Intraday Market Thoughts Archives

DOUBLE WARNING & IF THEN SCENARIOS: Subscribers of these IMTs and followers of alaidi on twitter were warned about not only a possible GDP explosion that was a full percentage point above consensus, but also about the INTERMARKET IMPLICATIONS of such a move. As US GDP blew up expectations (5.7% instead of 4.5%), USD immediately rallied along with stocks and commodities, only for the USD to maintain its strength while gold, oil and stocks all headed lower. This is exactly what we warned about (60 mins before the GDP release) referring to the same scenario we saw on Dec 4th when those strong jobs figures were released. On Thursday, we broke the S&P headline on UK rating on twitter 5 seconds after it broke on newswires and gave you the $1.6070 target. AUDJPY, GBPUSD and EURUSD are some of the many fundamental & technical calls we offered with no vested interest or fees. Do you know of another FREE service that warns, predicts & ties in the various markets as is done on this website? Those who havent yet followed us on twitter.com/alaidi, we have no idea why you haven't done so. You are missing real-time insights & analysis that no one provides with the same depth and intensity. The nomination round in the Shorty Awards is now over. We will inform you of the next step next week. THANKS AS ALWAYS

US Q4 GDP soared by 5.7%, overshooting consensus forecasts of 4.6%, driving down JPY across the board and propping USD vs. EUR and GBP. Subscribers to our IMT and twitter followers were warned (see previous IMT below) about the possibility of an !"explosive GDP". US GDP was NOT mainly driven by inventory accumulation but also by a 2.2% increase in final sales following 1.5%. GBPUSD target of 1.6080 has been hit before extending losses to 1.6038. GBP shorts could consider fresh entries at 1.6070-80 for 1.6030s. CAD Q4 GDP rose 0.4% vs. exp of 0.3%, which is capping the USDCAD gains at 1.0680, with support holding at 1.0610. ONE DAY LEFT into the FIRST ROUND of the Twitter Awards. If you have NOT voted for me in #finance or #education or #forex categories, please do so at http://shortyawards.com/alaidi MANY VOTES WERE ERASED because those twitter accounts were either INACTIVE (used mainly for voting) or were created AFTER the competition began in January. WE BROKE THE NEWS yesterday on S&P rating for the UK and warned you on today's GDP. alaidi works harder for you than any other provider at no charge. THANKS AS ALWAYS

US/CANADA Q4 GDP: Look out for a possibly explosive US Q4 GDP at 13:30 GMT, expected by consensus forecasts to be at 4.5%, but some private forecasters are expecting between 5.4% and 5.8% largely due to the effect of investory restocking. In the event of a GDP above 5.2% or 5.3%, we could see a market reaction similar to that enormous US November jobs report (released in Dec) when the US dollar immediately soared along with stock indices, only for stocks and commodities to fall back later in the US session, leaving the dollar holding strong. A strong GD report could be especially negative for the JPY across the board and possibly propelling USDJPY to as high as 90.90. Also at 13:30 is CAN Nov GDP, expected +0.3% could especially boost USDCAD in the event of a +5% reading in the US and a figure of no more than 3% in CAN. USDX technicals are empowered ahead with the depeer break beyond the 200-day MA. Gold may extend its declines on further USD strength, with 1073 being the prelim support.

Gold's 6-day consolidation within the 1110-1080 region http://chart.ly/ddwwc7 carries the features of a bearish flag, which could trigger a break below the 1070 and onto 1040. Ever since failing to regain 1170, gold has languished at these levels while the US currency garnered fresh gains at the expense of deteriorating fundamentals in the Eurozone. Fridays US Q4 GDP is expected as high as 5.0%, which risks broadening the USD rally at the expense of Gold and silver.

GBPUSD continues to demonstrate its robustness, with major pullbacks quickly reversing. GBP requires UK-negative news in order to generate marked declines. Falling stocks alone are no sufficient in triggering continued losses in GBP without disappointing UK news or economic data. $1.63 remains an important resistance (both 55 and 100-day MAs) which is unlikely to be broken ahead of tomorrow's USD GDP. USDCAD pauses for steam after rallying in 6 of the last 7 days, likely to find support at 1.0510. Tomorrow's release of CAN Nov GDP exp +0.3% from +0.2%. GOLD languishes at 1090, furthering its bearish flag and riasing outlook towards 1040. GRK-GER SPREAD now at 380 bps. Follow us on twitter for more current insights & analysis http://twitter.com/alaidi

JPY is the biggest loser due to escalating speculation that North Korea will test-launch more missiles on the west coast. FX markets immediately selloff the Japanese currency on any signs of skirmishes involving the Koreas. Euro remains sluggish across the board on a fresh jump in Greek-German yield spread, hitting a new record high of 360 bps, well above the 320 bps in March 2009 when EURUSD stood below 1.25. The sub-1.40 break is a prelude to the 1.38 target expected to occur by mid Feb. GBP regains the 1.6250 resistance, now eyeing 1.6280s. Shorting cable has proven a challenging endeavour as the currency hardly follows up on its declines without rebounding 40-50%. Yesterday's FOMC dissent by Kansas Fed's Hoenig should help provide the USD with an improving foundation. USDX remains above its 200-day MA of 78.45. USDCAD risks testing 1.0510.

