Intraday Market Thoughts Archives

FTSE-100 Rallied in each of the last 9 Decembers. None of the major G7 indices has matched such consistency. http://www.cityindex.co.uk/market-analysis/market-news/2992772012/299277/

Eurozone CPI falls; EZ unemployment rate at new record high; German retail sales decline. Focus turns to core PCE; personal income and spending; Chicago PMI and Canadian GDP. 1 of 2 EURUSD longs hit all targets, the other awaits final target at marginally higher level. Both GBPUSD longs are in progress. 2 Gold longs were stopped out. See the rest below.

The greenback strengthened at the beginning of the London session. However, most gains were lost after the bundestag approved the Greek aid bill. European equities trade in narrow ranges and JPY lags.

Comments from ECB's Draghi and IMF's Lagarde did not provide any surprises and only reiterated supporting views on banking union, the ECB's banking supervisory role and the role of the OMT. However, an interesting comment came from German finance minister Wolfang Schaeuble who suggested that Greek default must be avoided as it could lead to the end of the Eurozone.

European data disappointed today. Eurozone CPI eased to 2.2% in November which is the lowest level since January 2011 and the unemployment rate ticked higher to a new record 11.7% from 11.6%. The unemployment rate has risen 12th times in a row. German retail sales dropped 2.8% in October after rising 0.5% in September and finally Italian unemployment rate rose yet again and reached 11.1% from 10.8%.

The US session begins at 8:30 am ET with FED's preferred inflation measure, the core PCE that is expected to remain steady in October at 1.7% y/y. Personal income is seen growing 0.2% from 0.4% and personal spending is anticipated unchanged.

Chicago PMI will flash on screens at 9:45 am and it is seen at 50.7 after two monthly sector contractions. By the end of the session at 5:00 pm the FOMC member Jeremy Stein will participate in a discussion on large scale asset purchases. Any surprising comments could impact trading on Monday morning. CAD traders await September GDP that is expected to grow 0.1% from -0.1% m/m and remain steady at 1.2% y/y. The report is due at 8:30 am.

USDJPY, EURJPY, CADJPY are all in progress, while silver and oil were stopped out. For DIRECT ACCESS to these trades and the 3 volatility charts, click here: http://ashraflaidi.com/products/sub01/access/?a=696 NonSubscribers Can click here to join: http://ashraflaidi.com/products/

Ashraf's webinar with James Chen on behalf of City Index will be at 13:00 EST, 18:00 London time. Registration link here: Link to today's webinar at 6 pm London time https://www4.gotomeeting.com/ojoin/620444095/

Abe suggests easing till 2% CPI; European data improved and bested expectations; Swiss GDP higher; Italian auction. Market turns to US Final GDP revision, jobless claims and pending home sales. 1 of 2 EURUSD longs hit all targets, the other awaits final target at marginally higher level. Both GBPUSD longs are in progress. 2 Gold longs were stopped out. See the rest below.

USD eases across the board. European equities are gaining nearly 1% and the relative strength winner is EUR while AUD lags.

JPY fell lower at the during Asia after the LDP leader Shinzo Abe repeated that we would like to see the BOJ providing unlimited easing until the inflation reaches not 1% but 2%. USDJPY pushed back to 82.20s and EURJPY to 106.70.

European data surprised to the upside as Eurozone economic confidence rose in November to 85.7 from 84.3, UK CBI realized sales rose to 33 in November from previous 30 and German unemployment rose 5k from 19K in October. The unemployment rate remained steady at 6.9%.

Swiss Q3 GDP bested expectations as it grew 0.6% from -0.1% q/q and surged 1.4% from 0.3% on annual basis. Private and public consumption along with exports of goods contributed to growth while the export of services and fixed investments had negative impact.

Italy sold 5 and 10 year BOTs totaling EUR 5.982 bln vs. EUR 4-6 bln target. Both average yields declined but cover weakened compared to the previous auction. The 10 year yield fell below 4.5% which is the lowest level in nearly two years.

The US session kicks off with second reading of Q3 GDP at 8:30 am ET that is expected to be revised sharply higher to 2.8% from 2.0% on annual basis. Jobless claims are seen falling to 392K from 410K and pending home sales at 10:00 am are anticipated to rise 0.9% in October from prior 0.3%.

