Intraday Market Thoughts Archives

German retail sales drop; Eurozone unemployment remains high; Eurozone CPI surges to highest level in 3 years; Swiss KOF declines. Market turns to US PCE price index, personal income and spending, Chicago PMI and Canadian GDP. Ashraf's Premium Trades

The common currency has been under pressure over the past two trading sessions, declining from 1.3679 to 1.3487. The downside pressure is likely to continue as German Retail sales dropped -2.9% in August from +0.3% in July and Eurozone unemployment rate remained elevated at 10%.

Eurozone annual CPI surged to 3% in September, nearing a 3-year high, beating expectations of 2.5%. In August, CPI was at 2.5% and even that reading exceeded ECB target of 2%. CPI rose at the fastest rate since 10/2008.

EURUSD is likely to close current week at the lows confirming its inability to remain above key weekly trendlines. More about key levels and longer term trendlines in Ashraf's premium piece here: http://ashraflaidi.com/products/sub01/access/?a=508 Non-members can get a trial here: http://ashraflaidi.com/products/sub01/ CL, ES Premium trades all hit targets; One EURUSD trade done, the other as well as EURJPY & EURGBP in progress.

Swiss fundamental data started to deteriorate recently and the SNB projects that the economy will slow significantly towards the end of the year. KOF Economic barometer that fell to 1.21 in September from 1.61 in August, marking fourth decline in a row, confirms this view. CHF strength that impacted exports is blamed for the KOF falling to two year low.

The New York session starts at 8:30 am ET with FED's preferred inflation gauge, the Core PCE price index which is expected to remain at 0.2% in August. August Personal spending is seen lower at 0.2% from 0.8% in July and Personal income is anticipated to increase 0.1% from previous increase of 0.3%.

Canadian GDP is also due at 8:30 am ET and is expected to tick up to 0.3% in July from 0.2% in June. Annual GDP is seen at 2.3% from previous 2%.

Chicago PMI due at 9:45 am is anticipated to decline to 55.8 from 56.5 and University of Michigan consumer confidence due at 9:55 am is expected unrevised at 57.8.

Today marks the end of the week, month and the quarter. Markets could be thin and flows somewhat harder to predict as participants rebalance their portfolios.

The failure of both daily & weekly trendlines in EURUSD has been very vocal. We warned about this on Wednesday before the market moved against us to reach a.13660s. Yet the rebound was a prominent failure as it was unable to break above those key trendines. We also viewed it through a temporary decline in 1 month volatility, which we anticipated to hold at the trendline, suggesting a peak in EURUSD.

DIRECT ACCESS to today's s PREMIUM TRADES & CHARTS here:

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Ashraf

Ashraf

Austrian EFSF vote set to be passed, Eurozone September CPI and unemployment to remain unchanged from August, Italian CPI, UK consumer confidence improves slightly but still remains negative, Canada GDP set to rise. Ashraf's Premium trades are up

Having circumnavigated around a major bump in the road with the passing in the German Bundestag of the EFSF changes agreed on July 21st attention now turns to the Austrian vote later today. It is likely it will pass in the same manner as all the other votes have gone this week. In the likely event of the successful voting through of the measures, the only remaining obstacle is Slovakia where they are due to vote on 25th October.

The return of the troika to Greece yesterday was greeted with protests against fresh austerity measures, however government officials remained confident that Greece remained on course to receive the next tranche of money by the 13th October deadline.

Looking ahead to next weeks ECB meeting, todays release of European flash CPI data for September is expected to show that price pressures show no sign of increasing within Europe with expectations that they remain unchanged at 2.5%. The unemployment rate is also expected to remain unchanged at 10%, despite yesterdays surprise drop in German unemployment to 6.9% from 7%.

Italian CPI numbers are, on the other hand expected to spike slightly higher but not by enough to warrant concern with expectations of a rise to 2.6%, from 2.3%. Italy has bigger concerns than higher prices in any case after bond yields jumped to post euro highs at yesterdays debt auctions as investors remain concerned that the recent austerity measures, though necessary dont deal with the real problem, which is low growth.

In the UK the pound had a better day after better then expected lending data, while todays Gfk consumer confidence survey for September showed that the consumer remains extremely pessimistic about the economic outlook, even though there was a slight improvement, coming in at -30, from Augusts -31 reading.

