Intraday Market Thoughts Archives

Gold surges by more than $30 to a 3-week high as falling dollar and damaged global currencies (resulting from excess cenbank easing) add luster to the metal. I continue to favor gold over oil as global demand destruction takes a toll on energy prices and precious metals benefit from central banks liquefying of the financial system. $800 resistance stands at the 50-day moving average, coinciding with the 50% retracement of the decline from the Oct 10 high.

Falling yen, weakening dollar and rising gold emerge ahead of the US open following a rally in Asian and European markets despite Thursdays broad 7% damage in Wall Street. Aside from technical bargain hunting in the aftermath of 11-year lows in Wall Street, rumors of a 54-bp cut from the Peoples Bank of China reports fed into chatter of of another bout of emergency central bank easing, especially following the surprise 100-bp cut from the Swiss National Bank in early Thursday.

The midday stocks rally proved shortlived as reports of an agreement over Automakers' bailout were inconclusive. S&P plunged 6.7% to close at its lowest level in 11 years at 776, while the Dow closed 5.6% down to close at 7,553. The back and forth charade over a bailout plan for US carmakers is becoming increasingly similar to that of the TARP. Markets rally on false reports of an agreement, but when the plan was ultimately put in place, markets extended their damage after a brief run-up. The big difference between now and October is that the economy is unambiguoysly sinking into a recession, with 2-year yields falling below the 1.00% level for the first time in modern history. The only factors preventing further selling in Asian trade would be more rumors of an agreement over US autos.

Stocks soar higher and risk aversion trades are being unwound on reports that an agreement has been reached over a bailout between Senators and the Auto Industry. Press conference due at 2.30 pm EST.

Ashraf speaks to the WSJ on the Fed minutes: http://online.wsj.com/video/analyzing-the-fed-gloomy-outlook/968A3DB2-B46A-487D-8255-D2D82A6645AE.html

Both the Philly Fed and Leading Indicators index fell by more than expected. Phllly Fed at -39.3 from -37.5, while prices paid index plunged to a remarkable -30.7 from +7.2. VIX Index regains the 80 level for the first time in 3 weeks. Neither stocks nor FX markets are showing any hesistancy in quelling risk appetite, with GBPUSD shedding 200 pts to $1.4740, eyeing $1.4640s, while USDJPY breaches below 94.40s, eyeing 93.82. NZD, AUD and EUR are also extending losses vs USD and JPY. EURUSD seen supported at $1.2390, EURGBP seen regaining 0.85.

The unexpectedly strong 27K increase in US jobless claims to a fresh 16-year high of 542K from a revised 515K and a fresh 8-year high in the 4-week moving average drove US equity futures to their lowest session of the day, while further lifting risk aversion in favor of the USD and JPY. Consequently, US 2-year yields fall below the 1.00% fed funds rate at 0.9869%, reflecting the continued rally in fixed income securities relative to battered stocks. A surprise 100-bp cut from the Swiss National Bank in its 3-month LIBOR target to 1.00%, making its second reduction of the month after its scheduled cut 2 weeks ago.

Asian stocks lose more than 5% after the latest plunge in Wall Street. EUR, GBP, AUD, CAD and NZD are all slumping against USD and JPY. USDJPY ENDS 7-DAY CONSOLIDATION, breaching below the 95.85 and is now approaching a vital trend line support at 94.50 seen on the weekly chart. More MARKET-MOVING DATA ahead, starting with the 4.30 am EST release of UK Oct retail sales seen at 1.4% y/y from 1.8%. The 10 am release of the Nov Philadelphia Fed survey index seen at -35 from -37.5 could surprise on the downside as did the NY Empire survey earlier this week. Leading Indicators index seen ... Rest available to subscribers of Intraday Analysis.

Dollar sell-off stabilizes as stock market volatility remains sharp and rapid. GBPUSD gave in at the $1.5275 resistance--trend line extending from the Nov 3 high. Support climbs towards $1.5050 . EURUSD broke out of its consolidation, but failed to fully regain $1.28 resistance-- TL extending from the Nov 10-13 highs. Bigger than expected builds in oil inventories also contributed to dollar's rebound and the pullback in oil and gold.

