Intraday Market Thoughts Archives

If you missed Ashraf's Thursday Pre-NFP webinar where Ashraf warned why the ISM would be Friday's game-changer and NOT the jobs report (also explaining his recent FX & oil predictions), here is the AUDIO/VIDEO recording of his session, followerd by George Cavaligos on Treasuries and Gann waves and Fari Hamzei on market-timing and indices. session available here:  http://www.hamzeianalytics.com/Educational_Webinars.asp

The ISM survey was the day's game-changer as warned yesterday (not the jobs report). Here is what it means for US surveys to outpace the globe and more charts analysis showing JPY is far from oversold & what does the it means see here

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Here's how to trade USDJPY ahead and after NFP and ISM. Full analysis & charts here

January was an unmitigated success for Abe as his election pledge to beat deflation with a weak yen began to bear fruit. The yen was the laggard on Thursday and fell more than 5% on the month. The upcoming session features Japanese employment data and the official China PMI.Wednesday's long EURUSD Premium trade hit its 1.3580 target, while Thursday's EURUSD trade remains in progress. Gold and cable was stopped out. We also added trades on and US CRUDE OIL and SILVER. USDJPY trades are in progress

USD/JPY broke above 91.70 and yen crosses hit fresh cycle highs despite calls for month-end retracements. The 8% monthly rise in EUR/JPY was among the biggest gains since the currency's inception.

Economic news continues to show signs of improvement in the global economy. The Chicago PMI jumped to 55.6 compared to 50.5 expected. The US personal income report showed a 2.6% jump in December but it was likely boosted by one-time items. Spending rose 0.3%.

Initial jobless claims were a slight negative at 368K compared to 350K expected but the soft number comes after two weeks of unusually strong readings.

The Canadian dollar was particularly strong in US trading as USD/CAD broke below parity and the 200-day moving average to 0.9957.

Although the non-farm payrolls report is a risk on Friday, trading could be robust with Japanese unemployment for December at 2330 GMT. The main highlight will be the official China PMI at 0145 GMT. The consensus call is for a slight improvement to 50.9 from 50.6.

German retail sales disappointed but labor market improved; Japan approved budget for next fiscal year; Spanish and Italian yields rose. US jobless claims +38K from prior week's 5-year lows, US Dec personal income jumped 2.6% from 1;0% due to lump sum social security payments; personal spending +0.2% from +0.4%. Chicago PMI at 55.6 from 50.0. Canadian Nov GDP +0.3% m/m from +0.1% and +1.3% y/y from +1.1% y/y. Wednesday's long EURUSD Premium trade hit its 1.3580 target, while Thursday's EURUD trade remains in progress. We also added trades on GOLD, SILVER and US CRUDE OIL with 2 new on gold, 1 new on silver and 2 new on oil.

German data was mixed today. Retail sales disappointed as they fell sharply in December 1.7% from previous 0.6% growth but the unemployment declined 16K in January, which helped to pushed the unemployment rate down to 6.8% from prior 6.9%. EURUSD started off by falling to 40 pips to 1.3545 before regaining ground to 1.3594.

Japanese government approved a draft budget for the fiscal year 2013/2014 totaling USD 1.02 trillion. The first budget presented by the new PM Abe marked a symbolic improvement for the first time in seven years. However, when combined with the extra stimulus plan signed off earlier this month, which is financed in more than half by new bonds, it drives borrowing to new highs, Bloomberg reports.

In other news, UK Nationwide house prices rose 0.5% in January after a flat reading in December and French consumer spending was flat. GBPUSD is weaker trading around 1.5790.  

Spanish and Italian 10 year yields rose today hitting 5.31% and 4.41% respectively.

