Intraday Market Thoughts Archives

We can see the DOJI candle on the daily EURUSD chart. Doji candles are bullish especially when formed at the end of a declining leg. 3 days after the Troika gave 2 extra years to Greece to meet its 3% Debt/GDP target, the IMF Mission to Spain gave a thumbs up in its preliminary report regarding reforming the financial sector and the meetings of in the Memorandum of Understanding agreed with the EU. Apple stock drops below the $600 level for the first time since July and looks bound towards its 200-DMA (587) for the first time in 362 days. Next week will see those PMI figures from the Eurozone, UK & US as well as the all important US jobs report. Both EURUSD from this weeks Premium Insights are filled, with USDJPY, 1 of 2 CADJPY also filled and AUDUSD hitting all targets. 1 of 2 EURGBP was stopped out. We added 4 charts on EURUSD and gold to dissect the technical complexities for gold (daily and weekly sochastics and MA confluence) as well as euros intermediate trendline and its shifting behavior relative disappointing IFO & PMIs. For direct access to these Premium trades, please click here: http://www.ashraflaidi.com/products/sub01/access/?a=691 Non subscribers, can click on here to join: http://www.ashraflaidi.com/products/sub01/

Durable goods orders added a downside risk to Friday’s GDP report. The pound was the best performer while the yen lagged. Reports continue to circulate about Japanese government stimulus and central bank easing. See below for last night's Premium Insights.

US trading had a decided tone of risk aversion after the report on durable goods orders showed a continued reluctance by businesses to invest. Non-defense orders excluding aircraft were flat in September compared to a 0.8% rise expected. The prior reading was also revised lower.

Several economists revised Q3 GDP estimates lower after the release and the true market consensus is now probably 1.6-1.7% rather than the 1.8% cited by news agencies. The numbers also point to a weak fourth quarter, virtually assuring that full-year growth will be below 2%.

In other economic data, initial jobless claims were 369K compared to 370K expected and pending home sales rose 0.3% compared to 2.5% expected.

The euro rose in early European trading, hitting 1.3020 but slumped throughout US trading, falling as low as 1.2927 late in the day.

The yen was weak across the board despite jitters in the stock market. GBP/JPY rose to the highest since May and several other yen crosses broke key levels. Reports continued to circulate about a 700B yen government stimulus plan and 10T (or more) in additional BOJ quantitative easing. The governor of Tokyo also announced a new political party which will run in elections expected early next year.

The top item on the calendar is Japanese CPI at 2330 GMT. National CPI for September is expected to fall 0.5% y/y. October Tokyo CPI is forecast to fall 0.2% y/y.

GBPUSD long from last night's Premium Insights was unfilled by 4 pips. 1 of 2 EURUSD filled from last night's Premium Insights. The same for USDJPY, 1 of 2 CADJPY and AUDUSD. We added 4 charts on EURUSD and gold to last nights Premium Insights to dissect the technical complexities for gold (daily and weekly sochastics and MA confluence) as well as euros intermediate trendline and its shifting behavior relative disappointing IFO & PMIs. For direct access to these Premium trades, please click here: http://www.ashraflaidi.com/products/sub01/access/?a=691 Non subscribers, can click on here to join: http://www.ashraflaidi.com/products/sub01/

-AB

Out of 8 major equity indices (Dax-30, Eurostoxx-50, Nasdaq Composite, Dow-30, S&P500, Nikkei-225 and Hang Seng) , the FTSE-100 remains the worst performer so far this year, +4.2%, compared to as high as 22% and 18% for the Dax and the HangSeng respectively. See full analysis here: http://www.cityindex.co.uk/market-analysis/market-news/1253212012/uk-gdp-ftse-racing-to-the-bottom/

From recession to best GDP figs in 5 years. UK GDP figures power to the upside as Q3 GDP jumps to 1.0% from -0.4%, -0.3% and -0.3% in Q2, Q1 & Q4 2011 respectively. Markets were expecting a rise of 0.7%. Cable leaps to 1.6135, but unfortunately the cable long from last nights Premium Insights was unfilled by 4 pips. 1 of 2 EURUSD filled from last night's Premium Insights. The same for USDJPY, 1 of 2 CADJPY and AUDUSD. We added 4 charts on EURUSD and gold to last nights Premium Insights to dissect the technical complexities for gold (daily and weekly sochastics and MA confluence) as well as euros intermediate trendline and its shifting behavior relative disappointing IFO & PMIs. For direct access to these Premium trades, please click here: http://www.ashraflaidi.com/products/sub01/access/?a=691 Non subscribers, can click on here to join: http://www.ashraflaidi.com/products/sub01/

AL

The FOMC maintained a steady hand as expected on Wednesday. The Australian dollar was the best performer while the euro lagged after Draghi mentioned deflation. The RBNZ held rates in the only event on the Asia-Pacific calendar. Wednesdays release of the Premium Insights include new trades on EURUSD, USDJPY, EURJPY and much more. See link below.

