Intraday Market Thoughts Archives
Displaying results for week of May 26, 2013AUDUSD's Next Destination
The worst performing currency out of 173 currencies so far this quarter. The 2nd worst performing G10 currency behind the JPY year-to-date. The worst performing G10 currency in May, falling 7.2% vs USD, posting the biggest decline since September 2011 when it lost 9.7%. All the analysis & charts
Dollar Gives Up the Gains, Major Japanese Data
A downward revisions to GDP and a softer jobless claims figure knocked the dollar to a three-week low against the yen and euro in US trading. First quarter US GDP was lowered to 2.4% from 2.5% in the first revision, it was expected to remain unchanged. Initial jobless claims were at 354K compared to 340K.
After months of steady improvement, the trend in claims has flattened. Job creation at the current pace will fall short of the consistent +200K/month the Fed wants to see before tapering QE. If the data continues to show a stagnating recovery, the dollar will stagnate as well.
The euro rose above 1.3050 after several attempts at 1.3000 were rebuffed in the past two weeks. USD/JPY also touched the lowest since early May but it was unable to hold the declines and closed nearly unchanged.
So far, the dollar slump could simply be a month-end correction in a longer-term rally but it bears close watching with several pairs – and gold – launching small breakouts.
The trend in the dollar turned as the Nikkei broke down and after a 5% fall on Thursday, that market remains a major focus. Japanese data takes the spotlight in the hours ahead as April CPI, household spending and employment numbers are released.
CPI is always a major number in Japan but April was the dawn of aggressive BOJ action. Expectations are for a 0.4% y/y decline in the core number. Household spending is expected up 3.1% y/y and the unemployment rate is forecast to remain steady at 4.1%. All the numbers will be released at 2330 GMT.
Shortly afterward, at 2350 GMT, April industrial production is expected to fall 3.4%.
It's difficult to judge the Kuroda actions from April data because he didn't act until April 4. Better indications could come from May data, including the Markit manufacturing PMI, which was at 51.1 in April. It will be released at 2313 GMT.| Act | Exp | Prev | GMT |
|---|---|---|---|
| GDP Price Index (Q1) | |||
| 1.2% | 1.2% | 1.0% | May 30 12:30 |
| GDP Annualized (Q1) | |||
| 2.4% | 2.5% | 0.4% | May 30 12:30 |
| GDP (q/q) | |||
| 0.6% | 0.2% | 0.3% | May 30 5:45 |
| GDP (y/y) | |||
| 1.1% | 0.9% | 1.4% | May 30 5:45 |
| National CPI (APR) (y/y) | |||
| -0.7% | -0.9% | May 30 23:30 | |
| National CPI Ex Food, Energy (APR) (y/y) | |||
| -0.7% | -0.8% | May 30 23:30 | |
| National CPI Ex-Fresh Food (APR) (y/y) | |||
| -0.4% | -0.5% | May 30 23:30 | |
| Tokyo CPI (MAY) (y/y) | |||
| -0.4% | -0.7% | May 30 23:30 | |
| Tokyo CPI ex Food, Energy (MAY) (y/y) | |||
| -0.7% | -0.7% | May 30 23:30 | |
| Tokyo CPI ex Fresh Food (MAY) (y/y) | |||
| -0.2% | -0.3% | May 30 23:30 | |
| Overall Household Spending (APR) (y/y) | |||
| 3.1% | 5.2% | May 30 23:30 | |
| PMI Manufacturing | |||
| 51.5 | 51.1 | May 30 23:13 | |
| PMI Manufacturing | |||
| 51.5 | 51.1 | May 30 23:15 | |
| Chicago PMI (MAY) | |||
| 50 | 49 | May 31 13:45 | |
| Retail PMI | |||
| 46.8 | 44.2 | May 30 8:10 | |
| Continuing Jobless Claims (MAY 18) | |||
| 2.986M | 2.945M | 2.923M | May 30 12:30 |
| Initial Jobless Claims (MAY 24) | |||
| 354K | 340K | 344K | May 30 12:30 |
| Unemployment Rate (APR) | |||
| 4.1% | 4.1% | May 30 23:30 | |
| Unemployment Rate (APR) | |||
| 12.2% | 12.1% | May 31 9:00 | |
EURJPY Awaits Japan CPI
What a difference a day makes as today's USD tumble was attributed to a modest miss in Q1 GDP revision (2.4% vs exp 2.5%), while the important PCE rose to a higher than expected 3.4%. USDX failed to reach the 85 resistance, but support looks to remain intact around 80.70. AUDUSD rebounded on higher than expected Capex spending plans but failed to reach our 0.9700 short. EUR and CHF were among the day's best performers. Tonight's April CPI figures (00:30 London) from Japan are expected to show improved data all around, which may justify the weak-yen policy and support yen crosses. With EUR outperforming most major FX lately, EURJPY will be particulat to watch as Japan's inflation data is released amid 13-month highs in JGB yields. CAD awaits tomorrow's March GDP figures, which will help determined the fate of our latest USDCAD longs. We have reintroduced USDCHF to the Premium Insights after a long absence, issuing 2 new longs and 2 charts supporting the fundamental rationale. Both GBPUSD shorts were stopped out, while the stop on EURUSD was raised. Full details are seen in the latest Premium Insights.