Ashraf discusses with Bloomberg his $1.35 target on EURUSD initially made on Sep before revising it to 1.37 in December. He lays out the arguments for his insistence on further euro gains. Ashraf's webinar will take place on Thursday at 17:00 ET, 22:00 GMT  Full interview here

Ashraf's Thursday night webinar 17:00 ET, 22:00 GMT on FX & commodities with Fari Hamzei on equities & George Cavaligos on bonds is open for registration here https://www1.gotomeeting.com/register/736581993

We just added 1 more trade on EURUSD as one of the 2 trades from yesterday is 2 pips away from hitting its 1.3580 target. We've also updated our trades on GOLD, SILVER and US CRUDE OIL with 2 new on gold, 1 new on silver and 2 new on oil Click here: http://ashraflaidi.com/premium/latest

 British net lending to individuals and mortgage approvals rose; Swiss data mixed; solid Italian auction. Market awaits ADP, GDP and FOMC. A new set of Premium Insights has been issued ahead of Wednesday's FOMC decision. 2 new trades in EURUSD, 2 new in USDJPY, 2 dual trades in GBPUSD, 2 new in AUDUSD, 2 new in EURGBP, 2 new in EURJPY and 2 new in CADJPY. Gold, silver and US crude oil trades will be updated shortly.

USD is mixed in the ongoing session. EURUSD strengthened to a 1.3562 session high, USDJPY rose to 91.39 but commodity dollars weakened and still trade near session lows.

British net lending to individuals increased in December and reached GBP 1.7 bln from prior GBP 0.1 bln and mortgage approvals rose to 56K from 54K which is the highest level since 09/2012. GBPUSD rose alongside the euro and trades around 1.5775.

The CHF strengthened despite a set of mixed data out of Switzerland. The UBS consumption indicator rose in December to 1.34 from prior 1.23 but the KOF economic barometer fell sharply in January to 1.05 from previous 1.29. USDCHF fell to 0.9155.

Italy sold 5 and 10 year BTPs totaling EUR 6.5 bln vs. 4.5-6.5 bln target. Both average yields declined and cover was mixed. Germany allotted EUR 1.637 bln of 30 year Bund vs. 2 bln target. The average yield rose to 2.45% from 2.34% and cover fell to 1.8 from 2.7. 18.2% were retained.

The US session begins at 8:15 am ET with the ADP report that is expected to decline to 164K in January from December's 215K followed by Q4 GDP at 8:30 am that is forecasted to slow to 1.2% from prior 3.1% y/y. Markets will then wait for the FOMC decision and statement at 2:15 pm. The FOMC is likely to reiterate its stance on QE so today's meeting could be a non-event.

NZD traders await the RBNZ rate decision and statement at 3:00 pm. Rates are widely anticipated to remain steady at 2.5%.

A new set of Premium Insights has been issued ahead of Wednesday's FOMC decision. 2 new trades in EURUSD, 2 new in USDJPY, 2 dual trades in GBPUSD, 2 new in AUDUSD, 2 new in EURGBP, 2 new in EURJPY and 2 new in CADJPY. Gold, silver and US crude oil trades will follow on Wednesday before the US session.Click here for latest Premium Insights .

Bernanke will prove to the world on Wednesday he can still “speak Japanese” as he sticks to the treatment of quantitative easing, first delivered by the Bank of Japan in the mid 1990. Here are the fundamental and technical implications for “Bernanke's triangles” in gold and yields.

German GfK consumer confidence improved; Bloomberg survey projects the FED to buy additional $1.14 trillion; JPY pair weaker; solid Italian auction. Focus turns to real estate market data and consumer confidence. A new edition of the Premium Insights will be issued this evening, ahead of tomorrow's FOMC decision and Friday's NFP release.

Euro gave up some of its recent gains, now trading slightly weaker despite more evidence that points to continued recovery in Germany. GfK consumer confidence inched up in February to 5.8 from previous upwardly revised 5.7. Income expectations and willingness to buy both increased to the best levels since mid 2012. EURUSD trades around 1.3430 and EURGBP dipped to 0.8527.

Bloomberg survey of 44 economists projects that the FED will continue to buy assets worth $85 bln per month until the first quarter of 2014 when the program ends. By that time, asset purchases will reach additional $1.14 trillion.

JPY pairs trade slightly weaker, consolidating large gains from the past few days. Traders are awaiting the FOMC meeting that begins today and concludes tomorrow. USDJPY fell to 90.30 and EURJPY fell to 121.21.

Italy reached a full auction take-up as it sold 6 month BOTs totaling EUR 8.5 bln. The average yield declined to 0.731% from 0.949% and cover rose to 1.65 from 1.57.

US reports are limited to S&P Case Shiller HPI at 9:00 am ET that is expected to rise 5.7% in November from prior 4.3% followed by consumer confidence at 10:00 am ET that is seen slightly lower in January at 64.5 from previous 65.1.