Ashraf's Premium Trades are up, including EURUSD, EURJPY, EURGBP, USDJPY, gold & USD crude oil. Direct access here: http://ashraflaidi.com/products/sub01/access/?a=508 Non susbcribers can get a 1-week trial here: http://ashraflaidi.com/products/sub01

China HSBC manufacturing PMI remained unchanged at 49.9 showing that the manufacturing sector continued to stagnate in September, amid weak domestic and overseas demand.

In Canada annual GDP is expected to jump from 2% to 2.3%

Euro loses footing below 1.36, the large decline in US jobless claims was attributed to seasonal adjustments. EUR and CHF led while NZD fell badly after Fitch lowered its credit rating due to external debt. A raft of Japanese data has been released. Ashraf's PREMIUM INSIGHTS will be due at about 22:00 EST, 02:00 GMT. HEADS-UP for China's FINAL September manufacturing PMI due later this morning.

US trading began and ended on a positive note but there was a large swoon mid-session. The initial optimism came after jobless claims fell to 391K from 428K and US Q2 GDP was revised to 1.3% from 1.0%.

This, combined with the positive vote in Germany, boosted risk trades to session highs. Sentiment began to reverse after a Labor Department official said the big drop in jobless claims was due to technical issues and seasonal adjustment volatility, not economic factors. The sentiment was further eroded after Reuters said US authorities are probing accounting irregularities at US-listed Chinese companies.

Most trades later rebounded on quarter-end buying but the NZD took a fresh leg lower after Fitch cut its FX issuer default rating to AA from AA+. Despite the losses, NZD was able to hold above last weeks low of 0.7636. The kiwi rebounded somewhat when Moodys affirmed the Aaa rating for the island nation.

Asia-Pacific Review

Japans manufacturing PMI for September fell to 49.3 from 51.9. Japans unemployment rate unexpectedly fell to 4.3% in August from 4.7% (exp was 4.7%). Japans national CPI held at 0.2% y/y in August, while Tokyos annual CPI fell -0.2% again in September. Japans preliminary industrial production rose 0.8% m/m in August from 0.4%, less than the expected 1.5%. New Zealands NBNZ business confidence survey fell to 30.3 in Sep from 34.4.

China's FINAL September manufacturing PMI due at 22:30 EST (4:30 GMT) after the flash (preliminary) figure remained below 50 for the 3rd straight time, at 49.9

German Bundestag approves EFSF; UK mortgage approvals rise; Eurozone confidence indicators all declined. Market turns to Jobless claims, pending home sales and Canadian RMPI and IPPI.

German Bundestag approved enhanced EFSF with 523 to 85 majority. The approval was largely expected despite strong opposition not only among Germans but also among Merkel's governing coalition. Surprisingly EURUSD fell upon the announcement from 3670s to 3630s.

In the UK, August Mortgage approvals increased due to record low mortgage rates to 52.4K from 49.6K in July which is the highest since 12/2009 and above expectations of 49.5K. Net Consumer credit has also risen to GBP 0.5 bln from previous GBP 0.3 bln.

Chatter about QE does not seem to end in the UK. MPC member Spence Dale said today that "MPC has tools to act if deterioration continues" and that he is "sure that QE would work again".

The situation in the Eurozone continues to worsen as various types of confidence indicators all declined in September. The Economic confidence declined to 95 from 98.4, Consumer confidence fell to -19.1 from -18.9, Industrial confidence declined to -5.9 from -2.7 and Services confidence dropped to 0 from +3.7. To make things worse, businesses across all sectors reported a plunge in new orders. Export orders fell as well, despite the weaker Euro.

In other news, Italy and Spain extended short selling ban on bank shares stating that the ban will be effective until conditions improve and the chairman of the Chinese sovereign wealth fund said that "China cannot be expected to buy high risk Eurozone debt without clear picture of debt workout".

The US session will start at 8:30 am ET with Jobless claims that are seen at 420K from last week's 423K. Final Q2 GDP is expected at 1.2% from an initial estimate of 1.0%

8:30 am ET also brings Canadian Raw Materials Price index that is seen lower at -1.9% in August from -1.2% in July and Industrial Product Price index that is expected to decline -0.4% from previous -0.3%.

Pending home sales are due at 10:00 am ET and are anticipated lower at -1.7% in August from previous -1.3%.

