Intraday Market Thoughts Archives

Here's Ashraf interview on CNBC yesterday with Maria Bartiromo the Baltic Dry Index, copper, gold, China's trade balance and Brazil's Bovespa http://stk.ly/anojz8

EUROs CHART on REQUIRED UPSIDE TARGETS http://chart.ly/dhxw4q THIS WEEKEND will see a cacophony of statements about Greece and aid during the World Bank/IMF meetings in Washington starting today going into Monday. But watch out for remarks any further conditions imposed on Greece activating the package as potential dampeners on this latest wave of EUR optimism. France and German are in favour of disbursing aid but this wont be executed until 1st week of May. Will need to a see a break of $1.34 and $1.36 in order for any extended gains to follow-though. WATCH ASHRAF on CNBCs Closing Bell at 19:15 GMT (15:15 EST) discussing the Baltic Dry Index, commodities and FX.

CANADA CPI & RETAIL SALES Both weaker than expected. CAN CPI Softer than expected, slowing to 1.4% y/y in March from 1.6%, with the BoCs annual core CPI down to 1.7% from 2.1% vs exp 1.9%. Canada Mar retail +0.5% from +0.7% vs. expected 1.1%, while core sales from -0.1%. USDCAD eyes 1.0070, but further gains may be seen in EURCAD towards 1.3410. USD remains bid after CNBC learned that a growing number of FOMC members favours the sale of assets by Q3/Q4. This means the Fed is ready to start withdrawing liquidity ahead of the US mid-term election, which may be an added factor in triggering market jitters. Weaker than exp UK Q1 GDP also weighs on GBP and boosts EURGBP off its 100-week MA towards 0.690s. MORE USD GAINS AHEAD.

GREEK AID TALK FUELS EURO: Greek PM confirms that Greece WILL ask for EU/IMF aid. More volatility to come in the next 2-3 hours as markets set for a POSSIBLE BUY THE RUMOUR-SELL THE NEWS. EURUSD rallied 1.5 cent to $1.3346 on the news, but is failing to act as PM Papandreou begins his live statement. SIZE MATTERS: All we know now is size of aid is at EUR 45 bln ( EUR15 bln IMF and EUR30 bln from EU) so watch out for any surprisingly big amounts (announcement effects have been key), such as the EUR50 or EUR70 bln as has been indicated last week before these were dismissed as rumours. - $1.34 will be the level to break, but the next key barrier stands at $1.3550, which is the top of the 4-week channel. - EURGBP rallies off the key support (mentioned in yesterday's analysis 100-week MA); especially after disappointing UK GDP. 0.8750 stands as next substantial ceiling.

Watch Ashraf's VIDEO MARKET ANALYSIS on EUR, GBP, UK POLITICAL DEBATE, Gold, Oil. http://bit.ly/9sKamU Moodys downgrades Greece to A3 two weeks after Fitch downgraded. The Fitch downgrade didnt cause any negative EUR reaction matter as the IMF/WB deal took place that weekend. But today's Moodys downgrade of Greece may continue hurting the euro, UNLESS Greece goes on and activates that aid.

EURO NEUROSIS as SPREADS GONE WILD; Greece-German 10 yr spreads hit new record of 5.77%, Portuguese-German spread at 1.8%, USD BROADENING STRENGTH ESCALATES as EURUSD hits $1.3280, while EURGBP tests its 100-WEEK MA for the first time since 2007. US Mar existing home sales rose 6.8% vs exp +4.6%. Commodities sell-off drags oil below 81.90, eyeing 81.50, but 80.40 is the next target, which is the 38% retracement of the 69.5-87 move. AUDCAD seen testing 0.9210, Cable eyeing 1.53, especially on prolonged LDP gains ahead. USDCAD target stands at 1.0070. USDX PROBING 4-week trend line resistance at 81.72, eyeing 82.

GBPAUD consolidation enters its 4th week, but a perfect storm aiding the cross would be a favourable GBP outcome from tonights UK election debate as well as soft Aussie data, such as weak CPI next week. Tory officials have been vocal at indicating that a strong showing by the LDP would drag the country into hung parliament to the detriment of the currency. Will David Cameron and Gordon Brown aim at reducing Nick Cleggs lead by attacking him at the debate? Any signs of Cameron coming out ahead in the debate would boost GBP, while a strong showing from Brown is to have the opposite effect. GBPAUD is seen supported at 1.6450, while prelim resistance starts at 1.6680, followed by 1.6760. GBPUSD extends recovery, but pressure seen emerging at $1.5480, followed by 1.5540.

