Intraday Market Thoughts Archives

JPY pairs declined sharply but recovered a portion of losses; Euro weakens across the board; French Q3 GDP revised lower; 4 core Greek banks need recapitalization, Italian auction. Focus turns to Chicago PMI and pending home sales.

Throughout the Asian session, majors recovered most of the losses they incurred after yesterday's negative comments from the senate majority leader Reid regarding the fiscal cliff. Later during the London session, a bout of JPY buying hit the market that pushed all JPY pairs lower. Selling was especially strong on EURJPY that fell from 114.60 to 113.29. Other euro pairs declined as well.

EURUSD is trading near session lows around 1.3270 and EURGBP fell to 0.8175. However, commodity dollars are strong, particularly AUDUSD that trades at session highs just a few points below 1.0400.

European reports were limited to final Q3 GDP from France that was revised lower to 0.1% from 0.2% q/q and to a flat reading from initial estimate of 0.2% on annual basis.

In other news, Greek central bank said that four core Greek banks need EUR 27.5 bln in recapitalization before the end of April and German finance minister Wolfgang Schaeuble said in an interview with German newspaper Bild that "worst of the euro crises is behind us".

Italy sold 5 and 10 year bonds totaling EUR 5.87 bln vs. EUR 4-6 bln target. Both average yields were marginally higher but cover was higher.

The US data calendar is limited to Chicago PMI at 9:45 am ET that is expected to rise in December to 51.2 from previous 50.4 and to pending home sales at 10:00 am that are anticipated to fall 0.3% in November after rising 5.2% in October.

The fiscal cliff spooked markets Thursday after Senate leader Reid predicted the US would go over the ledge. The comments undercut a euro rally but it was still the top performer; the yen lagged. The yen will remain in focus with a series of Japanese data points upcoming including unemployment, retail sales and industrial production.

Reid said it looks like the US is headed over the fiscal cliff because there isn’t enough time to reach a deal. The House will resume sitting on Sunday but optimism for a true deal is next-to-nil. It is increasingly likely that any deal will be a short-term fix.

The euro immediately dropped a half cent after the remarks from Reid. The pound dropped to 1.6060 from as high as 1.6200 earlier in the session as sentiment deteriorated.

Economic news also weighed as the market frets about reports of soft holiday spending. December consumer confidence fell to 65.1 compared to 70.0 expected.

There were positive signs, however, with new home sales rising to the highest since April 2010. Initial jobless claims also improved to 350K compared to the 360K consensus.

The upcoming session features a round of tier 1 data from Japan. It begins at 2330 GMT with CPI and unemployment. It’s followed by industrial production and retail sales at 2350 GMT. Lean toward industrial production as the key metric but a low CPI print could also spark speculation about further BOJ intervention.

JPY and USD weaken; more pressure on BOJ; Italian auction; lower EZ sovereign issuance in 2012 compared to 2013; UK BBA mortgage approvals rose. Market turns to jobless claims; consumer confidence and new home sales.

Europe returned from Christmas holiday break and pushed the greenback lower. EURUSD rose to 1.3275 and GBPUSD trades just a few points below 1.6200.

JPY continues to fall across the board after the newly formed government intensified pressure on the BOJ. PM Abe's position has been widely known. Now others are joining in – the finance minister Aso said that "the BOJ has been insensitive to the problem of deflation" and urged the MOF to change its attitude. Meanwhile, the economy minister Amari confirmed that he is working on a stimulus program.

The upswing in JPY pairs has been impressive and a retracement seems likely. Nevertheless, considering the prospects for more BOJ easing, buying on pull back is preferred. USDJPY trades around 85.75, EURJPY around 113.75.

Italy reached a full take up as it sold 6 month BOTs totaling EUR 8.5 bln. The average yield rose to 0.949% from 0.919% and cover weakened to 1.57 from 1.65.

MNI reports that Eurozone sovereign issuance for 2013 is expected to be lower around EUR 760 bln vs. EUR 840 bln in 2012 as budget deficits as well as redemptions are lower. Ireland and Portugal are anticipated to return to the bond market while Greece will remain excluded.

The sole item on the European calendar was British BBA mortgage approvals that rose in November to 33.6K from October's 33.1K. Analysts expected an increase to 34.6K.

The US session begins at 8:30 am ET with jobless claims that are seen slightly higher at 365K from previous 361K. Consumer confidence is due at 10:00 am ET and it is expected to decline in December to 70.3 from previous 73.7 while November new home sales are seen rising to 382K from prior 368K.

5 consecutive rising months for EURUSD –not seen since Dec 2010-Apr 2011 when the currency completed a 26% rallying cycle. Our 1.35 target is seen as the mid-point of the path to 1.47, which is projected in our main piece in the homepage. EURUSD posts its 3rd straight winning week, making it 6 rising weeks out of the last 7. US Crude oil regains its 200-DMA after failing to do so 3 times over the last 6 weeks. Frequency of updates and Premium Insights is less frequent then usual due to holiday schedule.  The last edition of the Premium Insights, had 11 trades hitting all targets, 5 stopped out and 3 in progress. 1 of 2 EURUSD longs remain progress, the other was stopped out. Both USDJPY longs and both EURJPY longs hit all targets. 1 of 2 CADJPY hit all targets, while the other stopped out. Both EURGBP in progress, the 1st long is 4 pips away from its 08220 final target. Both gold shorts and both oil longs hit all targets. 1st leg of silver's dual trades hit all targets, the other is in progress. Both GBPUSD stopped out - 1st long missed its final target of 1.6315 by 8 pips. Both AUDUSD stopped out.