USDJPY, EURJPY, CADJPY are all in progress, while silver and oil were stopped out. For DIRECT ACCESS to these trades and the 3 volatility charts, click here: http://ashraflaidi.com/products/sub01/access/?a=696 NonSubscribers Can click here to join: http://ashraflaidi.com/products/

Markets reversed Wednesday on signs that US politicians are working towards a deal on the fiscal cliff. The commodity currencies led the way while the pound lagged. Australian capex data will be a key factor in the December RBA decision. Will last nights new set of Premium Insights on GBPUSD prove to be on the money as were the prior 2 weeks? And why did we change the strategy in EURUSD? The latest edition also has 3 charts on EUR & Equity volatility. See more below in the bottom paragraph.

Market sentiment eroded early in US trading, sending the euro as low as 1.2879. The declines culminated with the release of October US home sales, which slowed to 386K compared to 390K expected.

USD/JPY stumbled to 81.69 and the commodity currencies were under pressure. Shortly afterward the tide turned as Republican House leader Boehner said he was willing to consider addition revenues (taxes on high earners) if accompanied by spending cuts. Later, Obama said he believes a deal could be reached before Christmas.

A final deal is still a long ways away but the positive tone encouraged risk trades. The S&P 500 closed 10 points higher after falling by 10 early in the session. The euro bounded to 1.2960 and USD/JPY to 82.08.

Later in the day, the Fed

s November Beige Book showed that manufacturing was softening but consumer spending was upbeat. The tepid tone from the Fed suggests that another QE program will be unveiled when Operation Twist expires at year end.

In Asia-Pacific trading, the highlight will be on third quarter private capital expenditure data from Australia. Expectations are for a 2% increase and there is considerable talk the indications on investment spending could swing the RBA toward holding rates or a cut.

2 new trades on EURUSD, GBPUSD, 1 on USDJPY, 2 on EURJPY, 1 on AUDUSD, 1 on Gold and one existing, 2 new on silver and 2 existing in US crude oil. For DIRECT ACCESS to these trades and the relevant charts, click here: http://ashraflaidi.com/products/sub01/access/?a=696 NonSubscribers Can click here to join: http://ashraflaidi.com/products/

-AB

Dovish comments from BOE Bean; Spanish retail sales fell; solid Italian auction; Market focus is on new home sales, SNB Jordan and FOMC Tarullo speeches and FEDs Beige book. Will last nights new set of Premium Insights on GBPUSD prove to be on the money as were the prior 2 weeks? And why did we change the strategy in EURUSD? The latest edition also has 3 charts on EUR & Equity volatility. See more below in the bottom paragraph.

Optimism from the Greek deal disappeared while fiscal cliff worries continue to linger. The buck is stronger across the board except JPY. European equities are losing around 0.4%.

The BOE deputy governor Charles Bean who will, as we learnt yesterday, serve for one extra year said today that the UK economy will grow "weakly at best" and that a Q4 GDP decline is possible. He also added that the ongoing uncertainty limits QE effectiveness and that the BOE has not closed the door on further asset purchases.

The European data calendar was limited to Spanish retail sales that fell 9.7% y/y. German CPI for November will be announced right before the US session and analysts expect the inflation to ease to 2.0% from 2.1%.

Italy reached a full take up as it sold EUR 7.5 bln worth of 6 month bills. The average yield declined to the lowest level since 4/2010 at 0.919% from 1.347% and bid to cover improved to 1.65 from 1.52.

There are a number of risk events due during the US session today. New home sales at 10:00 am ET are expected to decline marginally in October to 387K from previous 389K. Crude oil inventories at 10:30 are seen higher at 0.5M barrels from last week's 1.5M barrels decline.

SNB chairman Thomas Jordan delivers a speech on monetary policy in Bern at 12:15 pm and the FOMC member Daniel Tarullo will begin his speech on regulation of foreign banking in New Haven at the same time.

At 2:00 pm the Federal Reserve will publish the Beige book. Analysts will seek comments on the impact of hurricane Sandy on industries along the east coast.

