Intraday Market Thoughts Archives

EURUSD shrugs news of the latest 24.5 billion loan to East/Cent European banks and down on mounting risk aversion. Next source of major event risk likely to take the form of an actual credit downgrade of a major Eurozone bank or the failure of an East/Cent European bank. Sub $1.2650 break likely to retest the months low of $1.2513. Persistent risk aversion that is particularly provoked by Eurozone-related issues is expected to trigger a break of $1.24 and onto the $1.2360. Upside so far capped at $1.2830. Hot-Chart on USDNOK remains valid from yesterday's call.

JPY returned to its old ways, rising on falling risk appetite despite plunging industrial production as the latest assault to shareholder value from additional government stakes in ailing Citigroup and the sharp downward revision in US Q4 GDP to -6.2% from an initial -3.8% is triggering US-centric risk aversion, thus, also boosting gold (see previous IMT). But any improvement in US equities off their initial open may send USDJPY back above 98 onto the 98.30.

USDCAD consolidation persists since November, but range has narrowed to a 5-cent range since January. Considering the trend line support of 1.2360 prevailing since Sep 29, a breach below it would likely be accompanied by a notable bounce in equities near 7,500 on the Dow and 790 on the S&P500. Despite the deteriorating climate for equities and the implications for higher USDCAD, the pair faces increasing resistance at 1.2620.

Gold extends declines to a 2-week low of $932 amid profit-taking of last week's highs. Bulls argue for increased investment demand (ETFs) and yield-eroding monetary policies by the world's central banks, while the bears point to excessive investment demand not supported by demand of actual jewellery. Today's $932.50 low coincides with the 23% retracement of the rise from the 699 low to the 1,003 high. Daily oscillators starting to indicate oversold dynamics. TL support stands at $915-20, which also coincides with the the previous TL resistance.

AUDUSD shows an increasingly positive bias, eyeing the 0.6550s for a possible transition towards the 0.6620-25 high, especially in the event that stocks close in the black today. But the 7,500 and 790 levels on the Dow and S&P500 may re-impose their presence especially as the US budget deficit nears the $1.7 trillion mark. The passing of two stimulus packages in Australia as well as the existing cushion on the interest rate front (rates at 3.25%) provides the currency with a superior base for the next move higher.

View Ashraf's appearance discussing Gold, the dollar, the loonie, yen, the Aussie, the Nokie, the equity/gold ratio and distinguishing growth and investment-led demand for commodities. http://www.cnbc.com/id/15840232?video=1045625827&play=1

EURUSD traders aware of Friday's release of Eurozone CPI expected to confirm advanced estimates for a 1.1% annual CPI, following a 1.6% reading, which supports at least 75-bps in rate cuts in the next 3 months. But from a technical perspective, EURUSD is propped by combination of bullish stochastics and stabilized consolidation suggesting the next leg up to test last weeks $1.2950, followed by $1.3020.

Worse than expected US existing home sales encourage traders to shift back to sell mode. With USDJPY having failed beyond the 97.20 resistance, the pulback is expected to be modest, leading towards 96.50, but support seen holding at 95.80. A better alternative to buy yen is against CAD, as the cross is seen heading towards 76.20 and 75.70. GBPUSD seen the preferred sell than EURUSD as this is cogently seen in the rallying EURGBP pair, which is reaching its highest in a week. Upside target 0.8980. Subsequent upside capped at 0.9050.

Markets await pres Obama's State of the Union Speech for any pointers on the banking rescue plan and the stress tests designed for banks. While it was no surprise that markets rallied ahead of the address, bear in mind that the latest trend has been for markets to sell-off after each and every speech by the new US president. FX markets shift risks towards a dollar-centric theme, which is continuing to boost EURUSD well above last weeks $1.25 lows, but resistance is expected to re-emerge at the $1.3090-00 barrier, especially as markets scrutinize the unfolding discord in within the European Central Bank.

USDCAD moves in line with today's Hot-Chart (accessed via password) a risk appetite improves at expense of JPY and USD. While both low yielding currencies are under pressure, further upside in USDJPY may attain 97.20 and onto 98.00 later in the week. EURGBP faces short term pressure at 0.8860, but rest of week may allow for prolonged gains towards 0.8920s. Foundation stand sat 0.8720.

The 3-month highs in USDJPY to 96.11 stands at the 38% retracement of the 110.41-87.28 pullback. Daily stochastics suggest extended gains in USDJPY to as high as 97.20. But the next key resistance is seen emerging at the 98.85 trend line resistance extending from the Aug 14 high. Fed Chairman Bernankes semi annual testimony to the Senate Banking Committee at 15:00 GMT will reiterate will be scrutinized for his take on the plan for issuing convertible preferred shares as well as the stress tests imposed on banks in the form of capital ratios.