German parliament set to ratify EFSF changes (311 votes needed by Merkel's allies), higher than expected decline in German unemployment, UK lending data set to remain weak, Japanese retail sales slide, US GDP Q2 final revision, US weekly jobless claims

After seeing the Finns ratify the changes agreed on the 21st July today sees the Germans step up to the plate with expectations that the vote will pass, however there is unease in some circles that this could just be the beginning of the start of an increase of the EFSF by the back door.

German Chancellor Angela Merkel also has a lot of political capital at stake in all of this, especially if she has to rely on opposition votes to get the measure through. Some commentators have speculated that she could find herself politically damaged if she does. Even if it does pass policymakers will have to wait until the end of October when Slovakia finally ratifies it.

Meanwhile the troika are set to return to Greece today to determine whether the latest measures are enough to release the latest funds, though a final decision wont be made until October, just before Greece needs the money.

Germany September jobless - 26k m/m vs expected -5k. Unemployment rate seasonally adjusted 6.9% vs. expected 7.0%

The latest UK credit data (due at 8:30 GMT) is not expected to paint a particular pretty picture with net consumer credit set to remain unchanged at 0.2bn for August, though mortgage approvals are expected to rise slightly from 49.2k in July to 49.5k in August.

In Japan the latest retail sales figure for August show that despite rebounds in June and July that the consumer is still struggling after the earthquake earlier this year as sales slid 2.6%, way more than expected.

In the US markets will be awaiting the final revision to the Q2 GDP numbers with many expecting a revision higher, while weekly jobless claims are expected to remain broadly unchanged around the 420k mark.

Sentiment reversed in US trading on worries about Europe and China. JPY and USD led while the commodity currencies lagged. Japanese retail sales data is the highlights of Asia-Pacific trading.

Modest risk appetite crumbled in US trading ahead of a key vote on the EFSF from Germany on Thursday. EUR/USD touched a one-week high of 1.3690 as North American traders arrived at their desks but steadily declined to 1.3544 afterwards.

There was no substantial news from the Eurozone and heightened fears triggered a cascading fall in risk appetite. Adding to the mood was talk of a Chinese hard landing after a report by BoA/Merrill Lynch highlighted the risks. After opening higher, the S&P 500 fell 2.1% to 1151.

US durable goods orders fell 0.1% in August compared to the -0.4% expected but ex-transport fell 0.1% compared to the +0.2% expected. Overall, the report was reassuring as it showed that demand was relatively stable amidst the market turmoil of the month.

Ashraf unveiled several NEW PREMIUM TRADES & CHARTS in US trading (originally posted at 14:30 EST). Members can get direct access here: http://ashraflaidi.com/products/sub01/access/?a=506 Non-members can get a trial here: CHOPPY TRADING & HESITANCY characterize http://ashraflaidi.com/products/sub01/

Precious metals and other commodities resumed nosediving as fold fell 2.4% to $1610, silver was down 5.1% to $29.85 and copper tumbled a whopping 7.5%. The close in gold was the lowest since July and is a disappointment to those who were expecting a larger bounce, at least. It may now retest the 200-day moving average around $1530.

Japan August retail sales fell 2.6% Y/Y from +0.6% in July versus expectations of -0.6%

At this point, Japanese policymakers are more concerned about deflation, industrial output and the strong yen than the health of the consumer so this report will not have a large impact. Plans are already believed to be underway for a comprehensive, long-term program to fight deflation and boost the yen. The risk is that a large negative miss increases the likelihood of deflation and that forces leaders to act more quickly or aggressively.

Choppy trading & hesitancy characterise FX, equities and commodities, particularly the inability to follow up on risk-seeking trades. We focus on USDJPY and EURUSD in Wednesdays Premium piece. Members can get direct access here: http://ashraflaidi.com/products/sub01/access/?a=506 Non-members can get a trial here: Choppy trading & hesitancy characterise http://ashraflaidi.com/products/sub01/

Euro extends bounce along with equities as Finns approve EFSF expansion, Greece backed tax hikes, German CPI could surprise to the upside; German import prices fell; Italian business confidence declined; French GDP unrevised. Market turns to US durable goods orders.