GOLD and SILVER facing their trend line resistance as other metals extend their selloff. GOLD capped at 1153, while SILVER attempts to show the same pattern shown in mid Jan but facing trend line resistance at 18.35 from current 18.05. Can these metals break the trend line resistance considering downside pressure from BDI, copper as well as the technical resistance in Dow and S&P500. Not to mention, AUDUSD increasingly struggling at 0.93. Aussie CPI due next week. A weekly close below 0.9330 should be watched,

AUSSIE & FREEPORT-MCMORAN chart http://chart.ly/fyysmt are both on their way down as copper extend losses in 4 out of the last 5 days (see latest weekly article on BDI). FCX, one of the worlds biggest copper producers, beat earnings by 20 cents/per share today but it looks like markets are already pricing in the economic recovery, which may limit any upside in copper and related companies/currencies. HEAD&SHOULDER in FCX is evident. FCX today also falling below BOTH its 55 and 100-day MA. We mentioned yesterday how Aussie fortunes are increasingly gloomy against USD and AUD, with prelim targets at 0.9150 and 0.9215/

THE CASE FOR $1.30 EURUSD remains very much alive. $1.27 is a subsequent target for Q3. Selling the rebounds is here to stay. The April 12-13 high was the only blip out of the 4-month down channel, but the fact that the spike was eliminated w/in 5 days underlines the technical case against EURUSD. France confirmed 6.3 bln euros as its part of aid to Greece, but markets looking at Athens ability to repay its debt beyond May. $1.3470 stands as immediate resistance, with prelim downside target at $1.34, followed by $1.3340. GBPUSD rallies on mixed employment figures (claimant unemployment fell by 33K but unemp. rate hit 14-year high of 8.0%). High profile resistance seen at $1.5470.

OIL's $2.00 RALLY IS NOT ENOUGH to break above the 84 trend line, which similar to last Wednesdays $3.00 rally when it failed the $86.40 trend line resistance. Despite a stronger than expected ZEW survey from Germany, Greece continues to weigh on the euro, which is down a full cent. EURCAD enters its 6th straight weekly decline, while todays 300-pip decline, gives back 9-days with of gains. Prospects of retesting the 1.33 are on the rise, but AUDCAD is the pair which will likely face deeper selling against the loonie as the uncertainties from Chinas monetary policy escalates further. GOLD capped at 1144hourly trend line resistance from Fridays1160 high, calling for 1128.

LOONIE SOARS after the Bank of Canadas interest rate decision to hold rates unchanged was accompanied by BIGGER THAN EXPECTED UPGRADE of 2010 GDP growth to 3.7% from the previous 2.9% and seeing CPI higher than its 2% target in 2010. Another HAWKISH remark was to remove the conditional commitment to keep rates on hold until end of June and indicating that it is appropriate to begin reducing the degree of stimulus. We warned in our prior IMT against any upgrade in GDP growth. The ultimate outcome was beyond our expectations, which dragged down USDCAD to 0.9980 and AUDCAD below 0.9290 from 0.9370. Our followers on twitter http://twitter.com/alaidi were told of the upgrade 7 seconds after the release as well as the 0.9980 and 0.9290 targets in USDCAD and AUDCAD. Oil remains below 83.60 resistance. Any further retreat in equities will further drag on AUDCAD towards 0.9240, while USDCAD may find stabilization at 0.9960-70 before regaining 1.0130 according to weekly chart.

The Bank of Canada rate decision is due at 13:00 GMT will undoubtedly make another reference to the strong loonie dampening. But watch for any upgrades in the BoCs GDP growth forecasts. In Jan, the BoC forecasted GDP growth at 2.9% and 3.5% for 2010 and 2011. Daily stochastics in USDCAD treading on bearish ground, with support standing at 1.0070s. EURUSD seen capped at $1.35, which is the support of most of last weeks price action. GBPUSD boosted by higher than expected mar CPI figures, but emerging resistacne standing at $1.5440, hrly trend line from Apr 15 high.

FRIDAY's 14% SPIKE IN THE VIX suggests that Fridays declines in US equity indices might not be a 1-day event. Each of the last +8% spikes in the VIX (Jan 20th and Feb 4th) involved a decline of at least 5% and lasting at least 1 week in US major indices. One UNUSUAL DEVELOPMENT in the recent rally of US equities is that emerging market indices (Brazil's Bovespa and India's Sensex) had fallen by as much as 4% BEFORE the high was reached in US indices. Such rare divergence between emerging market equities and those in the US suggested that S&P500 and Dow are due for a correction of at least 3-5%, which could drag the S&P500 and the Dow towards 1,150 and 10,550 respectively.

GREEk-GERMAN 10 yr BOND YIELD SPREADS shoot up to fresh record high of 462 bps EURUSD shed another half a cent to $1.3425. Volcanic ash is not only disrupting German air-space until Tuesday morning, but also delaying the arrival of the EU/IMF officials to Athens to discuss a 3-year policy program for Greece. The economic consequences of further blockage in European air traffic will be an added factor against the euro. Sterling dragged down by LDPs lead in all of the major opinion polls (not only debate polls), which increase the risk of a hung parliament. GBPUSD next target at $1.5135, while EURUSD risks calling up $1.3350 later this week.

3-G MARKETOLOGY OF T|HE WEEK: Greece-Goldman-Growth(inChina); three major forces that could extend Friday's risk aversion play. EU/IMF will try to suppress the latest rebound in Greek bond spreads (from last week's 427 bps) with another teleconference this Monday to discuss the terms of a bail-out package (which Greece remains reluctant to use). TUESDAY will see another 1.5 bln EUR bond issue, while Goldman Sachs will report earnings (also Tuesday) in the midst of the SEC accusation, which could cost GS more than $800 mln in legal costs/fines/settlements-excluding any conviction consequences. Meanwhile, China upped the ante on cooling off its property bubble by raising down-payments and mortgage rates. Lets wait for details regarding new taxes on property buys.