Intraday Market Thoughts Archives

Broad selling in USD and JPY as soaring oil is further extended by a higher than exp 7.2% jump in US July existing home sales (highest in 10 years). S&P500 +16 pts to 1,023, well above the 1,014 resistance, which is the 38% retracement of the decline from the all time high of October 2007 high to the 12-yr low of March 2009. Maintaining our bearishness with GBP as GBPUSD made a quick bounce towards $1.6622 after the US data before shedding a full cent w/in 45 mins. A close below $1.6470 and $1.4280 in cable and EURUSD remains a possibility, while USDCAD aims at holding above the 1.0740 support.

Oil soars to $73.88, its highest since October after estimates on Eurozone PMIs beat expectations across the board. European equities manage to push higher, shrugging the 1.4% fall in Nikkei-225. Shanghai forced a 1.7% rally despite indications from Beijing about higher capital requirements for banks. Sterling is lifted by a rallying euro, hitting key resistance at 1.6577, while USDJPY struggles below 93.90s. US Jul existing home sales exp +2.3% from +3.6%. Watch Bernankes comments from Jackson Hole about his views on inflation remaining subdued and the economic contraction abating as well as any insights on his justification for the slowing pace of Treasury purchases.

Asia refuses to rally on the oil-driven gains seen in NY. Traders must note how rising prices have a more positive and lasting impact on US equity indices than they do on Asian stocks. While many energy players comprise US indices, Asian firms are known for their energy inputs and the negative impact from rising oil. CAD is first to sell-off as the Nikkei opens down 57 pts. The Obama's administration to terminate the Cash for Clunkers may not be taken kindly by next months data on retail sales, jobless claims and hours worked. Moodys downgraded monoline CIFG to Caa2 from Ba3, leaving door open for further possible downgrade. Watch out for Bernanke reiterating the FOMCs decision to slow down the pace of purchase of Treasuries. GBPUSD 3 Hr Slow Stochastics http://twitpic.com/enusi $$ OIL seen losing over $3 by end of NY Friday below 70 ttp://twitpic.com/els28

CAD drags USD down below key 1.0930 support onto 1.0899, while CADJPY lifts off towards 86.30s. With the latter standing at key resistance since Aug 16, expect gradual pullback towards 85.50s, which is likely to prompt USDCAD back towards 1.0960s, especially in event of a pullback in oil below 71.80. http://twitpic.com/elj64

Stronger than expected August Philly Fed survey (+4 vs exp -2) and neutral Jul leading indics (+0.6% vs exp +0.7%) are boosting USDJPY back above 94, but not enough to drag down USD vs risk currencies. Mixed data on new foreclosures as overall foreclosures rose but suprime-related were down. USDCAD continues its base-buidling eyeing 1.1030 and 1.1070. http://twitpic.com/el2ya

US equity futures in the red as US jobless claims rise to a 4-week high of 576K, dragging down an already fragile GBP, CAD and AUD against USD and JPY. USDJPY falls back below 93.90. A break below 93.80 will likely re-emerge in the event of disappointing USD data such as an August Philly Fed survey (14:00 GMT) of no more than zero 9from previous -2.2 in July. Also watch the employment component of the Philly Fed survey whether it improves from -25.3. July leading indicators index exp +0.7% from Junes. Any protracted declines in oil below 72.00 will likely prope USDCAD towards 1.1030s and drag CADJPY towards 85.00. Sterling vulnerable to more losses in event of break below $1.6440.

Stronger than expected UK retail sales failed to preserve the knee jerk rally in sterling, which jumped as high as $1.6606 before pulling back to new session lows at $1.6524. UK sales +0.4% vs. exp +0.2% m/m but weaker than the previous +1.3%. Cables failure to close above $1.6560 and euros failure to close above $1.4250 in Wednesday NY confirms these currencys unsustainable advances against USD and JPY. Meanwhile, USDJPY continues to struggle around 94.50s and gradually finds its way towards down. US crude seen retreating below $72 towards $71.20s. US jobless claims and Philly Fed survey will be key. $1.6430 in cable and 1.1040-50 in USDCAD seen next.