The greenback is weaker as overall sentiment remained stable. Risk currencies and equities are benefiting from the expectation that Germany will pass tomorrow the legislation needed to expand the Eurozone bailout fund. EURUSD breached yesterday's highs and trades around 1.3670 hitting all targets mentioned in the premium piece.

German CPI is still being collected and analysts expect a decline to -0.1% in September from an unchanged reading in August. Annual figure is seen unchanged at 2.4%. However, the numbers from regions that have already completed collecting data suggest that we could see an upside surprise. Region of Saxony reported +0.3% monthly increase, which is the highest print since October 2008. North Rhine Westphalia and Hessen have also reported 0.3% monthly increase.

Ashraf's Premium Intermarket Insights hit all or most targets for EURUSD, EURJPY, US Crude, while gold, EURGBP and CADJPY remain in progress. Silver, USDCAD and ES were stopped out. Direct access here: http://ashraflaidi.com/products/sub01/access/?a=505

In other news, German August Import prices came at -0.7% m/m which is the largest fall since September 2009. Italian September business confidence fell to 94.5 from 98.6 in August printing the lowest number since 1/2010 and French final Q2 GDP was confirmed at 0.0% sparking fears of a recession. Weak print is attributed to contraction of household spending which accounts for a significant part of French GDP. Annual print declined to 1.7% from 2.2%.

GBP could come under renewed pressure in the days ahead as calls for more QE are becoming stronger. MPC member David Miles said that he was closer to voting for new QE because a "second dose of QE would boost the economy".

The EU/ECB/IMG troika has decided to return to Greece on Thursday and will hold meeting in October to determine disbursement of the next part of the aid.

The New York session will bring Durable goods orders at 8:30 am ET that are expected to contract by 0.5% in August after growing 4.1% in July. Core orders are seen at 0.1% from previous 0.8%. Crude oil inventories due at 10:30 am ET are anticipated at +1.1M barrels after dropping by 7.3M barrels last week.

Traders should note that Fed chairman Ben Bernanke speaks at 5 pm ET in Cleveland so volatility could increase during this illiquid time of the day.

Greece property tax passes, but rifts open with respect to Greek loan rollover, German CPI and import prices expected to fall, French GDP remains flat, US Durable goods due. Ashraf's CNBC Interview below.

Europe remains the centre of attention today with Finland due to vote on the extension of powers of the EFSF bailout fund later today. Greece managed to pass the unpopular property tax yesterday, which was pretty much expected given the PM Papandreou was in Berlin. Tensions still remain within Europe however after splits started to emerge among seven of the seventeen member states with respect to the amount of write downs private creditors would have to wear in respect of the new Greek bailout. Some German officials with support from other members have insisted that creditors take bigger haircuts than the 21% initially agreed as the fiscal situation in Greece has deteriorated markedly since July 21st when the agreement was first drafted.

Ashraf's CNBC Intereview earlier today. http://video.cnbc.com/gallery/?video=3000047932

The timing for the next loan instalment has also been delayed until the last possible minute, two weeks or so from now.

German consumer prices for September are expected to fall back 0.1% on the month, while staying 2.4% year on year while import prices are also expected to fall back 0.3%, lowering the annual rate from 6.5% to 5.7%. If these falls come in as predicted we could well see the ECB signal a slightly easier policy stance at next weeks monthly meeting. A rate cut would be unlikely, before November.

French Q2 GDP this morning came in as expected, remaining unchanged at 0%, confirming that Europes second largest economy is on the brink of slipping into contraction and highlighting the precarious fiscal position it could soon find itself in, if economic conditions continue to deteriorate.

Ashraf's Premium Intermarket Insights hit all or most targets for EURUSD, EURJPY, US Crude, while gold and CADJPY trades remain in progress. Silver, USDCAD and ES were stopped out. Direct access here: http://ashraflaidi.com/products/sub01/access/?a=505

In the US yesterdays consumer confidence figure for September showed that the US consumer remains weighed down by concerns about the US economy. August durable goods orders arent expected to lift the outlook for the US economy either.

Greece passed new taxation measures, clearing the way for the upcoming tranche of aid and boosting risk appetite. The best performers were AUD and NZD while JPY lagged followed by USD. The lone data point in the upcoming session is HIA new home sales for Australia.