2 new trades on EURUSD, GBPUSD, 1 on USDJPY, 2 on EURJPY, 1 on AUDUSD, 1 on Gold and one existing, 2 new on silver and 2 existing in US crude oil. For DIRECT ACCESS to these trades and the relevant charts, click here: http://ashraflaidi.com/products/sub01/access/?a=696 NonSubscribers Can click here to join: http://ashraflaidi.com/products/

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The topic of falling volatility in the euro and equities has already been explored in our Premium Insights at least 3 occasions over the last 12 months, but its worth revisiting it. The volatility on EURUSD 1 month call options fell 30% since September, while that in the VIX (volatility on the S&P500) fell by over 14% during the same period. How do we reconcile these trends with looming fiscal cliff and traders unwillingness to cheer the latest deal in Greece? In addition to the latest Premium Insights on EURUSD, EURJPY, GBPUSD, gold, oil and silver, we issue 3 charts on EUR volatility overlaid against the VIX. For DIRECT ACCESS to these trades and the relevant charts, click here: http://ashraflaidi.com/products/sub01/access/?a=696 NonSubscribers Can click here to join: http://ashraflaidi.com/products/

A Greek deal is finally done for now. It was between reducing the debt to 120% of GDP by 2020, or 110% by 2022 but with more debt relief and haircut on Greek paper. They agreed on 124% by 2020. The 34.4 billion in aid owed from June would likely be disbursed on 13 December pending approval by national parliaments . Full analysis on EURUSD & EURJPY http://www.cityindex.co.uk/market-analysis/forex-news/2859842012/greeks-latest-fix-stabilizes-euro-for-now/

Greece has reached a deal with its financial backers to cut its debt burden. The Bank of England stunned markets by appointing Mark Carney as the first foreign Governor in its 308-year history. The yen rebounded and was the top performer while the commodity currencies lagged in mild risk-off trading. EURUSD hits 1.30. Both GBPUSD hit all targets (two weeks in a row both cable longs hit their targets). AUDUSD long was unfilled (missed by 20 pips). 1 EURJPY long hit all targets, the other was unfilled. CADJPY long remains in progress, while both EURGBP finally hit all targets, which were in progress since Nov 14.

Eurozone ministers and the IMF hammered out a deal to release the latest aid tranche for Greece, which they say will reduce debt to 124% of GDP by 2020. The euro bumped above 1.30 as details of the plan emerged -- which include lower interest rates, a debt buyback, a maturity extension and the return of some accrued interest on debt held by the ECB.

Few market participants believe that the debt targets are achievable but the deal diminishes near-term uncertainty about Greece. Market sentiment is likely to improve so long as it doesnt lead to a fresh emphasis on Spain, where separatists who Catalonia's regional election on the weekend.

As markets waited for the Greek decision, the surprise BOE announcement added drama to an otherwise underwhelming trading day. Carney will stay on at the Bank of Canada until June and instantly lends experience and credibility to the BOE.

The search now begins for a BOC Governor, with Deputy Tiff Macklem seen as a favorite. Carney had maintained a hawkish tilt at the BOC and his replacement could shift to a more neutral stance, which would hurt the Canadian dollar.

One gold short stopped out, the other a new contingency long was filled and in progress. The long silver trade since Nov 7 finally hit its highest target of 33.90. The lone long in oil is in progress. For DIRECT ACCESS to these trades and the relevant charts, click here: http://ashraflaidi.com/products/sub01/access/?a=695 NonSubscribers Can click here to join: http://ashraflaidi.com/products/

-AB

Sterling traders were distracted by todays surprise appointment of Mark Carney to the helm of the Bank of England. The former head of the Bank of Canada (& ex- Goldman Sachs banker) is known for his hawkish approach to monetary policy and hard currency inclination. More GBP charts analysis on here: http://www.cityindex.co.uk/market-analysis/market-news/2807662012/sterlings-looming-breakout/

BOJ minutes; EZ finance ministers meeting continues; Catalan separatists parties won; German GfK fell; Italian consumer confidence at all time lows. Markets discounting favourable decision on Greece tonight. EUR/USD regained the important 200-DMA and 55-DMAs in matter of 3 days. 6 trades from the Premium Insights hit all targets, 2 were stopped out. See more details below.

