Intraday Market Thoughts Archives

Swiss President asked US Trsy Sec Geithner for the US to drop its case against UBS on tax fraud. If the US accepts, the condition may be to force Switzerland to change its accounting standars and bank secrecy laws, which would be a negative for the franc. Switzerland will have to hold referendum for such changes to take place. Tough choices ahead.

Smaller than expected loss from Ford and decline in US durable goods orders help fuel equities further and stabilize risk currencies such as GBP, EUR, CAD and EUR. The announcement on US banking stress tests is due out in about one hour and could prove a turning point in appetite. S&P500 stands at 867, 8 points away from last Fridays high. Recall, the 2 month cycle has yet to unfold until the first week of May, which could prove an essential time threshold for the current equity bounce. Cable recovered above the $1.4730 trend line resistance and could eye the next target $1.4830. EURUSD posts its 4th straight gain, eyeing $1.3380. Support climbs to $1.3120.

Sterling the worst performer ahead of USD on worse than expected Q1 GDO and concerns of a possible downgrade of the UKs credit rating. Cable targets at 1.4580, followed by 1.4530 in event of pullback in US trade. Note how Japanese stocks closed lower despite positive US Thurs session (due to after hour earnings). This will likely push US indices lower, thus, weighing further on GBP, to the benefit of JPY. Also consider accumulating EURAUD for 1.8850 target from current 1.8457. Support stands at 1.8230.

German IFO survey at 8 am GMT (9:00 London). Watch the Current Assessment/Situation component of the IFO survey whether finally rose from 82.7 after falling continuously since the summer. GBP drops across the board as reports crop up on a possible downgrade of UKs credit rating following the latest spurt in announced borrowing from Wednesdays budget. EURGBP regains 90 pence, while cable eyes $1.4580 and $1.4530. USDJPY extends losses below 97, whole gold regains $900, eyeing previous target of $922, silver targets 13.07 (55-day MA) i.e. trend line resistance from February high. Weekly Silver chart shows 13.60.

EURCHF could be set up for a bounce as the SNB gets nervous again about CHF strength. The line-in-the-sand for the SNB has been 1.5080s at which point SNB says "no more" and threatens to intervene to sell CHF again as it did over past 4 weeks. Technically, the line-in-the-sand coincides with the 100-day mov avg. Stochatics also suggest oversold action in EURCHF. Consider 1.52 target with limit @ 1.5040 i.e. just below the 55-day MA.

Gold and silver post their biggest gains since the Feds Mar 18 decision to buy long term bonds reaching $906 and $12.79. Golds 55-day MA coincides with the $920 target, while silver eyes its 55-day MA at $13.07, coinciding with its 4-mth trend line resistance. Daily oscillators favouring more silver upside than gold.

CAD pushes sharply high as the Bank of Canada says it will not yet start quantitative easing despite Tuesdays decision to cut rates to 0.25%. Markets were expecting the BoC to start forms of quant easing (buying private and govt assets) immediately. USDCAD breaks below 1.2270 TL support and could extend towards 1.22 in event of a positive turnaround in stocks.Upside target dragged down to 1.24. CADJPY risks calling up TL resistance at 80.70.

Risk aversion trades in FX extend their flows as US March exist homes sales fail to follow on the gain in Feb sales. JPY strength drags USD down to 98, eyeing 97.70. Cable eyes $1.4470, capped at $1.4650 CAD awaits BoC report/speech in 25 mins. S&P500 eyes 829, Dow targets 7,7430. New Hot-Chart on USDCAD-S&P500.

US jobless claims +17K to 640K w/in expectations while continud claims hit new record high of 6.14 mln, helping 10-year bond yields to come off their 2.92% highs, which is a positive for stocks. Markets await US existing home sales and whether they rise for the second straight month (Februarys 5.1% jump). USDCAD briefly slipped after Canadian retail sales +0.2% vs expectations of -0.3%, while autos +0.2% vs expectations of +0.6%, but traders cautious ahead of BoC report at 14:30 GMT.

