Intraday Market Thoughts Archives

On Feb 8, AshrafLaidi.com shared this chart http://chart.ly/8ec4fx on GBPUSD net longs/shorts, warning that MORE GBP SHORTS were ahead (read caption in chart). GBP net shorts soared to 62,884 this week from about 21,000 in Feb 8 while GBPUSD lost over 500 pips to $1.5200. On Monday Feb 22, we warned on the site and twitter.com/alaidi about the upcoming slide in CADJPY. The pair lost 200 pips by Tuesday and another 100 pips on Wednesday. Finally, Thursdays HotChart on AUDNZD speaks of itself. http://bit.ly/b9DCb9 Such is the nature of the predictions and insights given on AshrafLaidi.com, using fundamentals, technicals and marrying all major market segments. Gold did not reach our target this week, but we have not abandoned our medium term bearishness in the metal.

UK gilt yields showing a extreme bearishness on a price and oscillator level SEE CHART http://chart.ly/2mtrrc suggesting the ongoing weakness in GBP is here to stay. GBP is now the worst performing currency over the month-to-date, year-to-date and over the last 6-months when compared to the top traded 11 currencies. GBPUSD is now 7% below its 200-day MA, showing all the technical signs for further damage onto the $1.5050 and $1.48. Gold defies our bearish call for the week, now facing resistance at 1120., a break of which will call up the next barreier at 11134.

GBP tumbles across the board, further breaking away from its previous positive correlations with equities as the likelihood of further quantitative easing from the Bank of England haunts the currency. Readers of this website will recall our Dec 18 article http://bit.ly/5Meew3 laying out the case for why Sterling to Regain Whipping Boy Status in 2010. GBPUSD looks for preliminary target at $1.5130 after the $1.53 retarcement had been shattered. Any rebound remains capped at $1.5270 and $1.5330. GBPJPY probes the 135.70 support (61.8% retracement of the rise from the 118.90 low to the 162.91 high. Subsequent target at 135.30, followed by 133.80. US prelim Q2 GDP expected to be revised to 5.6% from 5.7%. CANADA Q4 Current Acct exp C$ -8.7 bln from C$ -13.bln. USDCAD supported at 1.0540, a break of which to call up 1.0480. But upside remains intact, for renewed test of 1.0590 and 1.0630.

Today's RUMOURS about CHINA BUYING buying the remaining 200 bln tonne of gold have yet to confirmed, but they were reportedly effective in supporting the metal against USD considering the sharp rally in USD and JPY. A Chinese website (China Daily) denied the news while a Russian publication (Pravda) confirmed it. Why would a buyer of something announce its actions before the purchase? Either the purchase had already been done or the news was let out inadvertently. It is the same concept with those reports of Arab Gulf central banks diversifying into EUR away from USD back in 2006-07; or PBOC buying EUR and less USD. Theres no reason for a central bank to pre-announce a purchase of a currency (unless it was intervening). Going back to this weeks article on Gold & EUR http://bit.ly/989mRs, note the chart on the Gold Net Longs/Shorts indicates the decline in net longs has some way to go. And in each of the preceding peaks attained, net longs fell 70% off each peak before starting to recover. Net longs are currently down 30% from their Dec peak, which helps suggest will reach towards the 145K contracts territory from the current 188K. We maintain our 1025 target in gold for next month.

Todays equity sell-off is accompanied by the biggest daily decline in oil since Feb 4, pushing the fuel below its 55-day MA, Gold, however, recovers after 3-consecutive daily losses on reports that China will buy the IMFs remaining 200 tonnes on sale by the IMF. A close above 1109 in gold could extend upside towards 1117. NEW HOT CHART UPDATED ON AUDNZD. http://bit.ly/b9DCb9

The GBP damage remains the headline of the day (see previous IMT) amid rising expectations of further quantitative easing from the Bank of England. GBPUSD bottoms at the $1.5273--50% retracement of the rise from the Jan 2009 low to the Oct 2009 high. Any recovery is seen capped at $1.5345-50. GBPJPY faces more losses at 135.20. Speculation that S&P would downgrade Greece credit rating weighed on EUR but the $1.3445 support continues to hold for now. AUD follows GBP in being the worst performer of the day, whose lower lows in the weekly chart suggests a possible testing of 0.8775 in AUDUSD. Gold immobile around 1090, with 1060 preliminary target intact, followed by 1035. View Ashraf's interview on CNBC yesterday discussing GOLD & EURUSD http://bit.ly/ bZ6Fwz

GBP DAMAGED ACROSS THE BOARD on comments from BoE Adam Posen reiterating Kings remarks about keeping the door open for renewed quantitative easing. Thursdays speech from King may just as well as reiterate these points once again, but traders must be aware of the revised UK Q2 GDP figures on Friday. Also weighing on cable is the latest Telegraph article reporting UBS $1.05 target. GBPUSD vulnerable to $1.5320 target, followed by $1.5240. USDCAD eyes 1.0590.

