Intraday Market Thoughts Archives

GERMANY TROUNCES ARGENTINA and Maradona 4-0 in a historic World Cup 1/4 final in Cape Town, in another show of skill, intelligence, power and cold-blooded football. Although the match was not deprived of Messi's dangerously skillful creativity, it was the Shweinsteigers, Muellers, Kloses, Neuers Ozils and Lahms who ran the German machine. Fitness played a major role in this game as each German attack had at least 4 German players in the Argentinean penalty box, while Messi was always surrounded by at least 3 players. Although Germany will be w/out Mueller in the semi final, I expect Germany to beat Spain (assuming Spain beats Paraguay) to go on facing their foe Holland (assuming Holland beats Uruguay) in the rematch of the 1974 Wcup final. Tonight's 1/4 final SPN-PAR is the last of the tournament should not produce any surprises. We shall see.

STOCKS DEEPEN IN THE RED during NY Lunch, prompting USD higher, but USDCAD still seen capped at 1.0680, while EURUSD remains unable to regain 1.2660, now facing support at 1.2480. We're not giving up on the $1.2660 target. HOLLAND SENDS BRAZIL to ROBBEN ISLAND as the "Holland Oranje" come back from a 1-0 deficit to score twice in the first quarter final of the WorldCup. After two consecutive WCup defeats against Brazil (1994 and 1998), Holland finally gives the Samba Boys to think aboutuntil the 2014 WorldCup, which will be held in Brazil. Holland maintains its UNBEATEN RUN since their last defeat on September 2008. And yes, this was the SOLUTION TO THE 2-WEEK OLD RIDDLE. England has not lost since Sep 2008, the same month when Lehman Bros was dissolved. Facing the winner of Ghana-Uruguay, the Dutch can almost taste the final. Holland was a loser in 2 consecutive WCup Finals (1974 vs. W. Germany and 1978 vs. Argentina). The only other nation in modern times to lose in 2 consecutive WCup finals was W.Germany (1982 vs. Italy and 1986 vs. Argentina).

ANSWER TO THE 2-WEEK OLD RIDDLE IS:

What Does Holland's Soccer Team Has in Common with the September 2008 End of Lehman?

ANSWER: Holland has NOT Lost a game since September 2008. The LAST DEFEAT was in September 6, 2008, against Australia 1-2. Since then, Holland never lost a game. Could it finally lose todayagainst Brazil?

And that is the Answer.

US JUNE NONFARM PAYROLLS -125K from +433K, Unemp. rate DROPS to 9.5% from 9.7% (vs exp 9.8%), Average Weekly Hours flat at 33.4. Euro continues to rally across the board, eyeing the $1.2660 target (prev IMT), while JPY rebounds to gain versus all currencies (except EUR). USDCAD looks to retest 1.0680 as oil drops below 72.00. 10-yr bond yields unmoved at 2.93%, but a decline below 2.89% will likely see EURUSD regain 1.2630 and 1.2660. STOCK FUTURES UNCERTAIN where to go due to mixed US data. Dow futures rallied to +60 pts before losing all of those gains. Now +8 pts. MARKET CHOPPINESS WILL GROW WORSE into mid morninbg US trading as US approaches long weekend and attention shifts to World Cup Match Brazil-Holland at 14:00 GMT

YEN IS THE DAYs WORST PERFORMER, closely followed by the tumbling USD as the combination of stabilization in Asian/European equities and onslaught of negative US data weigh on both currencies. Markets await US June non-farm payrolls expected to decline by 125K(estimates range from -200K to flat). Since census workers are expected to have shown a net loss of about 230k, PRIVATE PAYROLLS are expected to have risen by 105K. June unemployment rate seen at 9.8% from 9.7%. A disappointing number is likely to maintain the sell-off in the USD because the intensity of negative US figures has occurred simultaneously with stabilizing dynamics in the Eurozone. The break above 1.2480 in EURUSD will likely give way to an initial target of $1.2660.

GOLD FALLS ALONGSIDE USD, confirming that yellow metals impulsive moves have been driven by the euro (not USD). Just as we had seen gold rallying alongside the USD in the past 3 months (due to golds record highs in EUR-terms), were seeing an unwinding in this trades, that was partly made possible by alleviating liquidity fears in Eurozone banks and stronger than expected 5-year Spain auction. GOLD/EUR Chart shows breach of 23.6% retracement of Dec rally at 976. eyeing 933, which corresponds to 1170 in GOLD/USD. GOLDUSD us already testing its 55-day MA

THE UNUSUAL SIMULTANEOUS selloff in the US dollar and stocks seems to be in function of tumbling US bond yields as US data continues to disappoint throughout the day. The broad weakness in manufacturing ISM (including the 20-point tumble in the prices paid index to Nov lows), the unexpected 13K rise in jobless claims to 472K, the 30% plunge in May pending home sales, cannot be positive for yields. All these figures are helping to drive 10-yr yields to fresh 3-month lows below 2.90%. The ongoing tumble in yields is unlikely to spare the greenback in the event of a negative surprise in US jobs figures. EURUSD capped at 1.2480, USDJPY eyes 86.80 target, followed by 86.20 in event of Friday NFP selloff. WATCH ASHRAF ON CNBC TODAY 12:25 pm EDT (16:25 PM GMT)

AWAITING JUNE MANUFACT ISM (exp 59.0 from 59.7), with particular scrutiny given to the new orders and employment indices (previously at 65.7 and 59.8). May construction spending seen at -0.8% from +2.7%, which could also be instrumental in further dragging yen crosses. Jobless Claims surprsed on upside +13K to 472K. The downwards YIELD-YEN-STOCKS TRIFECTA remains in lockstep and could be especially accelerated by a weekly S&P close below 1020. USDJPY risks retesting 86.80 in the event of ISM disappointment (sub-59) following the 13K increase in jobless claims.

