Intraday Market Thoughts Archives

The euro climbed to the highest since December and Greeces Parliament approved the PSI deal. The euro was the top performer while the US dollar lagged. RBA Governor Stevens delivered a speech early in Asia-Pacific trading that hinted at no forthcoming changes in rates.

The upbeat German IFO numbers and a broad move to sell the US dollar pushed the euro above 1.3350 in Thursdays US session. It looked as if the euro would be capped by sell orders at the European high of 1.3342 as sentiment deteriorated in early US trading but a late-day rebound pushed the euro into a new range.

The technical breakout in EUR/GBP above 0.8400 also continued to gain momentum, driving the pair to within a few pips of 0.8500.

Economic news continues to point to an improving US jobs picture as initial jobless claims registered 351K compared to the 351K expected.

Greece may begin its debt swap as soon as Friday after Parliament approved the deal. A hurdle for the bailout was placed by the IMF, which said it wants a larger firewall, or common rescue fund.

US dollar selling began after a strong 7-year auction pushed down yields and continued relentlessly with USD ending the day at the lows. Oil and gold took advantage of the dollar selling to push to new highs.

In Australia, Stevens said policy is about right for the moment and that he sees inflation close to target over the next two years, suggesting no rate cuts any time in the immediate future.

The only other event of the session comes at 2350 with the release of Japans corporate service price index expected at +0.1%.

The latest Premium trades (announced earlier) include EURUSD, EURGBP, USDCAD, GBPCAD, gold, oil and ESH. Direct Access to Wednesday's Trades is found here: http://ashraflaidi.com/products/sub01/access/?a=606 Non subscribers click here: http://ashraflaidi.com/products/sub01

Strong German IFO report; EU commission lowered Eurozone's GDP forecast; UK mortgage approvals rose and CBI orders improved. Jobless claims and oil inventories are next. Both EURUSD longs in Wednesdays Premium trades are done. EURGBP, USDCAD, GBPCAD, gold, US crude and USDJPY are in progress.

German data boosted risk today as all components of the February IFO release not only improved on a monthly basis but also beat expectations. The business climate improved to 109.6 from 108.3, the current assessment rose to 117.5 from 116.3 and the expectations sub component printed 102.3 from 100.9. The business climate has been improving for four months in a row and reached the highest reading since July 2011. The risk that Germany would fall into a recession seems slightly smaller now (Q4 GDP was -0.2%). EURUSD jumped on the release to 1.3342, the highest it has been since 12/2011.

Despite the improvement seen in Germany, the EU commission has lowered its 2012 Eurozone GDP growth projection to -0.3% from 0.5%. Furthermore, EU commissioner Olli Rehn said that prospects have worsened and that decisive action to boost growth is needed.

In the UK, January mortgage approvals rose to 38.1K from 36.6K jumping 33% on the year and printing the best result since 12/2009. CBI industrial orders improved to -3 from January -16.

ECB deposits rose on Wednesday to EUR 466.4 bln from Tuesday's EUR 449.05 bln.

USDJPY continues to push higher with shallow retracements, gold trades in a narrow range consolidating yesterday's large gains and EURCHF trades only 50 points above the 1.20 floor defended by SNB. Reported gigantic stop loss orders right below 1.20 could come to focus.

The list of data releases due during the US session is short today. At 8:30 am ET jobless claims are seen slightly higher at 352K from 348K followed by crude oil inventories at 11:00 am that are expected higher at 0.9M barrels from previous -0.2M.

The latest Premium trades (announced earlier) include EURUSD, EURGBP, USDCAD, GBPCAD, gold, oil and ESH. Direct Access to Wednesday's Trades is found here: http://ashraflaidi.com/products/sub01 access/?a=606 Non subscribers click here: http://ashraflaidi.com/products/sub01

US trading was lackluster during a quiet week of economic data and as the market recovers from the Greek saga. On the day, CHF and EUR were the top performers while GBP and JPY lagged. The economic calendar is quiet until IFO data from Germany. The latest Premium trades (announced earlier) include EURUSD, EURGBP, USDCAD, GBPCAD, gold, oil and ESH.

The larger moves in European trading consolidated in the US. US existing homes sold at a pace of 4.57 million compared to the 4.67m consensus estimate but the market took almost no notice of the data.

Belgian business sentiment, which is a decent indicator for Thursdays IFO, rose to -7.7 from -9.5.

Gold jumped $17 to $1777, the highest close since Nov and above a double-top from Dec/Feb. The $1800 psychological level also coincides with the Nov high.

Cable fell hard in European trading on the dovish BOE minutes but remains relatively well-supported as long as 1.5644 holds. A fall below the 55-day moving avg at 1.5606 would add further damage.

The spotlight is shifting back toward the SNB as EUR/CHF edges back toward 1.2050. Given the newfound stability in the European periphery, it is worrisome that this pair is not moving higher.

