Intraday Market Thoughts Archives

Watch Ashraf's interview on CNBC earlier today warning that gold will go to $900 per ounce, which is also in line with the latest article on the site.

http://www.cnbc.com/id/15840232?video=1010508374&play=1

Ashraf's analysis on MULTI-CURRENCY GOLD TRENDS (mentioned in the earlier Intraday Market Thoughts) is explained in more detail in Chapters 1 and 7 of his book.

GOLD at FRESH RECORD HIGHS vs GBP, 3-month highs vs EUR, 3-week highs vs USD and only 3-day highs vs JPY . While having breached well above its 200-day moving average against both the euro and the dollar, gold remains 11% lower than its 200-day MA in yen terms. Since there remains ample upside in yen terms, Japanese investors may deem this as an opportunity to drive up the metal to next key targets (78K yen and 81K yen).

SLUMDOG-BOUND G7. The race to the bottom amid G7 economies speeds up the risk-reduction trades as macroeconomic data pushes superlatives to higher levels. Whether it is the 35% plunge in Japanese exports, a 16% decline in US building permits or the first UK recession in 18 yrs (bigger than exp 1.5% Q4 GDP drop in Q4), the escalating gloom is not only further shortening the life of equity market bounces but also lengthening the advances in risk-driven currencies such as the yen. USDJPY would come under prolonged downside pressure in the event that Obama Administration pressures China into further currency reval. USDJPY, EURJPY & GBPY test 88, 112 and 119.

Watch Ashraf's interview on CNBC today on Tsy Secretary designate Tim Geithner's likely dollar politics, what it takes to stabilize the pound and the likelihood of such a possibility:

http://www.cnbc.com/id/15840232?video=1009643578&play=1

Also catch Ashraf Friday 7.30 am EST (12:30 pm GMT) on CNBC's Squawk Box US.

US JOBLESS CLAIMS soar to 589K from 527K (exp 540K), while housing starts and building permits -15.5% and -11% in December respectively. USDJPY tests 88 yen, seeking the 87.60 target. The reports are as horrendous for US fundamentals as they are for equity futures, hence, negative for risk appetite, GBP and CAD. The 2.4% slump in Canadas Dec retail sales is likely to call up 1.27 in USDCAD and onto 1.2830, especially as March crude tests the $43.50 support. Expect broad weakness in CAD vs EUR, JPY and USD.

GBP LIFELINE ? European officials are starting to voice concerns about the falling pound and chatter circulates about a possible mention of the weak GBP in next month's G7 meeting, a venue that until last Spring was a popular speculation gathering on the issue of dollar weakness. Expect more GBP volatility ahead as the chorus of remarks from German and French officials addresses the need to stem GBP weakness. But what do UK officials think? So far, UK Treasury officials have exhibited an approving silence of the weak currency as it is the only silver lining of the UK recession.

S&P DOWNGRADES PORTUGAL prompting fresh declines in EUR and gains in JPY. EURJPY at 7-yr lows to 112, while GBPJPY breaks to fresh all time lows under 120. What started as an unusual JPY strengthening despite rising US stocks turned into an appreciable rally as equities move off their highs. EURUSD remains propped at key TL support of ... You must be a subscriber of Intraday Market Thoughts to read rest of content.

Stocks stabilize as former Fed chief Volcker is set to make the case for the nomination of Tim Geithner to head the US Treasury despite issues with his outstanding tax obligations. Geithners intention to steer TARP reform towards supporting small businesses and families is likely to play the favour of the markets, after a last minute U-turn from Hank Paulson to not allocate the funds to purchasing bad banking debt. Despite stocks' gain, USDJPY still fails to make a clean break above 90 as yen rises in technical trade on short covering. VIX drops from yesterday's 56 highs but still above 50.

Both USDCAD and CADJPY hit the the levels addressed in yesterdays pre-Bank of Canada note (to CMC Markets clients) at 1.2720 and 70.70 respectively, as rising risk aversion once again proved at the detriment of the loonie. A breach below 800 in the S&P may trigger prolonged CAD losses, calling up 1.2790 and 76.80. More USD and GOLD strength. GOLD regains its 1 1/2 week highs of $862 /oz as funds relocate capital flows from financials to metals. The trend may continue in the event that retail investors chase the prevailing trend via gold, potentially boosting the metal further towards Decembers $890s.

BOTH GOLD & USD are rallying, an unusual pattern manifesting that current dollar strength is widely emerging by default (UK banking troubles & Spain's downgrade) rather than reflecting any improvement in USD fundamentals. Stabilising rising risk appetite also helping to boost gold to 1 1/2 week highs after the metal managed to hold above its 2-mth trend line support of $805. The Jan 14 note (see Intraday Market Thought in archives) argued for $850 target based on troughing stochastics, worsening US retail sales and falling CPI. Chapter 2 of my book has 21 pages on Gold and contains recent case studies of both gold and dollar moving in tandem. See Amazon page for sample pages in Chapter 2. CAD stabilizes from expected -50 bp rate cut.

My interview earlier today calling for $1.37 in GBPUSD prior to the release of the UK CPI

http://www.cnbc.com/id/15840232?video=1005982377&play=1

Sterling has lost 2.5 cents, reaching fresh 8-year lows of $1.3885 since the interview despite the higher than expected CPI. $1.37 seen the low from June 2001. Today's theme remains European-centric, with USD gaining as default currency and not due to USD strength.

Euro's breach below $1.30 for the first time in 5 weeks as European FX are stirred in the turmoil of deepening UK banking losses and intra-Eurozone structural deficiencies (Spain's credit downgrade and widening bond spreads between Mediterranean nations and the Big 2. EURUSD runs the risk of calling up $1.27, which is the TL support along the bearish wedge from the Nov lows and the core of the consolidative range prevailing. . . You must be a subscriber of Intraday Market Thoughts to read rest of content.

Cable drops to fresh 7-year lows below $1.4150, while EURUSD dips to the $1.3020 target as Asian markets pick up the losses where European markets left off on Monday. But the latest bout of risk aversion is concentrated in the European currencies, rather than commodities FX as USDJPY remains supported above 90 and gold attempts to hold above $830. Sterling bears await fresh selling ahead of the morning's CPI figures, which may be expected to drop below 2.5%, thus paving the way for zero interest rates in the midst of second gvt bailout.

USD and JPY add on to gains as European bourses deepen losses following the near-nationalization of UK banks. Cable already at $1.4470, a level suggested to CMC Clients as a target for tomorrow (post CPI). This could imply a possible sub $1.4300 tomorrow in the event that UK Dec CPI drops below 2.5%. EURUSD eyes $1.3020 for tomorrow. As losing European equities skip the US session into Asia, we could see USDCAD ... You must be a subscriber of Intraday Market Thoughts to read rest of content.

EURUSD breaks under the $1.32 figure as European bourses enter negative territory following a short-lived rally on the heals of the UK govts' second bailout. S&P's eventual donwgrade of Spain's credit rating is also adding to EURO's losses. Less than a week after the US governments latest provision of backtops to BoA and Citigroup, and the unveiling of Germanys $50 billion fiscal stimulus plan, the UK government announced its second bank rescue, comprising additional multi-billion pound asset protection schemes. A recurring pattern to these government announcements is the simultaneous announcement of large scale banking losses with that of government bailouts. We witnessed such pattern in autumn 2007 when multibillion US dollar losses by Citigroup, Merrill Lynch and UBS were coupled with announcements (on the same day) of multibillion US dollar injections by sovereign wealth funds from Singapore and Abu Dhabi.