The vote in Athens was 155 to 142 in favour of a special property tax levy that will generate 1.1% of GDP in taxes and help meet Troika deficit demands. Fin Min Venizelos said on Monday he expects the approval of the next loan tranche in time. Venizelos The solid margin of passage in this bill suggests other upcoming taxation votes will also be successful despite opinion polls showing they are deeply unpopular.

EUR/USD hit a session high of 1.3666 shortly after the Duma passed the bill but gains quickly faded on a report in the FT suggesting as many as 7 of the 17-member eurozone countries are asking for a larger haircut in a Greek restructuring. The S&P 500 gained 1.1% to 1175 but halved its gains in the final hour of trading.

Were surprised at the effect the FT story had on markets because several similar reports began appearing last week, some said Germany is demanding a 50% haircut (up from the 21% thats rumoured to be on the table). Theres no new information here. The reaction shows how jumpy and headline-driven traders are in the current environment. Even though the pullback appears nonsensical, jittery markets usually gravitate to risk aversion.

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Asia-Pacific Preview

The calendar is essentially bare in the region with the exception of August HIA new home sales for Australia. In July sales fell 8% m/m and further declines could trigger fears about a deeper housing correction. In all likelihood, however, this release will go largely unnoticed as the market continues to dwell on Greece and the Japanese governments response to the strong JPY and deflation.

8 new trades and 4 new charts in our Tuesdays Premium Intermarket Insights. We also posted the latest EURUSD 1-month volatility chart in to support our call for the single currency. Metals extend their rallies in line with our last 2 Premium editions, while ES breaks out of the 1140s, now eyeing 1190s. See all the new trades on EURUSD, EURJPY, CADJPY, USDCAD, CADJPY, ES, US Crude, gold, silver and existing trades on EURGBP and USDCAD. PREMIUM MEMBERS click here for DIRECT access; http://ashraflaidi.com/products/sub01/access/?a=505 Nonsubscribers can click here: http://ashraflaidi.com/products/sub01/ Ashraf will be on the set of CNBC Asia at 20:30 EST, 00:30 GMT, 8:30 Singapore time (Wednesday).

German GfK consumer confidence unchanged, Swiss consumption declined sharply; UK CBI sales fell further. Markets turn to US Home price index and Consumer confidence data, Dallas Feds Fisher on why he voted against the Twist. Details on Ashrafs Premium trades below.

CHF was unaffected when Swiss UBS Consumption Indicator declined sharply to 0.79 from 1.28 in August confirming fears mentioned in last week SNB's quarterly bulletin that the Swiss economy could experience a significant slowdown in the months ahead.

Monday's Premium; Both $EURUSD, Gold & EURJPY hit all targets, CADJPY partly done, EURGBP working, 1 $ES hi targets other stopped out. FOR DIRECT ACCESS please click here: http://ashraflaidi.com/products/sub01/access/?a=504 TRIALISTS can click here here: http://ashraflaidi.com/products/sub01/

EUR is holding steady above the 1.35 level suggesting the possibility of short term strength. German GfK Consumer confidence underpinned the currency as October's survey came unchanged at 5.2 defying fears of a recession and market turbulence. However, the Economic Expectation sub-index fell sharply to 4.8 from 13.4.

UK CBI sales in September fell to -15 from -14 which is the lowest print since May 2010 and the latest confirmation of slowing economy. Retailers expect sales to decline further next month as 3M moving average of sales declined by 11%. GBPUSD may come under renewed pressure as the case for additional QE grows.

Yesterdays equity rally was founded on hopes that EU leaders may be finally ready to take the required steps necessary to deal with the crisis in Europe. One hope is that leaders are considering an increase or leveraging up of the bailout fund (EFSF). This step has raised the political temperature in Germany with fears that unless assurances are given the vote in the Bundestag on the extension of powers of the EFSF, could well get voted down. The head of the German constitutional court has already gone on record as saying politicians do not have the legal authority to make any agreements that violate or impinge on German national or fiscal sovereignty.

Any vote to increase the EFSF by the back door would do that and any such measures that impinge on German sovereignty must be put to a referendum of the people.

Greek PM Papandreou is due to meet Angela Merkel in Berlin today at the same time as the Greece parliament votes on the new austerity measures including the property tax.

The New York session will bring S&P/Case-Shiller Home Price index index at 9:00 am ET that is expected to continue its contraction by -4.4% in July from -4.5% in June

US Consumer confidence is due at 10:00 am ET and is seen higher at 46.2 in September from 44.5 in August. Market volatility could also increase at 1:20 pm ET when Dallas Fed president Richard Fisher delivers a speech titled "Why I voted against Operation Twist".