The first meaningful indicator of the day comes at 0900 GMT when Germany releases IFO data. The consensus is for an improvement to 108.8 from 108.3.

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Gold extends gains courtesy of more QE-friendly minutes from the Bank of England minutes of this months policy meeting. Last week we focused on EURGBP as the preferred path to capitalize on euros improving fortunes resulting from the ECBs liquidity-injecting LTRO and on the Bank of England's embarking on QE3. EURGBP hit a 10-week high. GBP is already the worst performer year-to-date and month-to-date out of a group of G10 currencies, behind USD and JPY. FIND OUT how all of this is tied to the LATEST PREMIUM TRADES.

Direct Access to Wednesday's Trades is found here: http://ashraflaidi.com/products/sub01/access/?a=606 Non subscribers click here: http://ashraflaidi.com/products/sub01

MPC minutes revealed calls for more QE; European manufacturing and services PMIs mostly disappoint; USDJPY above 80; ECB deposits declined. Existing home sales are next. See the latest about our Premium Intermarket Insights below.

USD trades higher against all majors. Major European equities are lower by 0.5% and the relative strength loser is NZD.

BoE meeting minutes from 2/9 revealed unanimous voting to keep rates

unchanged and 7-2 split on QE size. MPC members Miles and Posen wanted to increase QE by GBP 75 bln while others preferred GBP 50 bln increase as they believed that larger QE would send a wrong signal.

GBPUSD fell nearly 100 points within and hour as analysts expected that the decision to boost QE by GBP 50 bln would be unanimous.

Reports on manufacturing and service sectors in the Eurozone increased economic concerns as nearly all published data was not only lower in February compared to January but also worse than expected.

German manufacturing PMI fell to 50.1 from 51 and services PMI declined to 52.6 from 53.7. Eurozone manufacturing PMI rose to 49 from 48.8 and services PMI fell to 49.4 from 50.4. Composite PMI fell to 49.7 from 50.4.

Eurozone industrial orders rose 1.9% in December from -1.1% m/m and improved to -1.7% from -2.5%.

In other news, Germany sold EUR 4.282 bln of 2 year bond today (target was EUR 5 bln). The average yield rose to 0.25% from 0.17% and cover declined to 1.8 from 2.2 and ECB deposits declined to EUR 449.05 bln on Tuesday from EUR 464.1 on Monday.

USDJPY continues to push higher and broke above the psychologically important 80.00 level reaching to highest levels since 08/2011. The divergence between rising oil and declining CAD continues as USDCAD trades higher having made a series of higher lows on the hourly chart.

The only US report for today is existing home sales that is expected to increase to 4.66M in January from 4.61M in December.

Premium trades in EURGBP and gold are done, while US crude nears our 107 target. USDCAD & AUDNZD remain in progress. For direct access, pls click here: http://ashraflaidi.com/products/sub01/access/?a=605 Non subscribers can get started here: http://ashraflaidi.com/products

US markets were less impressed by the Greek bailout with risk trades losing ground after a positive start to the day. The US dollar was the top performer while AUD lagged. There are no major events on the Asia-Pacific calendar. Mondays Premium Intermarket Insights are underway.

The post-bailout bounce in the euro was short lived as EUR/USD closed out the day down slightly. It is a sign of how willing the market is to sell euros and how many hurdles remain in the debt crisis.

The EU has signed off on a bailout but the IMF said it will not approve until early March. The take up on the PSI agreement is also in question. Greece introduced legislation that would impose a collective action clause so long as 66% of bondholders participate. A low turnout could trigger legal challenges and worsen the results if CDS are triggered.

The Greek economic situation also continues to deteriorate as deficit projections for this year worsened in a leaked government budget document.

EUR/USD ranged from 1.32-1.33 on the day with stops likely looming on either side. EUR/GBP is also threatening the top of the recent range.

On market that has taken a firm direction this week is commodities. The main reason was the Chinese RRR cut but removing uncertainty about Greece added fuel to the rally. Oil touched a 9-month high, copper rallied 3% and gold is testing the Dec/Feb highs of $1762.

The Asia-Pacific calendar is light but Australias wage price index at 0030 GMT could spark light trading. The consensus estimate is for a 0.8% q/q rise.

Mondays Premium trades are in progress; include EURUSD, USDJPY USDCAD, EURGBP, AUDNZD, gold, oil & ES.

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USD firms across the board all majors in the ongoing session. Main European equities are losing about 0.5% and relative strength losers are NZD and AUD. Euro and other major currencies, except JPY, initially strengthened on news of a Greece deal, but failed to hold onto the gains and currently all trade weaker against the buck. Mondays Premium Intermarket Insights are underway.

Despite the second Greek bailout approval, market sentiment has worsened sending USD higher. With Greece out of the way, at least temporarily, traders are likely to shift their focus to 3 month and 3 year LTRO due on 2/29. ECB president Mario Draghi said that he expects the second LTRO round to produce similar results as the first round in December when it reached EUR 489 bln. EURUSD trades around 1.32 about 85 points below today's high.

