1.1490. EURUSD still holds at 1.3850s. The CADJPY has produced its 340-pip target in 2 days. Join our Twitter and make it 500. http://twitter.com/alaidi

VIX BREAKOUT ABOVE ITS 3 1/2 mth trend line will inevitably bring S&P500 and FTSE below their 200 pday MAs. Oil breaks below 70, USDCAD hits 1.1390 Cable breaks below $1.6250. All parameters of risk aversion are kicking in. Today's CPI will prove a distraction. Fedex beats estimates but stock is down as it says it "cannot give meaningful forecast due to lack of visibility". NZDUSD, AUDUSD, EURUSD targets at 0.6220, 0.7830 and $1.3790.

On the same day as the world's 8th largest economy is denied bailout by the Federal Govt, the world's 4th largest economy has formally approved selling gold vending machines in public places. Visit http://twitter.com/alaidi for hyperlinks. In 1975, Pres Ford denied a bailout to NY State. 34 years later, Pres Obama will do the same to Arnold. But will Tim or Ben come out with a new acronymed loan facility for the Golden State? Speaking of Gold...Germany is leading the way in gold ATMs...

MONDAYs CARBON COPY into today as equities deepen losses (S&P below 920- support, Dow below 8,630). CADJPY HotChart extends gains by +200 pips to 84.90, which is consistent with all JPY crosses. USDs gains this time are more limited today than Monday, yet this could change after NY lunch in the event S&P breaks below 910. Bovespa -1.4%, which could extend run into cash i.e. USD. Also watch oil testing below $70 (currently at $70.40) for CADJPY and USDCAD play (above 1.1390)

Oil outperforms metals as the fuel regains $72 while gold remains below $935. But equities in the US and Europe are up by less than 0.5%, which is keeping risk appetite rather limited. Brazils Bovespa (usually a clear sign of global risk appetite) is up 0.6%. Upon closer inspection, Bovespa faces resistance at 53,000, Nikkei-225 descends into negative stochastics that could lead to prolonged risk aversion for the rest of the week.

German ZEW survey better than expected, helping EUR regain $1.39. Has CADJPY fallen and cannot get up? The 200-pip decline in yesterday's short HotChart is putting together a potentially bearish engulfing pattern on the weekly candle, courtesy of JPY strength rather than CAD weakness. We warned about the role of yen strength in previous IMTs, which also supported our initial 97.40 target in USDJPY. Risk appetite stabilizes as FTSE and DAX are off only 5-7 pts. But more losses in the pipleline for EURJPY, NZDPY and AUDJPY. USDJPY resistance at 97.20 eyeing 96.30 and 95.90.

While both the dollar and the yen outperformed in todays market selloff, the yen gained the upper hand across the board, suggesting prolonged gains to come in the Asian session against the Aussie, euro and Kiwi. The 300-pip decline in EURJPY was a cogent reflection of increasing worries about toxic dent in Eurozone banks. It is rare that a daily decline in EURJPY of such magnitude was not followed by further losses in the next day. Prolonged losses towards the 133.30s may unfold as are those in USDJPY towards 97.40s.

GREEN SHOOTS or ASTROTURF? FX trades having a ball with buying USD and JPY against the major currencies. Aussie eyes 0.7880, NZDUSD eyes 0.6220, while EURUSD tests the all important support of $1.3770, which is 38% retracement of the $1.2887-$1.4331 decline. Any intensification of the decline beyond that point could call up the $1.3610 level. USDX eyes 82.5 as key resistance on weekly chart.

All eyes are on the extent over which equities will stage their pullback following a 5-week consolidation in major US and European indices. Escalating event risk such as; Latvia, negative earnings guidance and soaring yields are all possible sources of risk aversion. The worse thane expected NY Fed manufacturing index of -9.4 from -4.55 should further drag AUD and NZD, which are already the biggest losers in the 11-currency universe. CADJPY HOTCHART updated . SEK, NZD, NOK and AUD are worst performers in days trading. Dow futures -110 pts.

Ashraf's 2-hour webinar on HamzeiAnalytics, addressing currencies, bond yields, yield curves and multi-year cycles. http://webinars.hamzeianalytics.com/AL_061309.wmv The 1% decline in Nikkei is drags European bourses lower and lifts the USD against all currencies with the exception of the yen, which is the broadest winner. USDCAD breaks above 1.13 and AUDUSD drops below 0.80 in a clear showing of reduced risk appetite. GBPUSD tests 1.63.

The importance of this weekend's G8 meeting may have been diminished by the absence of US Treas Sec Geithner. Since none of the central bankers was present, no official communique on currencies was established. IMF Chief Strauss-Khans statements that he did not see a "weak dollar" may lead to interpretations that the recent dollar decline is of no concern, which could only pressure the currency further. But Russia's finance minister appeared to temper the situation by saying there were no immediate plans to switch to new reserve currency despite Russia's plans to cut some of its exposure to US treasuries.