| Act | Exp | Prev | GMT |
|---|---|---|---|
| National CPI (APR) (y/y) | |||
| -0.7% | -0.9% | May 30 23:30 | |
| National CPI Ex Food, Energy (APR) (y/y) | |||
| -0.7% | -0.8% | May 30 23:30 | |
| National CPI Ex-Fresh Food (APR) (y/y) | |||
| -0.4% | -0.5% | May 30 23:30 | |
| Tokyo CPI (MAY) (y/y) | |||
| -0.4% | -0.7% | May 30 23:30 | |
| Tokyo CPI ex Food, Energy (MAY) (y/y) | |||
| -0.7% | -0.7% | May 30 23:30 | |
| Tokyo CPI ex Fresh Food (MAY) (y/y) | |||
| -0.2% | -0.3% | May 30 23:30 | |
FTSE-100 Fundamentals & Technicals
The latest Infographic on the FTSE-100 Fundamentals & Technicals FTSE-100's rise since March 2009 vs. 8 other global indices FTSE-100's YTD Performance vs. 8 other global indices % FTSE-100 shares above their 200-DMA # of weeks without a 10% peak-to-trough decline FTSE-100 June Performance since 1991 Best and worst industry performers All the Charts & Analytics
CAD Takes BoC Breather, Aussie Awaits Capex
Aussie traders await tonight's report on April CAPEX figures (21:30 ET, 02:30 GMT) expected +0.5% from -1.2%, for the next juncture in the latest damage. Markets will also keep an eye on the 2013-14 investment plans. MNI consensus expects $A154 bn. Drifting below 200-WMA and 55-month MA (MMA), AUDUSD will show the difference between a consolidative bounce and a preparing for the next leg-down. We updated our Premium trades in AUDUSD (see below). Today's BoC policy statement reiterated its forecast for +2% inflation as Governor Carney served his final policy meeting before he is steps aside next month. We added 1 new short in GBPUSD, 2 new trades in USDCAD (ahead of Friday's GDP) and edited the target on the 1 of 2 trades in EURJPY Full trades seen in the Latest Premium Insights table.
| Act | Exp | Prev | GMT |
|---|---|---|---|
| GDP Annualized (Q1) | |||
| 2.5% | 0.4% | May 30 12:30 | |
| GDP Price Index (Q1) | |||
| 1.2% | 1.0% | May 30 12:30 | |
Euro's Biggest Open-Close Decline in 3 Weeks
Last week's decision to raise the stops and lower the targets on both of our existing EURUSD shorts was justified by Tuesday's 100-pip decline to 1.2850, which is the biggest open-close decline since May 9th when the pair failed a double resistance of 100-DMA and May 1st trendline. Noting that the FX headlines of the past 2 weeks have been mostly focused on the Fed and the daily pendulum of tapering/maintaining of asset purchases, the combination of gradual German softening of its positiob vis-a-vis austerity may further work against EURUSD. FX traders must not let declining EURUSD obstruct their view of rallying EURCAD and EURAUD, which spells durable conclusions for AUDUSD and USDCAD. We're sticking with EURUSD shorts, while issuing new long in USDJPY and 2 new positions in GBPUSD. We will revisit USDCAD and AUDUSD tomorrow as USDCAD is few pips away from final targets on 1 of 2 longs. All is found in the Premium Insights.
Timing the Next VIX Top
We look at the periodicity of recent tops in the VIX Index. The last four meaningful VIX peaks occurred at 2-month intervals, starting last October. Full chart & analysis
Germany Ponders Austerity, US Draws Investments
Markets started the week quietly due to holidays in the UK and US but continued volatility in Japan should add some intrigue to the upcoming session. A report in the German press suggests the government is shifting its view on austerity.GBP, CAD and AUD are the only decliners vs USD this week . 2 USDCAD, 2 EURUSD, 1 of 2 USDJPY, 2 of 2 EURJPY and 1 silver trades are in progress, while 2 AUDUSD await fill. All of these trades are in the latest Premium Insights.
USD/JPY slumped to start the week as another round of worries hit the Nikkei and it fell 3.2%. The pair fell as low as 100.74 but slowly recovered back to 101.00 in US trading.
The pound was the most-active currency despite the UK holiday. Cable climbed to 1.5157 in early European trading and then slumped to 1.5100.
Most pairs were stuck in tight ranges but the day ahead will bring volatility back to the market. The highlight on the calendar is at 2350 GMT with Japan's corporate service price index. It's expected to fall 0.2% m/m.
Several media reports highlighted trends we have outlined. The first was a Spiegel report saying Merkel's government is changing its mind about austerity. The government is fearful about extended youth unemployment and tarnishing its image. Efforts to tackle long-term budgets will continue but the government is looking to boost growth in the near term. The main idea is to extend low-interest loans via the German development bank through periphery development banks to companies unable to access credit.The change in German politics is unofficial but it underscores the move away from austerity from the flag-bearers of the movement.
Another trend is investment in the United States. A report from Bloomberg highlighted plans from China's $3.4 trillion FX reserves fund to invest in US real estate. A second item was an announcement from Canada's Valeant pharmaceuticals that it would buy Bausche & Lomb for $8.7 billion. Money flowing into the US will inevitably push the dollar higher.
| Act | Exp | Prev | GMT |
|---|---|---|---|
| Corporate Service Price (APR) (y/y) | |||
| -0.2% | -0.2% | May 27 23:50 | |