Public sector net borrowing reached a surplus of GBP 7.8 bln in January from November's GBP 14 bln deficit. This is the best result since 01/2008 that increases the chance that the actual government borrowing will be less than the target for this financial year. EURGBP fell to 0.8350 from 0.8377.

Spanish auction reached a full take up with lower yields and strong bid to cover ratios as Spain sold EUR 2.5 bln worth of 3 and 6 month bills today. The second 6 month EFSF auction reached EUR 1.99 bln vs. EUR 2 bln target. Yield and cover also improved.

There are no US data releases due during the NY session today.

Canadian data is due at 8:30 am ET and include wholesale data seen lower in December at -0.2% from 0.3% (core sales exp. 0.2% from 0.3%) and wholesales sales that are expected to grow 0.5% in December from November's -0.4%.

February Eurozone consumer confidence due at 10:00 am is anticipated marginally better at -20.1 from -20.7.

GBP volatility could increase at 2:30 pm when BOE deputy governor and MPC member Charles Bean speaks in Glasgow.

Mondays Premium trades are in progress; include EURUSD, USDJPY USDCAD, EURGBP, AUDNZD, gold, oil & ES.

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Greece reaches deal with creditors under the OK of European finance ministers. NZD was the best performer while JPY lagged. Monday's Premium Intermarket Insights involve 2 EURUSD longs already in progress, while US crude gains by more than $2.00 from Thursday's trade. Also the return of USDJPY, USDCAD and EURGBP.

Eurozone ministers reached a 130bn 2nd bail-out for Greece after cohercing Greek bondholders to accept a 53.5% haircut, agreeing on autserity to reduce the debt/GDP down to 120.5% by 2020 to meet the IMF target. Greek govt will start moving towards its Troika-induced target of laying off 150,000 public sector layoffs in June. There is talk of combining ESM/EFSF firepower.

The IMF had insisted that, whatever the deal, it must bring Greeces projected debt-to-GDP ratio down to 120% by 2020. A leaked Troika document obtained by Reuters said current deals project to 129% and the finance ministers have sought to lower that figure by slashing interest on loans, forgoing ECB profits or asking creditors for a deeper haircut.

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Year to date, Brent oil is up 12%, while US crude WTI is up only 6.0%. With fundamentals and technical looking positive for both, the upside potential for crude suggests further gains. See our latest Premium Intermarket Insights following those Thursday oil and euro charts and the implications for currencies once key targets are exceeded in oil. We're also bringing back USDJPY and EURGBP. Direct Access to today's piece is found here: http://ashraflaidi.com/products/sub01/access/?a=605 Non subscribers can get a 1-week trial here: http://ashraflaidi.com/products/sub01/

Asia rallies after China's weekend RRR cut. The focus remains on Greece and the euro but the market mover all week has been the yen. On Friday, it lagged once again while GBP and EUR led. Fridays CFTC data showed euro shorts growing once again. Japans trade deficit hits new record as exports posted 4 straight monthly declines. Latest Premium trades below.

Asian markets rally after China's PBOC cut in its reserve rate requirement by 50 bps to 20.5%, making it the first cut of the year.

Japans Jan trade deficit hits new record at Yen 1.475 trillion as exports fell 9% y/y, 4 months in a row.

Sth Korean Military said will hold live-fire drills near South Korea's western border islands today, despite North Korea's threat of retaliation, MNI quoting news from Yonhap News reports.

EUR/USD pushed toward 1.32 again on Friday but was unable to break the mark and drifted back to 1.3160 at the close. News from Greece was mixed. The ECB has reportedly completed its debt swap but other European central banks will not be given the same deal. A report from Reuters suggested a 50-50 chance they will be given the same deal as private creditors.

Schaeuble appeared to soften his stance on the need for a 120% debt-to-GDP target for Greece, saying it could be 2-3 percentage points higher. Juncker, however, raised fresh concerns saying they are far away from 120%.

The more tradable story continues to be the yens slide. USD/JPY touched above the October post-intervention low of 79.52 on Friday at the end of trading, suggesting that further gains are likely. In comments Friday, Shirikawa said policy should remain loose.

Friday's CFTC data showed EUR shorts climbing to 148K from 140K. It was the first gain after two weeks of declines. Yen longs were battered, falling to +29K from +55K. Canadian dollar longs climbed to the highest since August as oil rallied to a 9-month high.

The latest Premium Intermarket Insights focus on oil and the euro & S&P500 mini, while maintaining existing trades on USDCAD, AUDNZD and gold. To go directly to the piece, click here: http://ashraflaidi.com/products/sub01/access/?a=604 Nonsubscribers can click here http://ashraflaidi.com/products/sub01/