USD SHOOTS UP in the aftermath of the FOMC decision, which revealed an unexpectedly hawkish sign in the dissent of Kansas Feds Hoenig who voted against the Fed's outlook to maintain exceptionally low levels of the federal funds rate for an extended period due to a change in economic and financial conditions. Bond yields rallied across the board and oil prices fell well below 73.60, now looking for 72.80. We still expect gold to retest 1070 as an interim target after its failure to regain 1170 earlier this year. EURUSD struggles to hold above $1.40 for now, but a break below the figure is deemed an inevitability before the $1.38 objective is realized later this quarter. Friday's US Q4 GDP could potentially boost fresh USD longs especially if +5% is realized. GBPUSD eyes 1.6020, EURUSD eyes 1.3960, but any rebound is now seen unviable beyond 1.4180.

State of the "Eurozone" Union Weighs on EUR. As Greek-German 10 yr spread soaring past the 2009 record highs of 3.20% and Portugals disappointing budget prompting talk of a credit downgrade, the anti-EUR trade continues to broaden in FX markets. Year-to-date, EUR has underperformed all major11 currencies with the exception of DKK & NZD, falling 2% vs. EUR & GBP and 6% against JPY. The fact that the USD Index has now breached above its 200-day MA and the euro falling below its multiple trend measures (below its 50, 100 and 200-day MAs) for the first time since April, boosts FX markets to probe the $1.38 target. $1.4150 becoming considerable ceiling and days are numbered for the 1.4015 support, allowing for 1.3970.

State-of-the-Union-Address to Overshadow FOMC While much talk circulates around todays FOMC (19:15 GMT) and Friday US GDP report, I warn over todays State of the Union Address (21:00 EST; 02:00 GMT), in which President Obama will likely reiterate his pledge for restraining banks proprietary trading. Any more underlying tones of populism in the aftermath of last weeks Democractic loss in Massachusetts could cause trigger a negative reaction in Thursday Asian trading, before EU and US markets position for Friday's US figure. GBPUSD remains capped at 1.6250s after weaker than exp CBI survey; while EURUSD unlikely to regain 1.4120-30 ahead of the FOMC survey. 1.4015 to hold for now until the FOMC.

The EURUSD-USDX correlation is now at a 4-month low of 0.20, falling further from the 0.27 shown in this chart http://chart.ly/c7ynqh posted 5 days ago. THE IMPLICATIONS of such development suggests USD will likely maintain its strength despite any rebound in equities, while UNLIKELY to post any marked decline during rising equities (hence falling correlation). This also explains the current development on why the USD Index is near its 200-day MA despite stocks rebounding +0.7%.

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Ashraf

USDCAD +4% in past 6 days on the always CAD-negative combination of falling oil and equities. USDCAD eyes a full retracement of the Dec decline, targeting 1.0730. Oils 200-day MA has not been breached since Jul, with the level now at 73.60. AUDJPY failed bounce at 80.45 looks for fresh retest of 79.80. GBPUSD eyes trend line support in the following chart http://chart.ly/zsh6cd

USDX attempts to break above its 200-day MA for the 4th time in the past 6 sessions, while GBP drops across the board after UK Q4 GDP fell short of expectations; +0.1% q/1 (exp +0.4); -3.2% y/y (exp -3.0%). 10 year gilt yields hit a 5-week low at 3.84%. GBPUSD daily suggests 1.6030 is viable as resistance drops to 1.6220. AUDJPY respected the 82.20 resistance before tumbling to 80.00 on renewed reports of Chinese bank tightening (PBOC asked some banks to raise reserve requirments). Any rebounds are now seen capped at 0.8050s. EURGBP rallies +100 pips, now looking for 0.8790s.

Tuesdays release of German Jan IFO (9:00 am GMT) climate survey is expected to show the 11th consecutive monthly increase, but the expectations component will be scrutinized after recent declines in the ZEWs investor sentiment survey. Tuesdays release of UK Q4 GDP (9:30 am GMT) is expected at +0.4% q/q and -3.0% y/y, will be largely scrutinized in function of comparing it to the consensus of expectations. GBPCAD hit 1.72 from the last IMT, with the weekly stochastics calling for prolonged gains towards 1.73, but any retreat is seen limited at 1.71. Gold is still seen falling towards 1070 in the current downleg with any rebound unlikely to regain 1117--Dec 3rd trend line.

US existing home sales tumbled 16.7% in December vs. consensus of -10%, providing the USD and JPY with modest stability. CAD is amid the biggest losers, as USDCAD regains 1.06 and CADJPY struggles at 85.00 GBPUSD shorts continue to see resistance at $1.6210-20, but could consider long GBPCAD plays to target initial 1.7240, followed by Dec 17 high of 1.7340s. Weekly stochastics on GBPCAD shows more upside than daily oscillators, which are currently overstreteched to the upside. AUDJPY continues to respect last weeks 2-hr chart http://chart.ly/2f933c capped failed 82 now at 81.30, looking to retest 80.90. Gold's failure to regain 1105 remains well noted by USD bulls.

European equities push higher amid stabilizing fears from the Obama financial regulation plan and hopes that Fed Chairman Bernanke will get the necessary votes to be renominated for a second term. Dow futures are up 90 pts to 10,241. Monday rebounds following negative weeks in equities are a usual occurrence. The real test for the markets begins on Tuesday amid UK Q4 GDP and Germany IFO. FTSE-100, Dow-30 & S&P500 will attempt regaining their 100-day MAs at 5356, 10452 and 1114 respectively. EURUSD remains capped at Fridays resistance of 1.4280, Cable capped at $1.6210, while AUDJPY attempts to regain the 82.20-25 trend line resistance, which is seen acting as an interim obstacle. A break above it will face a more challenging barrier at 82.70, which will likely impose itself on the series of potential event risk this week.