Expectations were low for policy changes and the Fed managed to meet them. The FOMC statement featured only the slightest changes in language referring to soft business spending, a better outlook for consumer spending and slightly higher inflation.

Before the meeting, there was talk the Fed may remove its mid-2015 calendar guidance in favor of goals tied to economic performance but that did not come to pass. The next meeting is Dec 12, where the Fed will decide what to do when Operation Twist expires.

Markets were choppy in US trading. The pound climbed near 1.6050 after UK PM Cameron hinted that Thursdays GDP numbers will be strong. The euro rose on more talk that Greece will get more time to implement austerity policies but slipped after Draghi said deflation is a bigger risk than inflation.

USD/CAD rose after BOC governor Carney said the case for raising interest rates was less imminent.

Early in Asia-Pacific trading, the New Zealand dollar rallied after new RBNZ governor Wheeler left rates at 2.50%, as expected. There was speculation he may shift toward a dovish stance but there was no hint of lower rates.

The yen was virtually unchanged but Kyodo reported that the government is considering a 400B yen stimulus package. The September corporate service price index is the lone item on the calendar, at 2350 GMT.

Wednesdays Premium trade include 2 new on EURUSD, 1 new on USDJPY, 2 new on CADJPY, 1 new on AUDUSD, 1 new on EURJPY, 1 new on cable, 1 new on EURGBP, and 1 new on gold. For direct access to these Premium trades, please click here: http://www.ashraflaidi.com/products/sub01/access/?a=691 Non subscribers, can click on here to join: http://www.ashraflaidi.com/products/sub01/

-AB

Ashraf points out to CNBCArabia Euro markets (FX & bonds) are showing the opposite behaviour from earlier this summer, being the last to sell-off during risk aversion, while back in May-July, euro FX & bonds were the last to stabilize during rallying equity markets. More here: http://www.fxsolutions.com/blog/ae/?p=198

The S&P 500 was hit hard again Tuesday, sending risk trades lower. The yen led while NZD and EUR lagged. Major risks lurk in Asia-Pacific trading with Australian CPI and the Chinese flash manufacturing PMI on the calendar.

Corporate earnings hurt confidence in growth and hiring, pulling the S&P 500 1.4% lower and European bourses down as much as 2.2%. The Australian dollar tracked the moves lower, falling to a one-week low.

Economic data added to the negativity as the October Richmond Fed fell to -7 from +4 in September. A NYT report also said the Bernanke has told friends that he will step down at the end of his term. His replacement may be less likely to keep the monetary taps open, especially if Romney wins.

The main events on the calendar are Australian Q3 CPI and the HSBC flash China PMI.

The Australian CPI figures will be released at 0030 GMT and expected to show a 1.6% y/y rise. The trimmed mean is expected up 2.2% after a 2.0% rise in Q2. The OIS market is pricing in a 20% chance of an RBA cut on Nov 6 and a soft CPI reading will solidify those expectations.

The key number comes at 0145 GMT when HSBC releases its monthly manufacturing index. The September reading was 47.9 and the index has been below 50 for 11 months. Expect the Australian dollar to be hesitant between the two releases but, if both are low, it will fall.

-AB

Just as the Canadian dollar was suffering losses from Canadas rejection of Malaysian-owned Petronas takeover bid of Progress Energy Resources, the currency gets a sudden lift from todays Bank of Canadas policy statement indicating: some modest withdrawal of monetary policy stimulus will likely be required. But knee-jerk reactions to central bank statements are typical ... and the reaction to the above statement was premature. Read more: http://www.cityindex.co.uk/market-analysis/market-news/1151752012/loonie-caught-between-boc-government/

USD/JPY rose for the eighth consecutive day on Monday, hitting the highest levels since July. The euro was the best performer while CAD was surprisingly resilient. The Asia-Pacific calendar is light but reports continue to surface about BOJ easing next week and the US Presidential debates conclude. More on the latest Premium Insights is found below.

USD/JPY rose to within a few pips of 80.00 and EUR/JPY rose near 104.50 as the relentless yen exodus continued after yesterdays soft export numbers. The worst levels for the yen came after Toyota made an offer to take over a US manufacturer in a deal thats worth less the $1 billion but continues then trend of Japanese M&A outflows.

Gold bounces off its 55-DMA (testing for first time in 2 months), while oil attempts to hold above its 200-WMA for the 4th consecutive week. Dow-30 trades below its 55-DMA for the 1st time since July. Look out for Wednesdays release of Oct IFO survey from Germany, whose anticipated improvement will likely boost EUR pairs. The index has a strong record in triggering EUR moves on upside surprises.

Even a round of risk aversion in the stock market could generate the normal flight to the yen. The S&P 500 touched the lowest since early September before rebounding to close unchanged.

