Intraday Market Thoughts Archives

AUDJPY has finished consolidating around 81.60-81.15 and nicely comes down back ot 81.15.. This is the reated chart that held throughout the day http://bit.ly/4VNfXV. The pair consolidated within the 50-pip range since early London trading and traders were informed with this chart throughout out tweets and IMTs. Today's AUDJPY trade is yesterday's CADJPY

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FADING CORRELATION between the USD and major equity indices is best highlighted by EURUSD-S&P500 **** http://chart.ly/c7ynqh **** , which hit a 4-month low of 0.27 from an average of 0.84 in June-Dec. As the chart indicates, the decline of the correlation accelerated in mid December, coinciding with Greeces credit downgrade, which eroded the euros role as a risk currency. With the USD trading at its 200-day MA for first time in 8 months, and emerging consensus for US Q4 GDP standing at 5.5%, well above that of the G5, the anticipatory nature of USD-longs will likely remain at least into mid Q1. This could help maintain a win-win scenario for the US dollar, whereby falling equities to continue propping the low yielding currency and improved risk appetite is associated with higher probability of a Fed tightening.

Risk aversion returns as Dow futures go to -54 from +17 pts, pushing back up USD and JPY. AUDJPY recurring failure to to break above 82.20, now calling for 81.30, followed by rest of 80.70. GBPUSD did fail to regain $1.6290, now looking for $1.6130. EURUSD unable to regain $1.4170, now looking for $1.4050 as Portuguese 10 year yields exceeded their German counterparts by 112 bps (highest since May) while Greek-German spread hovers near last March highs for 300-bps .

USD and JPY take a breather in early London trading after an Asian session that was particularly strong for JPY amid the 277-pt decline in the Nikkei-225. Although risk aversion remains in Europe with FTSE -20 pts, Dow futures are +23 pts, therefore theres a sentiment that the latest downleg in equities (and risk appetite) may be diminishing. As a result of this improvement in risk appetite, USD and JPY are pulling back, especially against GBP which is awaiting UK RETAIL SALES DUE at 9:30 GMT. Sales are expected to improve from to +1.1% from -0.3% m/m and +3.0% y/y from 3.10% y/y. This could keep cable supported, with the key resistance standing at 1.6290, trend line resistance from Jan 19. A break above it could take us towards 1.6350 cap depending on the strength of retail sales. EURUSD resistance standing at $1.4230. USD up trend is not over. This is only a consolidation.

Watch Ashraf tomorow co-hosting CNBC Europe Squawk at 6:15 am GMT discussing FX, China & the latest White House proposal on curbing banks' proprietary trading.

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Watch Ashrafs VIDEO MARKET ANALYSIS on the STOCKS-FX-OBAMA REACTION http://bit.ly/6d6HZZ Stocks deepen losses after Pres Obama began his speech on restricting banks from proprietary trading. The dollar quickly dropped on fears that the proposed laws will shed a major share of US banking revenues. The story was seen as s US-specific problem (just like Ford/GM/Chrysler was in Dec 08 which weighed on USD). But USD is expected to recover from those losses, catching up with the yen. Nikkei futures -300 pts.

Jan Philly Fed survey at 15.2 from 22.5, Leading Indicators +1.1 vs. exp 0.7% from +0.9%. Stronger than expected earnings from GS ($8.20/share) fail to fuel back US equities back into the green. USDCAD remains supported at 1.0440 before an expected retest of 1.0520, while CADJPY remains capped at 87.70. USDJPY requires a break above 91.90 in order for the recent upleg to be preserved. EIA oil Inventory data due at 16:00 GMT instead of 15:30 due to late release following MLK holiday. Crude oil inventories exo at +2.2 mln from 3.7 mln. Greek-German 10 yr yield spread off its 10-month highs of 300 bps, now at 297.

Goldman Sachs Earnings due at 13:00 GMT, with the consensus estimates at $5.22/share vs. $5.12 or the whisper number (unofficial estimates). But noted Bank analyst Dick Bove has just given his forecast for as low as $4.20, which would be a tremendous earnings miss by a bank that has usually surpassed earnings by wide margins. GBPUSD breaks below $1.6180, now eyeing $1.6080 after weaker than expected CBI figures. EURUSD eyes 1.4015, while USDCAD breaks above $1.05 (in line with chart in previous IMT), drawing 1.0545 as the next key target.

Mind China's Double Digit Growth Markets may start witnessing shades of 2007, when strong Chinese figures led to market jitters on the grounds of accelerating tightening from the PBOC. Thursdays release of China Q4 GDP is expected at +10.0-10.4%, which would further justify broader tightening from the PBOC --such as raising the actual lending rates (beyond higher bond yields and increased reserve requirements). Such justification COULD PROVOKE FURTHER NERVOUSNESS in global markets, weighing on the principal source (China) of global commodity demand, starting with metals, followed by energy. If the GDP and retail sales (both due on Thurs) come stronger than exp, then China may as well announce more tightening as early as this week.

USDCAD BREAKS OUT out of its 5-week trend line resistance (see chart http://chart.ly/9zhynf CADJPY HotChart has now fallen +180 pips in since it was first posted on Jan 14. GOLD NOW TESTS 1120 in line with the Cantos Charts Presentation shown in the previous IMT. Many readers of this site are increasingly finding these Intermarket analysis helpful for their trading. If you have, then please consider voting for me in the finance category in this years Shorty Awards: http://shortyawards.com/alaidi And please remember: only 1 vote per 1 person per 1 categorySo how about trying #forex #education categories And do state a reason . THANKS !

