Intraday Market Thoughts Archives

UNCONFIRMED RUMOURS that Goldman Sachs has settled with the SEC are said to be boosting equities and the risk trade at the expense of the USD and JPY. Dow rallies +200 pts from its pre-open low. Todays passing of the German rescue bill at the Upper House of parliament will attempt to lift EURUSD above $1.2620, which is an important short-term resistance, linking the highs of May 2 and May 10. As EURUSD posts its 3rd consecutive daily gain, the pair HAS YET TO post 4-straight daily gains this year. AUDUSD aims at regaining 0.8320, a close above it would be important in extending bounce towards 0.8430. But previous key support of 0.8570, to remain firm resistance. USDCAD 4-hour showing signs of double top at 1.0730, which could extend drop towards 1.0570 trendline support in event of extended risk bounce. CAD remains better short vs. JPY than vs. USD.

ASHRAF's UPCOMING AUSTRALIA SEMINARS

*** SYDNEY & MELBOURNE ***

RSVP :

https://www.cmcmarkets.com.au/forms/lg-seminar-invitation

You know what Ashraf said about the Aussie 4 weeks ago> Now hear him say it IN Australia

EURUSD LOSES GROUND to join the commodity currencies on the downside after German IFO sentiment survey slipped in May to 101.5 from 101.6 vs expectations of a rise to 102. NIKKEI-225 GAPPED DOWN 240 pts on Friday following its 300-pt Thursday decline. Dow-30, S&P500 & Nikkei-225 all retested the lows reached on Black Thursday May 6th. MORE BAD NEWS FOR UK as the April Public Sector Borrowing Requirement surged to a new record of 8.8bln, M3 (money supply) was flat for the month and mortgage approvals fell to 47K, highlighting continued govt borrowing and weak bank lending. Cable upside seen capped at $1.4440s, but EURGBP appears vulnerable for fresh break below 0.8650. AUSSIE REMAINS AN AGGRESSIVE LOSER as traders sell the rebounds to renew focus on 0.8140 and 0.80. USDCAD supported by hourly trendline at 1.0610 before renewed run-up to 1.07. EURCHF crushed our trend line resistance of 1.43, but the BEARISH DAILY GAP-DOWN suggests a return below 1.42 if we close the week (today) below 1.4330s. Subseq resistance at 1.4640.

DAMAGED GOODS is the state of the commodity currencies as their selloff intensifies primarily against JPY, USD and to lesser extent the euro. What started as a shapr selloff in AUD is now broadening into CAD and NZD. We continue to target 0.8140 and 0.80 as prelim AUDUSD targets, followed by 0.78 as the ultimate objective following the break of 0.8570. EURCHF failed to breach the 1.43 trend line resistance despite yesterday's intervention, thus calling up prelim targets at 1.427 followed by 1.4220 and 1.4070. GBPUSD eyes 1.4250, a break of which calls up 1.4130 but at this point it's more appropriate to play GBP shorts via EURGBP longs. Ashraf is travelling so no updates for the rest of the day.

THANKS VERY MUCH FOR VOTING ASHRAF as #1

http://www.investimonials.com/commentators/

Why not facebook it

USD 3-MONTH LIBOR REACHES 0.48%, doubling the levels from the November lows, as it reflects the escalating cost of USD-funding for US and non-US banks. Lack of trust among banks as well as liquidity difficulties are the main culprit. Fed has responded by providing USD-funding through FX swaps with major central banks. If these measures continue to show little effect in alleviating funding costs, central banks may have no choice but to carry out outright interventions (selling USD vs EUR). Meanwhile, AUD, CAD, NZD continue to be the PREFERRED SHORTS as traders take a break from assaulting EUR ahead of a possible intervention. AUDUSD eyes 0.82, followed by 0.8130-40. GBP WEAKNESS broadens as EURGBP break sabove 0.8620s eyeing 0.8710 but CHF STRENGTH prevening EURCHF from regaining 1.43.

Watch ASHRAF's INTERVIEW (translated from Italian) conducted Thursday May 13 on the short and medium term outlook for the euro. http://bit.ly/cFkt78

FEAR OF ECB INTERVENTION PULLING FX traders away from selling EUR and GBP, and forcing them to knock down commodity currencies (AUD, CAD & NZD).

The massive 200-pip jump in EURCHF in less than 10 minutes (13:00-13:10 BST) followed by an additional 100-pip move is the work of no other than the Swiss National Bank intervening to sell its own currency. But the 80-90 pip jump in EURUSD followed by further gains could be the work of European banks intervening on behalf of the ECB to boost the ailing euro. WATCH ASHRAFs APPEARANCE ON CNBC http://bit.ly/cu57uq

SILVERs TRIPLE TOP extends sell-off SEE CHART http://chart.ly/759vbb suggesting further damage in the metal, followed by a possible $1170 in gold. BOTTOM suggests further AUSSIE COLLAPSE CONTINUES as AUDUSD drops 5% vs JPY and 3.5% vs USD. Last nights break of the all important 0.8570 triple bottom, paves the way for a theoretical medium term target of 0.78. As long as Aussie does not close above 0.86, the road remains open for 0.8170, followed by 0.80 and 0.78. The days losses are nowhere near the +500-point 1-day losses seen in 2009 or 2008. Reuters says AUDUSD trading activity is almost 50% above the daily average of last month

RISK BREAKDOWN CULMINATES upon the VERY IMPORTANT BREAK in AUDUSD below the key 0.8570 support (FAILED TRIPLE BOTTOM), which paves the way for prelim target at 0.8475, followed by major target of 0.78.