K Morrison & P Urban

More signs that European leaders are working on an enlarged bailout spurred a continued rebound in risk appetite. GBP and CHF were the top performers while JPY and USD lagged. The Asia-Pacific economic calendar is quiet.

EUR/USD closed out the day at a session high of 1.3546 but it was a bumpy ride with the pair as low as 1.3362 in early European trading. CNBC boosted the euro and broad sentiment after reporting on a European plan to create a special purpose vehicle to buy distressed periphery bonds. The key further gains will be breaking the highs from late last week in the 1.3550/67 range.

While the news surrounding an enlarged and empowered EFSF was largely positive, signs of trouble continue to arise in Germany. First, Fin Min Schaeuble said there is no intention to increase the EFSF (but did not rule out leveraging it). Second, the head of the constitutional court said Germany is already pushing the limits of its constitution with current bailouts and a referendum may be required before expanding the bailout mechanism or making it permanent.

Fed Governor Raskin also helped boost risk assets, saying additional policy accommodation is warranted under present circumstances. The S&P 500 gained 2.3% to 1163 and closed at the highs. The Australian, New Zealand Canadian dollars all fell to fresh recent lows but rebounded and closed higher on the day, suggesting the potential for further corrections.

The washout in gold and silver finally appears to have ended as both fell drastically once again before rebounding to nearly unchanged levels on the day.

The lone item on the economic calendar is the 2350 GMT of Japans corporate services price index. Expectations are for deflation to continue with prices down 0.4% y/y following a 0.5% in the prior report. The data point rarely moves markets.

Despite silvers intraday plunge below the 4-month downward channel, it appears it will succeed in closing the day above the support (27.70s), which is a short term positive. Silver also avoided the more important 100 WEEK moving average (26.57), which is ANOTHER positive. BOTH ES trades remain in progress, and the same goes for the EURGBP and CADJPY trades. Only one remaining EURUSD is now in progress. Click here for direct access to our trades http://ashraflaidi.com/products/sub01/access/?a=504 Get your 1-week free trial here: http://ashraflaidi.com/products/sub01/

Ashraf

Sentiment improved after German IFO came out above consensus. ECB Yves Mersch rejected expectations of ECB rate cut. Gold and silver recover after sharp losses during Asian session. Market turns to US New Home sales and Dallas Fed Manufacturing index. Arabic speakers can watch Ashraf on AlArabiya discussing gold and silver at 12:30 GMT (16:30 Dubai Time)

Overall sentiment has improved and risk currencies are rallying after September German IFO business climate came out at 107.5 compared to 106.5 expected. Other components of the IFO index also came above expectations Current assessment printed 117.9 vs 115.7 exp. and the Expectations part came out at 98 vs. 97.3. However, it is important to keep in mind that all three components worsened slightly compared to August readings confirming negative outlook. EURUSD has recovered to 1.3476 after falling to 1.3363 at the beginning of European trading. Other European news included Italian Consumer confidence that declined in September to 98.5 from 100.3.

Additional support for the common currency came from the ECB governing council member Yves Mersch who in an interview for MNI rejected speculations of 50 bp rate cut. Yves Mersch said that those were "wild expectations" that show that "people have lost their sense of direction".

Gold and silver surged higher over the past few hours. Gold gained almost 100 dollars when it recovered to 1626 after falling to 1533 while silver surged higher by almost 4 dollars when it reached 30 after falling to 26.10.

During the US session, the volatility could increase at 9:15 am ET when Federal Reserve governor and FOMC member Sarah Raskin delivers a speech on monetary policy in Washington DC.

August New Home Sales are due at 10:00 am ET and are seen lower at 296K from 298K in July. Despite the stabilization seen over the past 2-3 years, the sales of single family homes are still near decade lows.

Dallas Fed Manufacturing Activity index is due at 10:30 am ET and is expected to slow the rate of decline and print -8 in September from -11.4 in August.