Dollar hot across the board as EUR, GBP, GOLD, AUD, NZD and CAD all rally in waht appears to be stop buying in an otherwise low volume market. News from Iran of established independent policy are the only fundamental news seen so far. But as we have warned earlier today, seasonal reversals in FX markets usually emerge in the last 6 weeks of the year, reversing the flows prevailing in Sep-Oct. Today's moves may be the beginning of a new temporary dollar decline into early Q1 2009.

JPY emerges from the shadow of GBP amid a fresh ascent in global risk aversion. Markets to keep watch on Paulson/Bernanke's testimony shedding more detail on the immobilization of half TARP package. Keep close watch on Dow and S&P500 continue closing above the key 8,100 and 840 levels before considering fresh trades on the low yielding JPY. As in all JPY crosses, USDJPY tested test the bottom of a symmetrical triangle, at 95.50, but 95.80 has first to be ... ...Rest of Analysis Available to SUBSCRIBERS OF INTRADAY THOUGHS.

Bigger than expected decline in UK CPI and heightened selling in US equity futures is further dragging GBPUSD from its $1.50 base. UK October CPI contracted 0.2% m/m vs. expectations of +0.1%. The year-on-year figure slowed to 4.5% vs. expectations of 4.8% from previous 5.2%, showing the first decline in annual inflation in over a year. The decline in core annual CPI to 1.9% from 2.2% vs. expectations of 2.2% also highlights the depth of disinflation, opening the door for as much as a 50-bp rate cut next month and enforcing GBP bears into prolonged selling. Interim target stands at ... REST OF ANALYSIS AVAILABLE TO SUBSCRIBERS of INTRADAY THOUGHTS.

DAILY CHART of Sterling Traded-Weight Index is now added to the homepage, showing the currency performance against a basket of 46 currencies as determined by the Bank of England. As of Nov 14, the index is down 18% year to date, hitting its lowest level since May 1996 and tumbling 16% below its daily average of the past 18 years.

GBPUSD failed to breach above the $1.5060 resistance stated in today's earlier Intraday Thoughts as the bears once again had the last word in equities. From a TECHNICAL STAND POINT, the Williams % R momentum indicator on the 2-hour chart is showing evident mean-reversion trade, topping out at -25%...Rest of Analysis Available to SUBSCRIBERS OF INTRADAY THOUGHS.

Classic case of recovering risk appetite benefiting all higher yielders at expense of USD and JPY, with GBP standing as the biggest winner. USDJPY displays a late reaction to recovering risk appetite, attempting to breach short-term TL resistance at 97.30, after which emerges the key 97.80 barrier. On the 4-hour chart, USDJPY shows to test the top of a symmetrical triangle at 98.70. Support climbs at 96.20, backed by 95.20.

NY Fed's manufacturing index hit a new low of -25.4 from -24.6, but better than expectations. The components were equally dismal, with the new orders and employment indices also dipping to new lows. Industrial production rose 1.3% in October following a revised 3.7% in September, which was exaggerated by the hurricanes and Boeing strikes. STERLING PAIRS ARE THE BIG WNNERS, beating even their yen counterparts as orders rushed in to snap up the currency pound following sharp gaps down in early Monday Asia/Pacific trade. Confirmation of a Japanese recession limited forex risk-seeking trades from a yen stand-point. GBPUSD is seen extending gains towards an interim pressure point of $1.5060, with major trend line resistance standing at $1.5150. Support climbs towards $1.4950 and $1.4970.

MIND THE GAP. Early Monday FX trade in Asian/Pacific shows sharp gains in USD and JPY after Friday's late session deterioration in US equities. Some Forex brokers who shut at 3 pm EST Friday had their prices close significantly away from the closing prices at 5 pm EST Friday and/or 3-4 pm EST Sunday. For exampe, GBPUSD now at 1.4666 well down from Friday's 1.4940, USDJPY at 95.98 from Friday's 97.60s, and AUDJPY at 61.86 from Friday's 0.6660s. The G20 meeting in Washington proposed creating the first central clearinghouse for credit default swap market, along with more supervision, but none of this is seen successfully allaying the immediate market bearishness emerging from Friday's horrible US retail sales and the late session slide in equities.