USDJPY short term techs exposing failure to breach above 98.40s, despite Asian rally and positive equity flows in Europe. 98.70 seen as a subsequent barrier, but the fading oscillators suggest a decline towards 98.00 and 97.80. US jobless claims and existing home sales will be closely scrutinized as to whether the improvement in prior figures (falling claims and rising sales) would be prolonged.

Another Canadian rendez-vous tomorrow with the Bank of Canada at (14:30 GMT) as it releases its monetary policy report, followed by a news conference at 1515 GMT detailing the framework of its newly established quantitative easing policy. As BoC Governor Mark Carney and Senior Deputy Governor Paul Jenkins lay out the economic rationale (downgrading CPI and GDP growth), CAD seen pressured anew. We saw how markets reacted after the Tuesday decision to cut rates by 25 bps to 0.25%. With CAD falling in the last hours of NY trade on falling equities, this may be the set up to 1.2580 and 1.2660. Stops still recommended at 1.2270-90.

Closely watch stocks' struggle to hold on recent gains and the repsonse from FX, especially currencies which are vulnerable to risk aversion (GBP, NZD, CAD, AUD and EUR). EURAUD is an example of a risk aversion trade seeking prolonged gains, targetting 1.8830s from current 1.8340 in the event of falling US equities and negative repsonse in Asia. FTSE-100 closed at 4,3030, 30 points below the right Shoulder resistance. Expect weak bias in CAD to prevail ahead of tomrrow's CAN retail sales and BoC policu update.

Concerns over surging planned UK treasury guilt sales of 220 bln exceeding forecasts of 150 bln bear negative implication for sterling, especially as the Debt & Mgmt Office stated that weak sterling to help alleviate the possibility of failed guilt auctions. Sterling is weakest performing currency of the day, just ahead of Kiwi. Todays breach beyond the $1.4530 target, calls for next level at $1.4380. The FTSE-100 Hourly Chart head&shoulder formation remains valid with 4,050 resistance (right shoulder) looming. Validity of 4,050 resistance underlined by right shoulder, left shoulder as well as the high from April 6th.

Sterling losses intensify on combination of soaring UK borrowing, 50% income tax hike on +150K earners and bigger than expected losses by Morgan Stanley. Substantially negative engulfing candle on GBPUSD suggests $1.4360 target. CAD losses re-emerge after -1.3% in leading indicators. USDJPY vulnerable to testing 97.20. CADJPY eyes 77.70. EUR drops to 1.29 after IMF says ECB says has more scope for easing and recession will be "particularly severe" in Ireland and "quite severe in UK". EURUSD eyes 1.2870.

UK unemployment rose by less than exp (+74K vs exp +120K) unemp rate to 4.5% vs exp of 4.6%, while avg earnings ex-bonus during the 3-montsn ending in Feb +0.1% y/y vs exp =1.4%, which the lowest on record. Falling wage growth is in line with prolonged weak price growth. Separately, the BoE minutes noted a sharp rise in unemployment is underway. Cables failure to breach above $1.47 reflects reluctance to get over interim resistance. Negative Intra-day stochastics converge w/ price action. Bids unlikely to emerge before the Budget. $1.4480 target ahead. Aussie weakened across the board after weaker than exp CPI.

Stocks boosted by Geithner's assuring markets that most US banks have sufficient capital, alleviating worries about the incoming stress tests regarding the capitalization of banks. The stress tests will be announced on May 4th. Markets also shrug IMFs report expecting $4.1 trillion in writedowns. Looking ahead, Aussie Q1 CPI figures (1:30 GMT) could drag Aussie if figures come in on low side as did Monday's PPI. Annual CPI (y/y) expected at 2.8% from 3.7%. UK Mar unemployment at 8.30 GMT, followed by the preliminary figures of the UK Budget at 11:30 GMT.

