Intraday Market Thoughts Archives

Catch Ashraf on Bloomberg TV at 2.10 pm EST today.

The sharp decline in Eurozone preliminary Nov CPI to 2.1% y/y from 3.2% in October clears the way for a possible 75-bp rate cut to 2.50% at next weeks ECB meeting. EURUSD failing to regain its previous resistance of $1.2820, now eyeing interim support at $1.2680. Mixed reports of a resolution to the hostage crisis in India is gradually alleviating market sentiment, aiding USDJPY higher towards the 95.50s but the pair does remain consolidative within the 95.00-95.60 range.

The forex market reaction to the deadly terrorist attacks in Mumbai had initially failed to emerge as the usual safe heaven currencies --Japanese yen and Swiss franc--showed insignificant gains during the US Wednesday session, but this changed during the Thursday Asian session as the crisis unfolded into hostage standoffs in several areas in Mumbai and the death toll surpassed the 100 mark. JPY's response became more noticeable in the latter hours of Tokyo trading when the low yielding yen advanced despite ... COMPLETE TEXT AVAILABLE TO SUBSCRIBERS.

Ashraf' discusses his dollar outlook into Q1 2009 http://www.cnbc.com/id/15840232?video=941075536&play=1 Happy ThanksGiving Everyone !

Watch Ashraf on CNBC TV's Closing Bell at 3.45 pm EST today.

EURUSD's reassuring consolidation around the $1.2950s following yesterday's $1.3080 peak suggests a likely attempt to retest $1.3050 and regain the $1.3290 target. EURUSD foundation is increasingly supported by a 5-day TL support at $1.2920, backed by $1.2830. Another way to highlight relative stability in EURUSD is to compare it to EURJPY's trading pattern... REST IS AVAILABLE TO SUBSCRIBERS

Despite the Fed's latest acrobatics in quantitaive easing, US stocks barely ended in positive territory, sugesting Asian and European trading could see renewed blow to risk appetite and a necessary pullback before the ThanksGiving Holiday in the US. GBPUSD peaked out at $1.5530, forming a classic reversal candle that could repeat the decline of 24 hrs ago and call up the interim support at $1.5340. Note how YEN CROSSES saw the least gains, thus, vulnerable to renewed damage in Asian/European trade.

Markets require a catalyst to trigger partial end-of-year reversals and today's Fed announcement is an ideal catalyst. This by no means implies that the worst is over in the economy and the financial markets, but stability may be here to stay for most of the next 4 weeks. Such environment suggests a weaker dollar against EUR, GBP, CAD, AUD and NZD, but a stable USDJPY above the 93 figure. SEE EURUSD CHART IN PREVIOUS ARTICLE for illustration of previous reversals.

IT IS ONLY THE SECOND 2-DAY RALLY in stocks this quarter. After $306 bln of govt guarantees in Citigroup's assets, $20 bln from the TARP package, and at least $175 bln in stimulus funds from the Obama White House, S&P and Dow rally 6.4% and 4.8%, making the biggest 2-day rally since 1987 and second back to back gain this quarter (after late October). The intensity of the last 2 sessions could suggest the beginning of a year-end rally, which is consistent with a seasonal reversal in foreign exchange. Further supporting this notion is next month's rate cuts from the Fed, ECB and BoE. Asian trading promises prolonged gains in yen crosses with EURJPY, AUDJPY and NZDJPY targeting...

USDCAD drops below 1.26, on its way to aforementioned end of week target of 1.24. Gold extends gains to $822/oz, up over $35 in past 2 sessions. Key target stands at 100 day MA of $831. One way to highlight the strengthening role of risk appetite on currencies is the EUR's shrugging of the worst than expected IFO survey from Germany. Although the IFO index hit a 15-year low, the euro rallied on the Citigroup news, which was a boon for higher yielding currencies relative to ... REST AVAILABLE TO SUBSCRIBERS of Intraday Market Thoughts.

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Equities rise across the board after US govt guarantess up to $306 bln in Citigroups assets against, as well as injecting extra $20 bln from the TARP package. JPY and USD are biggest losers. Particularly positive is CAD, which is expected to drag USD down to 1.25 from current 1.2680. I expect USDCAD to reach 1.24 before week's end in event of prolonged equity gains for the week. Watch for the $810 resistance in gold, a breach of which seen paving way for the seasonal reversals in forex mentioned in the latest article.