The market is convinced the BOJ will act next week after another report, this time from Reuters, that said the BOJ is leaning toward further easing at the Oct 30 meeting. Another 10 trillion yen of QE is possible.

The euro rallied to the highest against the pound since April but was rangebound near 1.3060 against the dollar. Reports that Greece will get a two-year extension to complete its loan goals boosted EUR/USD to 1.3080 but it fell back when a German lawmaker said Greece is unlikely to receive an official haircut or more bailout funds.EURGBP tests its 200-DMA for the first time since 11/11/2011.

The latest Premium Insights section has details on multi-week breakout and the ensuing run-up in EURGBP halfway through the multi-year channel. Both EURUSD Premium trades are in progress. CADJPY hit all targets and so did 1 of 2 GBPUSD, with the other in progress. 1 of 2 EURJPY remaining in progress after missing the final target of 104.20 by 6 pips, while the other remaining unfilled (missed entry by 7 pips). USDJPY and AUDUSD were stopped out. EURGBP in progress. 1 of 2 gold in progress, the other stopped out and silver remaining in progress. US crude oil remains in progress. For direct access to these trades and the technical rationale to that featured EURGBP play and charts, click here: http://ashraflaidi.com/products/sub01/access/?a=688 NONsubscribers can join here: http://ashraflaidi.com/products/sub01

-AB

EURGBP tests its 200-DMA for the first time since 11/11/2011. Premium subscribers were warned last week of the multi-week breakout and the ensuing run-up halfway through the multi-year channel. Gold bounces off its 55-DMA (testing for first time in 2 months), while oil attempts to hold above its 200-WMA for the 4th consecutive week. Dow-30 trades below its 55-DMA for the 1st time since July. Look out for Wednesdays release of Oct IFO survey from Germany, whose anticipated improvement will likely boost EUR pairs. The index has a strong record in trigering EUR moves on upside surprises. Both EURUSD Premium trades are in progress. CADJPY hit all targets and so did 1 of 2 GBPUSD, with the other in progress. 1 of 2 EURJPY remaining in progress after missing the final target of 104.20 by 6 pips, while the other remaining unfilled (missed entry by 7 pips). USDJPY and AUDUSD were stopped out. EURGBP in progress. 1 of 2 gold in progress, the other stopped out and silver remaining in progress. US crude oil remains in progress. For direct access to these trades and the technical rationale to that featured EURGBP play and charts, click here: http://ashraflaidi.com/products/sub01/access/?a=688 NONsubscribers can join here: http://ashraflaidi.com/products/sub01 - Oct

-AL

The euro and Canadian dollar will be in focus to start the week after Spanish election results and a surprise anti-investment decision from the Canadian government. Last week, in a sign of the indecision in markets, the Australian dollar was the best performer while its commodity cousin CAD lagged.

Early exit polls in the Spanish regional elections suggest Basque nationalist parties have won, which will increase momentum toward separatism. The government received some good news in Rajoy home region of Galicia where it won an absolute majority.

An unwillingness to anger voters ahead of the elections was a factor that restrained the government from applying for ESM aid. So long as separatist momentum is restrained, the euro should benefit from a fresh mandate.

The Canadian dollar is likely to start the week on the defensive after a surprise government move to block Malaysias state-owned energy producer in a $6 billion takeover of a Canadian natural gas producer saying it didnt provide a net benefit to Canada.

The completely unexpected move comes as the government reviews a separate $15 billion takeover by a Chinese state-controlled company. Signs that the country is closed for foreign investment will take untold billions off the table and undermine CAD.

At the same time, the Bank of Canada meets on Tuesday and it is looking increasingly likely they will remove the hawkish tilt from the statement. On Friday, soft inflation added to the argument as CPI fell to 1.2% y/y compared to 1.3% expected.

The stock market sent traders into the weekend on a jittery note. The S&P 500 fell 1.7% in the largest decline since June. Considering the decline, FX was relatively stable but if further losses materialize that is unlikely to continue.

The EU Summit wrapped up without any measures to boost confidence in periphery debt markets although there was talk of governments sharing losses on legacy assets with the ESM and other countries in the union.

In the Middle East, tensions continue to rise after the car bombing in Beirut. Separately, joint US-Israel military drills are raising fears of a strike against Iran.

1 of EURUSD in progress, CADJPY hit all targets and so did 1 of 2 GBPUSD, with the other in progress. 1 of 2 EURJPY remaining in progress after missing the final target of 104.20 by 6 pips, while the other remaining unfilled (missed entry by 7 pips). USDJPY, AUDUSD & 1 EURUSD were stopped out. EURGBP in progress. 1 of 2 gold in progress, the other stopped out and silver remaining in progress. US crude oil remains in progress. For direct access to these trades and the technical rationale to that featured EURGBP play and charts, click here: http://ashraflaidi.com/products/sub01/access/?a=688 NONsubscribers can join here: http://ashraflaidi.com/products/sub01

-AB