USDCAD jumps to 1.25 and CADJPY hits 78.28 as the bank of Canada cuts rates by 0.25% to 0.25%, moving officially into quantitative easing. While the decision to cut today was not widely expected, CAD losses were anticipated. USDCAD seen extending gains towards 1.2650, CADJPY eyes 75.70. VIX turns higher after closing above the April 8th gap-down target of 38.80.

FTSE-100 hourly indicates a Head&Shoulder formation in with a resistance (right shoulder) at 4,050, and a preliminary target of 3,875 from current 3,950. See today's Hot-Chart for details. Tomorrow's twin release of UK Budget, Thursday's CBI survey and Fridays retail sales and Q1 carry major event risk for GBP and FTSE-100. GBPUSD resistance stands robust at $1.4670 with target at $1.44 and $1.4360. BoC rate decision at 13:00 GMT will be key. US Tsys Geithner to speak at 14:00 GMT

Sterling breaks below $1.45 to $1.4470 session low ahead of UK CPI data (8.30 am GMT--9.30 am London time) expected to drop back below 3.0% y/y after 3.2% in Feb. $1.44 is the 50-day MA, followed by $1.4360 (50% retracement). CAD deepens losses across the board ahead of todays interest rate decision (exp unchanged at 0.50%). But the real news from the Bank of Canada will be Thursdays monetary policy report, which will shed more evidence on the central banks intentions to move into credit easing. The 78.70 target of CADJPY HotChart was hit as the pair bottomed at 78.69 in Asia. Renewed risk aversion seen ahead today.

Asian equities expected to show losses of 3%-4% losses, which will likely add to damage in Aussie & Kiwi vs USD, JPY and even EUR. Nikkei-225 eyes 8,770s & Topix at 830s. AUDJPY vulnerable to 0.6720 and AUDEUR eyes 0.5330. We asked on Friday "who woud want to buy GBP ahead of Wednesday's huerrendous Budget". Cable lost 270 pips b/ween Friday & Today. http://twitter.com/alaidi Watch Ashraf on CNBC Europe from 6.15 am to 7.00 am London Time tomorrow.

Both gold and silver are are up sharply despite a stronger USD as stocks losses intensify, prompting sector rotation away from financials into metals. Silver eyes 200-day MA of 12.33, 12.90. Gold eyes 910. Subscribers of my twitter page obtained favourable updates on Friday afternoon, pointing out the bullish Divergence in RSI and Williams % http://www.twitter.com/alaidi . Today's CADJPY Hot-Chart Strategy is 70 pips in the money.

Keep an eye on AUDNZD as the battle of the high yielders may be lost to the Kiwi in the short term as the Aussie retreats after worse than expected 0.4% decline in q/q PPI (, which means that Wednesday's CPI will also show bigger than exp decline, hence a negative for RBA. These dynamics are seen as fundamental catalyst for the turning point in AUDNZD daily chart. Target seen at 1.22440 and 1.2350. Stocks drop across the board after S&P500 failing to go above 860-865, which is the 30-31% point of the rally from the March lows.

Canada's international securities transactions for March are due out at 12:30 GMT. Previous reading showed C$10.4 bln, which was the first net foreign inflow into Canadian securities after 2 consecutive months of net outflows. See today's Hot-Chart on CADJPY and on tomorrows BoC rate decision. US Mar leading indicators index due at 14:00 GMT. (exp -0.2% from -0.4%). Busy week for Canadian data; (Leading indicators on Wed, retail sales and BoC policy report on Thurs. EURCAD shows bullish engulfing candle and improved stochastics, targeting 1.6050. USDCAD eyes 1.2390. Cable hits $1.4539.

Sterling & Aussie are the biggest losers in early London trade as the retreat in risk appetite (lower London open) magnifies losses in risk currencies. GBPUSD drops from Fridays 1.4800 to $1.4620, in line with the previous Intraday Market Thought (Friday). Wednesday's scheduled UK budget will show the governments latest evidence of higher public spending and more admissions for growth deterioration, $1.46 marks the trend line support of from the March 11 low, but losses may intensify towards $1.4530.