Spain's 5-year auction raised EUR 3.5 bln auction, which was deemed good by bond traders considering the negative chatter about a possible Moodys downgrade. CHINAs June PMI may have escaped a decline below the 50 level, but the decline to 14-month lows at 50.4 was sufficient to send the Shanghai Composite and Nikkei down 2% and 2.6% respectively. Markets await the EUR 442 bln repayment of the 12-month funds obtained from the ECB, which is due within the half hour. recurring pattern of lower highs (see chart) highlights the difficulty of the $1.2370-75 resistance, while the interpolated downside target suggests a looming break towards the $1.2105-00.

THOSE WHO ARE NEW TO ASHRAFLAIDI.com, and came across my World Cup updates, relax. I am back from the World Cup and so are market-related updates. You can relate the prior IMT (Intraday Market Thought) on Swiss Francs stellar performance in June to my June 11 article, where I suggested HEDING EURUSD SHORTS with SHORTING USDCHF. Since June 11, USDCHF has fallen more than 800 pips, thereby helping to produce the francs outperformance for the month. See bottom paragraph in this link about Hedging SWISS KNIFE. http://bit.ly/cS7IhC

CHF = BEST PERFORMER OF THE MONTH out of a universe of top traded 35 currencies (emerging markets & G10) after the Swiss National Bank is widely perceived to back off its sporadic interventions, as these have shifted from being an act of stabilization to catching a falling EURCHF knife. The francs safe haven allure has not only gained from outgoing Spanish and Greece funds, but also from Baltic and Eastern European investors. With EURCHF tumbling 12% YTD to 1.3180 and USDCHF reaching 8-week lows at 1.0809, interest will likely crop up in CHF against AUD and CAD as questions escalate regarding the recoveries in China and US. While betting against these commodity currencies via USD and JPY remains a popular risk aversion trade, selling them against the safe haven CHF can be supported by the increasingly struggling USDCHF. No considerable selloff is required in USDCHF in order for CHF strength to emerge against commodity currencies (assuming USD will remain firm against them). The monthly reversal in USDCHF suggests a retest of 1.06, which suggests 0.8750 and 0.9820 in AUDCHF and CADCHF respectively.

ADP TURNS BELOW TREND. ADPs +13K increase in June was the lowest in 4 months. While the survey of private payrolls had become known for its underestimation of the BLSs private payrolls, the May figure was the first overestimation of the BLS report since April 2009. The drop off in census workers will further cloud the relationship for the June figure. In term of trend, the 13K increase means the ADP has fallen below its 3-month moving average for the first time since March 2009when the survey hit its all time low since records began. EURUSDs recurring pattern of lower highs (see chart) highlights the difficulty of the $1.2370-75 resistance, while the interpolated downside target suggests a looming break towards the $1.2105-00.

JAPAN MAY BE out of the World Cup, but the yen is doing its usual cheer of the 3% fall in Wall Street. Portugal's World Cup team was outplayed and downgraded by Spain's marvellous Villa, while the euro finds its way below $1.22. Stocks' foray above their 200-day MA was as durable as England's hopes to reach the quarter finals of the World Cup. Wednesday's release of the June ADP survey and Friday's NFP will provide much attention for the market. But the real spectacle shall undoubtedly be Argentina-Germany and Brazil-Holland, which sounds like semi-finals but they are only quarterfinals. Argentina's coach Maradona was instrumental (understatement) in winning his country the WCup at the 1986 final over West Germany. 4 years later, Germany beats Maradona's Argentina at the World Cup in Italy. If this is no revenge then I don't know what is. Actually wait, Brazil-Holland will also be a revenge occasion for the Dutch who were eliminated by Brazil in unforgettable 1/4 and 1/2 finals of the 1994 and 1998 World Cups respectively. To those who were too young or busy to watch, you must get the highlights of Brazil-Holland of the '94 WCup in USA, when Romario, Bebeto and Branco placed the M on a "memorable" 3-2 game. In fact, those 2 Dutch goals were 2 of the only 3 goals conceded by Brazil during the 1994 WCup. And then came the '98 WCup in France when these same teams had a dramatic 1-1 match that was decided in penalties with the help of the brilliant Taffarel. 12 years later, the drama goes on.

GERMANY BEATING ENGLAND was not a surprise according to statistics, but Germany outclassing and outplaying England in such devastatingly skillful manner was beyond words. Not only the German players are 3 yrs younger than their English counterparts on average, but they also lack the "Brand Name" of the Rooneys, Lampars, Gerards etcc. LAMPAR'S ERRONEOUSLY disallowed goal was an utter disgrace for the officials and FIFA. While Capello has the right to speak about "ifs and buts" regarding the psychology of the game had the goal been counted, English team has no "ifs and buts" for the excruciatingly efficient counterattacks of the Germans, who managed to reach the English penalty box in 3-4 passes. Organisation and efficiency aside, the SKILLS of the young German players were very more Latin-like and atypically German. Their future is already here. While the French Football Federation sent its disgraced squad home via "economy class", no confirmation as to whether the England squad would be sent w/ the luggage. Unless BA has another strike that is. The Premier League maybe the richest in the world, but what would it be worth without non-English players? ARGENTINA were favoured by a goal that was clearly offside. The goal became less relevant when a Mexican error allowed Higuain to score his 4th of the Tournament. Tevez' sensational goal put up Argentina 3-0, but at least Mexico came back with a valiant effort from Manchester United-bound Hernandez. Mexico did lose, but was not humiliated as England was. Watch for a big win from Holland tomorrow, while Kaka's return is likely to secure a Brazil victory over Chile that may not go as smoothly as many expect.