When you force someone to do something unsustainable, it will eventually fail spectacularly. That is what soaring oil is doing to non-USD and non-JPY currencies i.e. EUR, GBP, AUD, CAD etcc. These are rallying BEYOND THEIR MEANS and so are stocks. Their downside will emerge in Europe (if not Asia). EURUSD and GBP seen failing to close above the key 1.4245-50 and 1.6555-60s. More Frequent Trading Updates on http://twitter.com/alaidi

The largely energy-driven stocks rally in the aftermath of those explosive EIA inventory data is forcing currencies such as CAD and GBP to rally into their technical boundaries, such as 1.0940-45 support on USDCAD and $1.6570 resistance in GBPUSD. If cable failed to break above the $1.66 resistance yesterday following stronger than expected CPI, then its likely to do fail again at this same level on non-GBP specific news. Expect the market to retest 1.6480, followed by $1.6420.

Oil prices soared to a 3-day high of $71.35 after the EIA inventory data on crude, gasoline and distillates plunged across the board due to falling US imports. JPY fell across the board, while USD dropped against all majors except for USDJPY which is now dragged down towards session lows of 93.80. Subsequent target satnds at 93.25-30. After struggling to overcome 1.1120, USDCAD is now seen supported at the 1.0970 trend line support -- Aug 3 channel. GBPUSD faces selling pressure at $1.6530-40

OIL SOARING ahead of the EIA data due out in 14 mins: Expected crude stocks +1.1 million brls, distillate stocks +800K brls in distillate stocks and gasoline stocks seen -1.7 million brls. Tuesdays API data showed crude supplies -6.1 million barrels last week, distillate stocks +1.5 million barrels and gasoline stocks 84K barrels.

GBPUSD hits $1.6380 target, leaving Tuesdays higher than exp CPI behind as the BoE minutes reveal Gov Mervyn King to have voted for a higher 75 bln in new QE (along with 2 other members), more than the agreed upon 50 bln. (this is the the 3rd time King was outvoted since taking over the Governorship in Jul 2003). Cable to revisit $1.6330. USDCAD hits 1.1130 after BoC annual core CPI rose to 1.8% lower than exp 1.9, while annual headline CPI fell to - 0.9% from -0.8%, its lowest since 1953. CAD markets await the 14:00 GMT release of the July leading indicators index exp +0.2% from -0.1%. Any disappointment should help attain a clear break of 1.1120 and towards the next barrier at 1.1180, Neutral to positive report may fail to drag down the pair if equities extend selling and oil breaks below 67.50s.

With the Shanghai Composite Index down 3%, nearing the definition of bear market territory (almost -20% off its peak) and British Tory leader David Cameron reiterating those fears (warnings) about the loss of the Kingdoms AAA debt rating, Sterling joins the risk currencies in selling vs. USD and JPY. Cable never regained the $1.66 trend retracement show in our latest IMT, and is now eyeing interim support at $1.6380. NZD, CAD and AUD each lose ground, while EURUSD looks to retest 1.4040s as the London session opening salvo is set to produce a fresh wave of USD and JPY buying. USDCAD is up nearly a full cent from its 1.10 low, with retreating oil prices and falling equities weighing down on CAD. The 11 am GMT CPI data from Canada will also be scrutinized.

JPY selling outpaces that of USD as US equities push to days highs. Sterling surpasses Aussie and Kiwi as the day's best performing currency amid the combination of higher than exp CPI, recovering equities and extreme Monday selling. http://twitpic.com/ecun5 is the GBPUSD chart showing the $1.6570 and $1.6670 are the levels to break not only for the day but for the US session. EUR, GBP, AUD and NZD each got their fair share of unconfirmed session highs in (closing below session highs). Wednesdays release of UK CBI industrial trend survey and Thursday's release of Jul retail sales (exp 0.4% m/m from 1.2% m/m and 2.7% from 2.9% y/y) raise downside risks for GBP. Oil's growing intraday bullishness extends over $1.10 in gains, eyeing $68.00. Just like on Jul 26, 27 and 28, oil may print as high as 68.50 but a close is expected at 68.