Ashaf re-iterating to CNBC his fundamental and technical arguments for further euro strengthening by way of central bank liquidity, investment and futures flows - Click here for full interview

One central bank nears the end of its easing cycle, while the other is set to start a new wave of quantitative easing. The former may no longer worry about the spillover from a Chinese hard landing, while the latter is dealing with the 4^th negative quarterly growth over the last 6 quarters. Complete Chart & Analysis here.

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Japanese jawboning; commodity dollars weakened; Italian auction; gold lower. Focus turns to durable goods orders and pending home sales. The latest Premium Insights issued on Thursday have 5 trades hit all targets, 5 unfilled, 4 stopped out and 4 in progress.

The common currency trades slightly weaker around 1.3435 despite Italian consumer confidence that fell in January to 84.6 from prior 85.7 which is the worst level since the series started in 1996. EURGBP pushed to 0.8557.

JPY pairs pushed higher in Asia but gave up their gains and trade slightly weaker. Jawboning from Japanese officials continues from the ex economy minister Takenaka who said that the JPY has room to fall towards USDJPY 95. Takenaka is speculated to be a candidate for the new BOJ governor. USDJPY rose to 91.26 and currently trades around 90.70.

Commodity dollars are broadly weaker against the greenback in the ongoing session. AUDUSD fell to 1.0384, NZDUSD trades around 0.8285 and USDCAD rose to 1.0100.

Italy sold 2014 and 2018 bonds totaling EUR 5.5 bln vs. EUR 5-6.75 bln target. Both average yields declined but both bid to covers fell as well. Eurozone sovereign bill issuance is estimated around EUR 19 bln this week, up from last week's EUR 15.7 bln. Bond issuance is seen reaching EUR 15.25 bln vs. EUR 13.01 bln last week, MNI reports.

Spot gold is slightly weaker trading around 1655 ahead of a key short term support zone around 1640. The market is focused on the FOMC meeting on Wednesday and jobs figures on Friday.

The US session begins at 8:30 am ET with durable goods orders that are expected to increase 1.8% in December from prior 0.8%. However, core orders are seen rising only 0.8% from previous 1.6%. Pending home sales are due at 10:00 am and they are anticipated to increase 0.5% in December from November's 1.7%.

As LTRO funds are repaid, the focus is slowly shifting to how the ECB will scale back its extraordinary programs. The best performer last week was the euro while the Canadian dollar lagged. Asia-Pacific economic data is light to begin the week. In Thursday's Premium Insights, 5 hit all targets, 5 unfilled, 4 stopped out and 4 in progress.

The ECB said on Friday that banks will repay 137 billion euros in LTRO funding. The low-cost loans were used to finance bond buying and helped depress periphery yields. The repayment figure was higher than the roughly 100 billion euros that market participants were expecting.

The repayment begins this week and it raises some risks. Many banks were crowded in the 'Sarkozy trade' which was a carry trade into short-term periphery bonds. As this trade is reversed it could put upward pressure on 1-3 year yields. Gentle upward pressure would be euro-positive but a more abrupt risk could spark fears and a flight from the euro.

In Davos, comments from the ECB's Coene highlighted the changing priorities of the central bank as it slowly begins the march toward normalization. He said the ECB bond purchase pal would ideally be left unused. He added that the ECB could revise growth forecasts higher in March.

As the trading week begins, the lone data point to start the week on the Asian calendar is the Japanese corporate service price index for December. Economists forecast the measure will decline 0.5% year-over-year. This data point rarely moves the FX market.

Australian is closed for a holiday.

Commitments of Traders The weekly futures positioning data from the CFTC reflects the close last Tuesday. EUR net long 21K compared to +7K last week JPY net short 64K compared to -66K last week GBP net long 18K compared to +28K last week AUD net long 97K compared to +89K last week CAD net long 58K compared +69K last week CHF net long 6K compared to +13K last week

There are a couple takeaways. The market now comfortably long euros for the first time in years but it has been a slow process. Oftentimes a rally is easier to sustain when traders are slow and reluctant to join in.

It's a surprise to see the market long the pound despite the recent weakness. Although some indications are showing cable oversold, the continued net long position should give bears comfort.