Silver is up $2.40 off the Monday Asia lows, Gold dipped to 1525 (nearing the 200 dma). Our Monday Premium Intermarket Insights are now up. EURUSD hit a new 8-month low of 1.3363. Click here for direct access to our trades http://ashraflaidi.com/products/sub01/access/?a=503 Get your 1-week free trial here: http://ashraflaidi.com/products/sub01/

Ashraf

IMF and G20 look to draw up new plan after unproductive weekend, German IFO for further declines, Italian consumer confidence to fall below 100, US New home sales due. Ashrafs latest Premium trades to follow in 40 mins ahead of the London open.

Over the weekend, the IMF pledged it would take decisive action to tackle the Eurozone debt crisis and help support the global economy. There is also talk that European leaders may explore speeding up the start of a permanent rescue mechanism, or European Stability Mechanism, (ESM) bringing it forward a year early from 2013, to 2012.

EU's Olli Rehn said the focus now remains on reinforcing the current 440bn EFSF in order to create a firebreak around Greece, Portugal et al to prevent a spill over to Italy and Spain, with talk that ministers are looking at ways of boosting it to around 3trn, though quite how this will be achieved is not immediately apparent.

Mixed messages remain the order of the day with EU leaders after German chancellor Angela Merkel spoke to German TV last night and said that Greece should not be allowed to default, while at the same time not ruling out a euro area insolvency.

Fears about the economic situation in Europes largest economy could well continue to weigh on sentiment this morning, with the release of the latest IFO data for September, with economic expectations set to fall below 100 to 97.4, and into contraction territory from Augusts 100.1. Germanys other well-known index (the ZEW-investor survery) was charted in Ashrafs latest article showing the likely path to recession for the Ezones largest economy.

The business climate index is expected to fall as well but remain above 100, in expansion territory, falling to 106.5 from 108.70 in August.

Also due, Italy Sep consumer confidence expected to fall further in the wake of the last few weeks uncertain political backdrop as well as all the political haggling over the recent austerity budget. Consumer confidence is expected to fall from Augusts 100.3 to 98.5.

In the US, new home sales for August are due to continue to paint a bleak picture for the US housing market, with expectations that they will fall 1%, adding to Julys 0.7% decline.

Gold and silver prices have continued to fall with silver falling below its 200

day MA for the first time since July 2010. Fridays margin hikes by the CME on not only gold and silver prices, but also on copper could well see further falls in the short term.

Ashrafs Premium intermarket insights to follow w/in the next hour, ahead of the London open. Click here to subscribe http://ashraflaidi.com/ products/ sub01/

The euro opened modestly higher on a report of a plan to boost Europe's bailout fund. A Japanese official played down the possibility of a Swiss-style peg. Fridays CFTC report showed the net USD position at the most bullish in more than a year. The trades from Friday's Premium Intermarket Insights have been triggered according to the latest strategy. Premium members must closely watch that oil chart from Friday's piece.

EUR/USD jumped to 1.3525 from Friday's closing level of 1.3470. The gains were spurred by a report in the Telegraph outlining a plan to end the crisis in Europe. First, the current 440B euro EFSF would be leveraged to 1 or 2 trillion by guaranteeing losses. Second, European banks will be recapitalized with many tens of billions of euros. The article also says Germany is pushing for a managed Greek default including a haircut as large as 50% with the country remaining in the eurozone. According to the article, the plan will be ready before late November G20 meetings.

Speculation about Japan following in the footsteps of the SNB and introducing a currency peg were dashed by comments from a Ministry of Finance official who told Reuters that IS NOT AN OPTION because it would involve abandoning monetary policy. His comments suggest that policymakers are focused on combating deflation as a means of devaluing the yen and stimulating the economy. USD/JPY opened the week roughly unchanged at 76.59.

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NZD is the laggard in early trading, falling to the lowest since April. The declines appear to be primarily driven by risk aversion but August trade balance data released before the market open is also weighing. A deficit was reported at $641M compared to the $315M expected and $129M prior. Exports increased but rising imports, especially energy, caused the defict.

Fridays CFTC report (which tracks data through the close on Tuesday) is of limited value because of the extreme market moves that followed the FOMC but the trend toward USD is clearly accelerating. The USD net long grew THE MOST SINCE JUNE 2010 as GBP shorts more than doubled and EUR shorts increased 46%. The yen was the only major currency to make headway against the USD as the net long JPY expanded by a quarter. The market remained long AUD and NZD heading into the FOMC and that might explain the swift falls in both since Wednesdays decision.