WE HAVE BEEN HERE BEFORE. Both USD and JPY rally sharply against all other currencies as stocks sell-off following Germanys announcement to ban naked shorts against selected stocks & euro bonds. BUT WHAT ABOUT USDJPY ? USDJPY has now lost only 150 pips after the sharp rebound from the May 6 collapse to 87.90. But HISTORY HAS SHOWN that each time USDJPY rebounds following a +5% 1-day collapse (as was the case twice in October 2008), not only the rebounds are short-lived, but renewed sell-off tends to drag back near the previous low. While a break below 90 may not be assured for now, expect USDJPY to reach 91.70, followed by 91.20. Follow us on Twitter for more frrquent uopdates http://twitter.com/alaidi

GERMANY BANS NAKED SHORT SELLING against certain stocks and European government bonds (and their credit default swaps) tomorrow according to preliminary reports. This would mean that shorting stocks that people own will be permitted via the borrowing of shares. The news coincided with a deeper sell-off in the euro as the measures could be interpreted as a last ditch effort by German authorities to stem a broader attack on Eurozone financial markets. EURUSD hourlies eye a decline to as low as $1.2240. USDCAD held up at the 1.0170 support mentioned in earlier IMT, eyeing 1.0390, followed by 1.0415-20.

ASHRAF's TAKE ON THE IMPACT OF THE GREEK CRISIS for the Council of Foreign Relations:

"The most common arguments against a destabilization of the U.S. economy by the eurozone sovereign debt crisis are 1) the activism of the U.S. federal government in mobilizing another TARP-like aid package for U.S. banks, 2) a compliant Federal Reserve willing to reopen the liquidity taps by buying (again) U.S. government bonds, and 3) the sole ability to print a currency in which globally held U.S. debt is denominated. ..."

Read the rest of Ashraf's contribution as well as that of a panel of experts.

http://bit.ly/8Y1Chn

LOONIE REBOUNDS on a combination of stabilization in global equities and the first increase in oil prices in 5 days. USDCAD breaks below 1.03, looking for declines to as low as 1.0240. Yet, markets cannot ignore the 25% slide in oil prices, which have lifted USDCAD support from parity to 1.0170. Immediate resistance stands at 1.0330 trend line from the May 6 high, a break of which eyes 1.0430. CADJPY garners fresh gains past the 90.20s, facing the trend line resistance at 91.60.

GBP drops across the board despite the highest annual CPI since Nov 2008 (3.7%). The bulk of sterlings climb occurred ahead of the figures before Cable dropped a full cent to $1.4430. Traders are not only confident in the Bank of Englands repetitive calls that rising UK inflation will be temporary, but also preoccupied about the spending decisions that must be taken by the new govt and the impact on overall growth. Aussie drops after the RBA minutes made the case for a possible pause in its tightening cycle. AUDUSD eyed 0.8680, but only a protracted selloff in equities is expected to add on to losses towards 0.8570s. Traders who see EUR to be oversold may see some stabilization against GBP, followed by further gains into 0.8640-45.

USDCAD daily oscillators remain positive despite the failure of the 1.0430 high, which coincides with the 50% retracement of the decline from the May 6 high. The 24% slump in oil below $75 level is clearly reducing the once positive bias in CAD. 4-Hour chart may suggest a possible retreat towards to1.0300s especially in the event that a sustainable bounce in US indices succeeds in boosting Asian equities. But recovery stands to face 1.0420, followed by 1.0480 at the next round of equity sell-off. Market will closely watch Canadas CPI due Friday, which will impact the latest pricing of BoC rate hike.

USD stabilizes from day's highs as US equities attempt getting back into the black but disappointing NY Empire Manufacturing data could weigh on abny recovery in risk appetite. GBPUSD hit the $1.4250 target from overnight IMT. Tomorrow's UK CPI figures will determine the extent of cable's recovery beyond $1.4550s. Todays breach of the $1.2320 low to $1.2237 is likely to be followed by the familiar Monday rebound in equities, which could call up $1.2420 by mid week.

WATCH ASHRAF's INTERVIEW ON BNN earlier today

http://watch.bnn.ca/#clip302804

Ashraf

GBP vs. EUR. While last weeks losses in EUR and GBP against the USD were largely straightforward, GBP losses against USD and JPY had exceeded those in EUR on Wed and Thur of last week due to deteriorating UK trade balance and a negative inflation report from the Bank of England. But as the rumours of fresh Eurozone debt downgrade emerged on Friday, EURGBP joined all euro crosses lower. Todays UKs house prices rose 0.7% m/m in May from +2.6% in April, dragging the annual growth rate to 4.3% from 6%. London asking fell 0.4%, posting their first decline since December. GBPUSD hits fresh 13-month lows at $1.4440, facing little support before $1.4250, but EURGBP can accumulate short-lived gains towards 0.8620-30s. EURUSD looks to hold the Lehman-week low of 1.2328, which could as the latest temporary bottom, before $1.17 emerges later in the quarter.