Intraday Market Thoughts Archives

Sharp unwinding of JPY shorts drive down USDJPY towards our 94.80 target, CADJPY to 87.45s, but dollar weakness extending vs EUR, GBP, AUD and NZD due to sharp oil rebound. Oils sharp $3.00 bounce to 68.12 is the main catalyst to USD weakness, especially as stocks remain stable. CAD remains stable despite soaring oil, thus, CAD shorts to extend into next week following today's CAD GDP. GBP unlikely to close at today's 1.6685 highs see chart http://twitpic.com/c9aqt

It will be bad day for CAD and better day for USD. Although US Q2 GDP was better than expected at -1.0%, the 2 major negatives were with Q2 GDP report were: 1) Q2 consumption headed back into the red to -1.2% from +0.6% in Q1 (which was revised down from +1.0%); 2) the downward Q1 revision to -6.4% from -5.5%. CAD May GDP -0.5% from a downwardly revised -0.2% in April. USDJPY held up at 95.80 resistance, eyes 94.80, while $GBPJPY shorts could expect 156.50. CADJPY targets 87.10, while USDCAD eyes 1.0890. Wait for Chicago PMI next for confirmation. Latest updates on twitter.

US Q2 GDP and Canada May GDP both due at 12:30 GMT. US GDP seen at -1.5% from -5.5% and Can GDP seen -0.3% from Aprils -0.2%. JPY weakness extending across the board after last nights release of the biggest decline in annual core CPI in history (-1.7%). Dow futures +41 pts, FTSE +5 pts (FTSE resistance at 4,680). USDJPY tests interim resistance at 95.80, but we must see a close above the key trend line resistance of 96.20-25 to invalidate the current downtrend. NZDUSD tests 0.6570s, a break of which could extend towards 0.6620. Month end trading strategies and removal of hedges by banks to magnify volatility. Follow trading updates on http://twitter.com/alaidi

The UPCOMING 7-YR TREASURY AUCTION (due in 30 mins) faces a high bar of expectations since last months 7-yr auction drew a stronger bid-to-cover ratio of 2.82 compared to 2.26 in May. The participation from indirect bidders was also at a high 67%. Thus, todays auction needs to beat these numbers in order to avoid making a trifecta of disappointments following the 2-yr and 5-yr auctions of the last 2 days. The 7-year could also have a greater impact on 10-year yields from a maturity stand point, which could risk a fresh run-up towards the 3.80s%, potentially at the expense of the greenback. With evidence of Asian investors moving towards the shorter end of the yield curve, today's 7-year auction risks a disappointing subscription.

Reminding traders of watching the CLOSING values rather than the session highs. GBPUSD struggles to hold above $1.65 but 1.6550 remains key selling point. http://twitpic.com/c53lh Previous IMT (GBPJPY Daily) requires a close above 157.40, but the 4- hour chart suggests the possibility of a fade out in the latest run as far as momentum is concerned. http://twitpic.com/c53r5

The Bank of England has just announced the conclusion of its guilt purchase program, but it clarified it would review the scale of the next purchase next month.

Aussie leads the pack for the day as the strongest performing currency, closely followed by sterling and the loonie as equities charge higher and S&P500 targets the 1,000 level. Watch the key VIX support level at 23. Market optimism is already being fuelled ahead of next Friday's payrolls, expected to produce around -250K in jobs, which could be the smallest decrease since August. Caution of market whipsaws between the London close and the 7-year Treasury auction (17:00 GMT). A GBPJPY clsoe above 157.35 sets up for 158.70 and 160. http://twitpic.com/c4u0d

NZD rebounds vs USD and JPY as do other risk currencies after stabilization in Asia and Europe. Dow futures +56 pts. Markets awaiting US jobless claims expected to edge up towards 580K from 554K. Oil paring a third of yesterdays $4 plunge, facing pressure at $65. Canadian June industrial product price (also 12:30 GMT) expected -0.1% from -1.1% and raw. 1.0830 proved an effective resistance in USDCAD, risking to retest 1.0790. AUDUSD eyes pressure at 0.8280. Insights on the 7-year auction to follow. For more frequent TRADES & UPDATES see http://twitter.com/ alaidi

Will today's RBNZ decision (21:00 GMT) manage to drag the Kiwi lower? The policy statement is widely expected to hold rates unchanged at 2.5%, while communicating gradual stabilization in economic activity. Theres no question that the central bank is growing increasingly concerned with the strengthening NZD, but its vocal inability to weaken the currency has been just as obvious. The decision will take place 1 hour after the close of NY trading, thus in the event that US equities deteriorate in late trading, then accumulated risk aversion could intensify against NZD. 0.6510, 0.6470. Here's LAST MONTH'S POLICY STATEMENT (watch the negative bias on inflation and growth) http://www.rbnz.govt.nz/news/2009/3658527.html

Another poorly subscribed US Treasury auction as the 5yr auction (CORRCT not 2 year) receives poor 36% participation from indirect bids and low 1.92 bid/cover ratio. The news are adding to stocks losses, thereby helping USD stabilize after brief pullback. JPY weakness, however, broadening, as USDJPY tests 95.35 resistance. Dow eyes testing of 9,000 level and S&P500 eyes 965.