Watch Ashraf's GOLD & EURUSD Video Analysis on CantosCharts

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One day after we warned on the DEAD CROSS in the EURUSD confirming our bearishness from the Jan 5 article, EURUSD drops a full cent to $1.4196. Now the GOLDEN CROSS in the USD Index is in the process of forming as the 50-day MA (76.42) approaches the 100-day MA (76.43). A positive cross-over at the close today would be an important bullish signal as it paves the way for 78.20. CADJPY HotCharty deepens below 88 to 87.60. Expect a bounce to 87.90s before a retest of 87.30 and ultimately. Weekly CADJPY still eyes 86.60s as per the HotChart accessed here http://bit.ly/700SYM

GBP fails to hold near its $1.6457 high session, retreating back to the $1.6350s as USD strength intensifies across the board despite rallying US stocks. While the EURUSD confirms its downtrend via its Dead Cross (50-day MA falling below 100 day MA), USD Index is close to attaining its own Dead Cross with the 50-100 Max at 10 pts apart. USDJPY holds its 100-day MA to trigger a fresh run-up at 91.00 and paving the way for prolonged gains towards 91.70. But it is CADJPY, AUDJPY and EURJPY which face the greater downside. CAD eyes a retest of 1.0390 ahead of tomorrow's BoC rate decision. THANKS FOR YOUR VOTES EVEYONE. Please state a reason for your vote and please make sure it is a relevant reason to the market http://shortyawards.com/ alaidi Thanks

Watch Ashraf's Charts analysis of NIKKEI-225 and USDJPY on Cantos Charts http://bit.ly/8j6nhM

EURUSD breaks below its 200-day MA of 1.4292 as ZEW survey drops for the 4th straight month. Our $1.38 target for EURUSD remains intact.

GBP rallies across the board as UK CPI hits 9-month high of 2.9% y/y from 1.9% in Nov. Krafts imminent takeover offer for Cadbury is boosting GBP, as well as a report from Goldman Sachs predicting the UK will outperform major economies in 2010. Next cable resistance stands at $1.6480 (61.8% retracement), which requires a close above this level to prolong bullishness into $1.66. EURUSD drops on disappointing ZEW figures, now vulnerable to call up the 200-day MA at $1.4280. Oil drops below the key 78 support, dragging CAD across the board. Our HotChart deepens in the green as CADJPY hits 88.00.

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EURUSD now at risk of retesting the elusive 200-day MA of $1.4280, especially if it fails to reclaim the preliminary resistance of $1.4450. The lack of first category economic release this week from the US and the Eurozone gives way to the round of earnings releases from the major US banks, which will influence overall risk appetite and the US dollars recently improving foundation. UK Dec CPI tomorrow exp +2.6% y/y from 1.9% could further prop GBPUSD back above the $1.6350 resistance (50% retracement), but a close above it would be convincing if we close above $1.64.

Ashraf's interview on BNN discussing the Eurozone's Achylles Heel http://bit.ly/7MAGzK and there's a mention to all of you who are generously supporting me in these Twitter Awards. Thanks guys. Let's keep it up !

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Stronger than expected RICS housing figures are boosting GBP (see Econ Calendar for forecast and actual figures), especially against the damaged EUR, which is the 3rd weakest currency today (among a group of 12 currencies) following talk of the ECB's backtracking from any assistance to Greece. GBPUSD makes it past $1.6350, but will have to break the Dec 16 high ($1.64) to convince the bulls of further gains ahead. EURGBP breaks below the 0.8830 support to 0.8796 and the 61.8% retracement (lowest since Sep) at risk of calling 0.8720. US 10-year yields falls below 3.75% to 3.67% dragging diwb USDJPY to 90.60s, eyeing the 100 and 55-day MA at 90.40 and 90.10 respectively. But more JPY gains are seen against commodity FX ahead.

Here's that heres $VIX chart we posted on Monday night showing the RARE Bullish Gap Down, giving dollar and yen bulls confidence for rest of the week http://chart.ly/94xpw7 The chart was issued on Monday and we all know what the JPY did on Tuesday, before the USD followed the lead into the rest of the week. That's what we call InterMarketAnalysis working with currencies. Chapter 5 of my book as 13 charts on using the VIX, risk aversion and various currencies http://bit.ly/JSJCI

SPECULATIVE FX POSITIONS: Youve already seen futures traders commitment reports for the 5 major FX pairs going back to 2001 on the site

http://www.ashraflaidi.com/charts/speculators-futures-fx-positions.asp Now look at the ZOOMED-IN-VERSION of the EURUSD and USDJPY spec reports http://chart.ly/extzaz , showing the EVIDENT TIME-LAG between turns in EURUSD futures contracts and turns in the EURUSD spot rate. This increase in the EUR net shorts could suggest a looming decline in the spot rate below 1.40 later by next month. THANKS FOR ALL YOUR NOMINATIONS ! WE NEED AS MANY AS WE CAN GET to stay in this close race. Please provide a REASON for your vote and make sure you are following ALAIDI on twitter in order for your vote to count. THANK YOU.