Ashraf's interview on CNBC earlier today giving his outlook for GOLD & EURUSD http://bit.ly/bZ6Fwz

ASHRAF's 1-DAY COURSE on FX & INTERMARKET DYNAMICS - Saturday, March 13 in LONDON *** REGISTER HERE *** : http://bit.ly/bSHPbb

Dollar regains ground after brief losses following the release of Bernankes speech, which sounded a bit more dovish than expected, reiterating the Fed Funds rate to remain exceptionally lowfor an extended period. The 11% decline in Jan new home sales failed to move the market. Traders must await the Q&A session where more detail may be shed regarding the exit strategy. GBPJPY among the biggest losers as JPY rallies across the board, dragging USDJPY to 89.78. EURUSD 4-hr faces prolonged gains towards $1.3640, while cable remains limited at $1.5485-90. Gold seen capped at 1110 before renewed downside emerges.

Ashraf's Video Market Analysis previewing Bernanke's testimony http://bit.ly/9CXYiZ Insights on gold, EURUSD, GBPUSD, CADJPY, USDJPY and Crude.

Asian markets head into rock & a hard place, following 10-month lows in US consumer confidence and a quadruple credit downgrade by Fitch of Greeces top 4 banks. Jitters ahead of Bernankes Wednesday testimony (see latest article for more details). Catch Ashraf Wednesday on CNBC-US Squawk on the Street 9:40 EST (14:40 EST) discussing EUR, gold and USDX.

DOUBLE ASSAULT on risk appetite as Fitch downgrades its rating on Greeces 4 biggest banks right before US consumer confidence plunges to 10-month low at 45 from a revised 56.5. We warned on Twitter.com/alaidi 40 seconds after the breaking news on consumer confidence that the figures were widely positive for the yen and that all yen crosses would fall violently. CADJPY tumbles 190 pips from yesterday (eyeing 85), USDJPY, EURJPY and GBPJPY tumble extend damage, with USDJPY vulnerable to 89.80 after hitting 90.70 target. USDCAD surges past 1.05 target from previous IMT. GBPUSD seen capped at 1.5520 & EURUSD capped at $1.36. SPACE IS RUNNING OUT at ASHRAF's 1-day LONDON COURSE March 13th, where FX RISK AVERSION DIFFERENTIATION WILL BE EMPHASIZED http://bit.ly/bSHPbb

3-YEAR ANNIVERSARY of the Pre-Crash Correction: February 27 (marks the 3-year anniversary of the 1st correction in global bourses, which wiped out nearly $600 billion in market value, triggered by fears of higher transaction taxes in China, an expected plunge in US durable orders and preliminary fears of US subprime debt. The Shanghai Composite plunged 10%, NASDAQ fell 4% and DJIA dropped 3%. While the global patient has shown marked signs of improvement, it remains highly vulnerable to multiple sources of contagion (Eurozone fiscal woes, Chinese tightening, rating concerns in Gulf & pace of liquidity reduction by Fed).

GBP drops across the board as Bank of England Governor King continues his perfect track record of dragging down the currency lower each time he speaks since August. Todays parliamentary testimony reiterated that the CPI increase was temporary before falling back below the 2% target in H2, and that the central risks to the recovery remained to the downside. King also reiterated the possibility for renewed quantitative easing, Cable drops from $1.5575 in Asia to $1.5396. Expect a recovery towards $1.5460s ahead of US consumer confidence figures before a possible decline back towards $1.5380s. Disappointing German IFO data drags down EUR by a full cent to $1.3590s. CADJPY is down 80 pips from yesterdays IMT, now likely to call up 86.70s in event of disappointing US consumer confidence. USDCAD eyes 1.0480.

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Yen is best performing currency of the day (after NOK). CADJPY falls by more than 60 pips from the last IMT calling for declines in the pair. USDJPY hits 91.10 target, with 90.80 remaining viable, while gold demonstrates another high profile failure at 1123. Subseq target for CADJPY stand at 86.59, followed by 86.00 into the week. German Feb IFO (9:00 GMT) & US Feb consumer confidence (15:00 GMT) see calendar for more detail http://www.ashraflaidi.com/economic-calendar/

Ashraf''s interview on Bloomberg earlier today discussing the ECB, euro, sterling http://bit.ly/cbyidT We're still bearish on gold, expecting 1020 to take place well before end of quarter. CADJPY seen extending losses towards 87.20, 86.80, with resistance imposing at 88.60.

Another case of data(less) Mondays when risk appetite pushes higher at the expense of USD and JPY. But GBP remains pressured after those disappointing public sector figures last week, which showed the first January deficit since records began in 1993. GBPUSD 4-hr failing to regain the $1.55 trend line resistance and at risk of recalling $1.5430. USDJPY still unable to break above 92.00 since mid January, now looking to retest 91.10, followed by 90.75. EURCHF drifting back towards the 1.46 intervention zone after SNB VP Jordan said he sees gradual tightening of Swiss monetary policy. Watch out from any wave of buying near 1.46.