MONTHLY VIX chart highlights a textbook bullish reversal signal as indicated by the doji star and further supported by the January 2007 trend line http://twitpic.com/c0t3b USDJPY still failing to break above 95.15 resistance, while EURUSD hit our 1.4060 target (from 1.4140), NZDUSD at 0.6520 and USDCAD nears 1.0930 target. This market is paging through the textbook of currency-intermarket dynamics. OIL DOWN $4.00 at $63.00

Bigger than expected 2.5% decline in US durable goods accelerating USD bounce as Dow futures -51 pts. EURUSD eyes 1.4060, GBPUSD eyes 1.6270, USDJPY eyes 94.10. US crude oil breaks below 66 trend line support, eyeing next key target at $64.93--38% retracement from 58.41 low. GBPJPY looks to flirt with yesterday's lows again. USDJPY eyes 94.10 after failure at 95/15, http://twitpic.com/c0hay

Nikkei may have closed higehr today but China is down significantly. Shanghai Composite Index is down 5%, potentially showing the biggest weekly decline in 5 months, testing below the 3,200 level before bouncing to 3,266. Bombay -1.95%, Moscow -0.5% so lets see what the Brazil part of the BRIC does today. We reiterate that the extent of any impact from falling equities onto USD and JPY depends on the rate of the selloff in emerging markets, which occupy the bulk of risk cash (usually denominated in USD in times of repatriation). USDCAD eyes a rest of 1.09, as oil is dragged towards its 55-day MA of 65.57, eyeing 64--38% retracement of the decline from the 73.44 high.

The following Nikkei-225 chart http://twitpic.com/bylb2 suggests further risk aversion coming up in Asia. With Nikkei likely to retest 9,900 and even 9,866, which will likely prompt a USDJPY rest of 94.00, NZDUSD at 0.6510 and GBPJPY at 154.00 (medium-term target at 152.30) http://twitpic.com/bxh2j USDCAD longs still ought to consider shorts in AUDCAD for a retest of 0.8910 and 0.8860.

USD strength joins JPY rebound as the oil pullback below 66.80 joins the equity sell-off. GBPJPY hits 155.20 target, while NZDUSD and USDJPYhave yet to near their 0.6550 and 94.10 goals. Gold, as expected, failed to hold above the 957 before extending loses towards 938. AUDCAD peaked out at 0.8990, now looking to extend losses towards 0.8810. For more frequent TRADES & UPDATES see http://twitter.com/alaidi

If equities hardly managed a rebound yesterday despite a sharp increase in US new home sales, then what would happen in case of renewed decline in S&P/Case Shiller home price index (13:00 GMt) and US July consumer confidence (10:00 GMT)? Yen was already leading the pack earlier this monring before USD joined in and began dragging down EUR, GBP, CAD, AUD and NZD. Look for NZDUSD at 0.6550, GBPJPY at 155.20 (after 155.80 target was hit) and USDJPY at 94.10,

If equities hardly managed a rebound yesterday despite a sharp increase in US new home sales, then what would happen in case of renewed decline in S&P/Case Shiller home price index (13:00 GMt) and US July consumer confidence (10:00 GMT)? Recall the June 30th release of the June consumer confidence coincided w/intermediate peak in equities. Yen was already leading the pack earlier this monring before USD joined in and began dragging down EUR, GBP, CAD, AUD and NZD. Look for NZDUSD at 0.6550, GBPJPY at 155.20 (after 155.80 target was hit) and USDJPY at 94.10,

Dollar index breaks below the June lows at 78.31, now at its lowest since December. 78.25 is the 61.8% retracement of the rise from the 71.29 low to the 89.50 high. The fact that dollar selling is occurring despite a flat close in the Nikkei, underlines the weakness of the US currency, which was magnified by hawkish comments from the RBA. RBA Governor Stevens said earlier today there was no rule dictating the RBA that it has to wait for unemployment rates to peak before cutting interest rates. Markets were already expecting the RBA to raise rates by 25 bps by year-end. Thus, todays comments further boost the long term viability of the currency. 0.8350 remains a key intermediate target before a retreat is likely ahead of US consumer confidence and the $42 billion 2-year auction.

EURGBP gradual strengthening over the past 4 weeks reflects the broadening stability in EUR and deepening weakness in GBP. The cross has yet to regain the 0.8735 resistance to shake off any remaining doubters with recent rally. For now, the 2-year trend line support at 0.84 remains valid, while a figure above 0.95 isnt in the cards until Q4. EURCHF remains consolidative in its 1.51-1.5350 range, with the SNB propping the 1.51 line. Yet, the market remains unable to extend risk-seeking trades beyond 1.5350. Range-bound traders continue to find stability in the cross.

Equities shrugging of the stronger than expected 115 surge in US June home sales highlights the insistence for markets to pare Fridays gains, setting up the opportunity for renewed slide in AUDUSD, NZDUSD, GBPUSD and GBPJPY to 0.8145, 0.6505, 1.6410 and 155.80. Gold seen capped at 957--38% retracement of the pullback from the 989 high, eyeing 940. More updates on http://twitter.com/alaidi

CAD drags USD to fresh 9-month lows at 1.0779, while AUDUSD hits 0.8259 session high, 4 pips away from Mays 8-month highs. Dow futures retreat to negative territory ahead of the 14:00 GMT release of US June new home sales exp +3.8% at 355K from 342K. As risk appetite pushes the envelope currencies are still scrutinized on whether the session highs will be maintained into the end of the day. 10-year bond yields surge to 4-week high at 3.75% extending the dollar's selloff. But JPY remains the broadest loser, with 95.50 in USDJPY and 136 in EURJPY.