USD attempted to push higher at the beginning of the London session but it gave up all gains and currently trades slightly lower against all majors. European equities are losing around 0.5%.

The BOJ meeting minutes did not provide any surprise as they contained only the usual notes of continued powerful easing in light of a weak outlook. Despite the governor Shirakawa comments that the currency market can be influenced by easing until the inflation target is in sight, USDJPY declined from 82.50s to 81.92 and currently trades around 82.10.

Eurozone finance ministers are meeting in Brussels for the third time this month on Greek debt clearance. The goal is to agree on debt reduction and debt sustainability before the next tranche of the aid is delivered. Markets discounting favourable decision on Greece tonight.

Catalan separatist parties won regional elections but voters gave no clear message for their leaders as the Catalan president Artur Mas who called the election actually lost a number of seats in the regional parliament. As a consequence he will have to form an alliance with parties that have a different socioeconomic agenda.

The European data calendar was light, Eurozone GfK German consumer climate fell for December to 5.9 from previous 6.3 and Italian consumer confidence fell to all time low 84.8 in November from 86.2 in October. EURUSD trades not far from session highs around 1.2965.

There are no data reports due during the US session today. The only risk event is a speech given by the vice president of the ECB Vitor Constancio that is scheduled to begin at 9:00 am ET.

6 trades from the Premium Insights hit all targets, 2 were stopped out, 4 remain in progress and 3 were unfilled. 1 EURUSD short stopped out, while the long was unfilled. USDJPY in progress. Both GBPUSD hit all targets (two weeks in a row both cable longs hit their targets). AUDUSD long was unfilled (missed by 20 pips). 1 EURJPY long hit all targets, the other was unfilled. CADJPY long remains in progress, while both EURGBP finally hit all targets, which were in progress since Nov 14. One gold short stopped out, the other a new contingency long was filled and in progress. The long silver trade since Nov 7 finally hit its highest target of 33.90. The lone long in oil is in progress. For DIRECT ACCESS to these trades and the relevant charts, click here: http://ashraflaidi.com/products/sub01/access/?a=695 NonSubscribers Can click here to join: http://ashraflaidi.com/products/

The yen was beaten up for the second week in a row as risk trades surged. EUR/JPY gained 350 pips to lead the way -- posting its strongest week since February. Meanwhile, EUR/USD required a convincing catalyst to lift it back above its important 200-DMA of 1.2820. And it did 6 trades from the Premium Insights hit all targets, 2 were stopped out, 4 remain in progress and 3 were unfilled.

The yen continues to be undermined by politics, with Japanese leaders making outlandish promises ahead of the Dec 16 election. The positive risk trade added to the momentum this week with stocks in Europe and the US gaining each day.

There are other factors as well, including signs that Japanese companies are beginning to move aggressively to buy up foreign rivals. On Friday, an executive at Mitsubishi UFJ said it is keen on a big US acquisition to become a top-10 US bank.

In Europe, political wrangling continues but there are signs that Greece is being shifted to the back-burner. When negotiations broke down on Thursday, the euro tumbled but it quickly regained the losses. On Friday, Germanys Schaeuble said he was confident on a solution for Greece and Rajoy said he wanted a deal in the week ahead.

EU budget discussions were delayed once again but the never-ending discussions are not likely to impact the FX market at any point.

Events early in the week include a speech from Shirakawa at 0100 GMT on Monday. He will be asked to comment on the election and the potential for further easing.

6 trades from the Premium Insights hit all targets, 2 were stopped out, 4 remain in progress and 3 were unfilled. 1 EURUSD short stopped out, while the long was unfilled. USDJPY in progress. Both GBPUSD hit all targets (two weeks in a row both cable longs hit their targets). AUDUSD long was unfilled (missed by 20 pips). 1 EURJPY long hit all targets, the other was unfilled. CADJPY long remains in progress, while both EURGBP finally hit all targets, which were in progress since Nov 14. One gold short stopped out, the other a new contingency long was filled and in progress. The long silver trade since Nov 7 finally hit its highest target of 33.90. The lone long in oil is in progress. For DIRECT ACCESS to these trades and the relevant charts, click here: http://ashraflaidi.com/products/sub01/access/?a=695 NonSubscribers Can click here to join: http://ashraflaidi.com/products/

-AB