Neither US housing starts nor building permits in July could add on to the aggressive gains shown in June as Julys figures declined unexpectedly. US July PPI fell sharply in line with last weeks CPI plunge. The fragile rebound in risk appetite may be in jeopardy, especially as both EUR and GBP showed short-lived gains after unexpectedly strong ZEW and CPI. USDCADs support is well cemented at 1.0980, extending gains towards 1.1080s, but a deeper pullback in oil is required to see return towards 1.11. USDJPY failed at 95.27, now eyeing interim target at 94.30. Any pickup in risk appetite is likely to see USDJPY capped at 95.80, but our negative stance remains intact. Dow futures +40 pts on strong earnings from retailer Target. More active predictions on http://twitter/alaidi

Higher than expected inflation figures from the UK and a 17-point jump in German ZEW index are boosting all European FX against USD and JPY. UK July CPI at 1.8% from Junes 1.5% and higher than expected core CPI at 1.8% are lifting GBP across the board. But GBP remains the weakest traded currency after USD and JPY. GBPUSD is seen capped at $1.6530s, USDJPY faces resistance at 95.80s. US Jul housing starts/building permits expected to have registered a modest gain in July, which could be exert fresh weakness against USD and JPY, but sustaining these moves during the US session will remain the question for the day as we've seen several days of intra session highs in EURUSD and GBPUSD that failed to hold by end of trading.

The 2 occasions today during which markets eased off their selling and FX retraced from their risk aversion plays were the release of the better than expected NY Fed Empire survey and at present, the release of the NAHB Housing Market Index (rising to 17 from 18). The NAHB coincided with NY Lunch time, which usually a bit of profit-taking. The fact that CAD, GBP and AUD are well off their session lows against USD suggests the viability for a renewed retest of these lows as early as post-NY lunch, if not then the weeks UK and Canadian CPI/retail sales data could trigger prolonged losses. While AUDUSD has neared key support levels at 0.8155, technical downside for CAD and GBP stands at 1.1170 and 1.6220. Readers of our IMTs were told of 1.1120 in $USDCAD & 1.6270 target in $GBPUSD, as seen in the 3:26 am EDT IMT http://bit.ly/338li

The main difference between equity losses originating in US markets and those originating in Asia is that the latter have tended to dissipate during the subsequent US session, especially in the case of improved US data. This time around, the sell-off originated in US Friday, which later added to existing damage in China and triggered profit-taking in Tokyo. But the deteriorating sell-off in Shanghai Composite has now led to a 17% decline off the August highs in a matter of 2 weeks, which may qualify as more than just a correction. The fallout of the global selloff has been exasperated by the intensifying declines in the crude oil, which is at risk of testing a key support of $66.00. USDX faces trend line resistance at 79.75 along with the 55-day MA at 79.50. Gold readies to post its 2nd weekly decline (first in 5 weeks) testing $930 TL support extending from the June low, also coinciding with the 100-day MA at 927.

GBP, AUD, CAD deepen losses through key support levels as selling intensifies throughout commodities, equities and bond yields. Dow futures drop 193 pts. USDCAD eyes 1.1180, AUDUSD breaks below 0.818038% retracement, eyeing 0.8090 as the next support. Plunging oil are considered the more significant price action for any notable recovery in the US currency to take place. With prolonged losses in EM and broadening losses in metals, the ensuing sell-off carries the technical properties required for extending losses towards $63.95 and the key support of $58.0038% retracement of the rally from the $33.49 low to the $73.40 high.

GET OUR CALLS ON FX & INTERMARKET DYNAMICS NOW http://twitter.com/alaidi Friday's bearish AUSSIE WARNING http://twitpic.com/dvwtp (now 100 pips down) , US yield's 20-bp decline http://twitpic.com/dvd83 , Sterling's Gravestone DOJI WARNING http://twitpic.com/d1r81 (now 200 pips down) and Oil's $5 slump http://twitpic.com/dijtk are just some of the forecasts our followers on twitter are enjoying

A 5.8% decline in the Shanghai Composite, a $1.50 decline in crude oil to $66.26 are some of the manifestations of deepening risk aversion in the aftermath of disappointing US consumer confidence and Colonial Bank's failure, which is the 5th largest bank failure in the US. GBP and CAD extend broad declines, with GBPUSD at $1.6365 and USDCAD at 1.0782, eyeing $1.6280 and 1.1120 as interim targets. SSEC Deteriorating technicals http://twitpic.com/e7woq USDJPY eyes 92 for the week.