Intraday Market Thoughts Archives

Ashraf telling CNBC about the importance of the $1.3440s in EURUSD, the changing USD reaction to US data and importance of the 3% in US yields http://bit.ly/hjjlZB

USD FALLING ON POOR US figures may appear to be an unusual dynamic in currencies considering the laws of risk aversion of the past 3 years. Nonetheless, these dynamics have changed after the Nov 4 announcement of QE2, when positive US data started to help USD on the rationale that improved economy reduces the likelihood of completing the entire $600 bln in asset purchases. The disappointing US November jobs report (+39K NFP vs. +145K consensus and +0.2 pt increase in unemployment rate to 9.8% vs. 9.6% consensus) adds to expectations of full QE2, thereby sending US 10 year yields back below 3% and weighing on the USD across the board. On the positive side, the Nov jobs report showed the first back-to-back monthly increase in jobs since April-May. EURUSD makes a vital rebound above $1.3350, lifting 3.2% off this weeks 3-month lows of $1.2980. Next weeks Irish budget may be among the remaining obstacles for EUR sentiment, followed by Spain auctions (Dec 14-16). In order for EURUSD to break off its 5-week downtrend, it must attain a close above $1.3420-30 next week, which coincides with the important 55-week MA as well as the lows of Nov 15-16 and the low from Sep 28. Subsequent technical barriers for the euro stand at $1.3660.

QUICK PREVIEW AT US JOBS REPORT: Market expects +145K NFP and +155 K in PRIVATE PAYROLLS, with the UNEMP RATE seen unchanged at 9.6%. USD lower across the board after a solid 2-days in global risk appetite. BUT CAREFUL IF WE DO GET the same story from Dec 4, 2009 (exactly 1yr ago) when the US jobs report came broadly higher than expected, pushing both USD and stocks higher only for the USD to maintain rallying into the end of the session and both stocks and gold to eventually turn lower. The revisions would also have to be positive. STRONG CANADIAN JOBS figures (Unemp rate droped to 7.6% from 7.9% and NFP +15%) could generate broader CAD gains in the event of a positive US report, thus we could see CADJPY regain 84.20. NONETHELESS, The fact that S&P500 is already at the DOUBLE TOP high of 1225-7 makes it VULNERABLE to a BREAKDOWN later in the session.

QUADRUPLE CHART DELIGHT http://chart.ly/qw6kcil $USDX, US 10 yr Yield, AUDUSD, EURUSD. Here are the levels requiring your attention. I said in the last IMT that EURUSD will need to close above 1.3270 in order for a rebound to ensue. I would say the level is $1.32. Therefore, a Friday a close below $1.32 would be an immediate negative into the following week.

US 10 YEAR YIELDS TOUCH 3.00% for the 1st time since August, nearing the 200-day MA of 3.10% while USD approaches towards its own 200-day MA of 82 from the current 80.40. This especially negative for EURUSD as the spread between German and US 10-year yields (GE minus US) deteriorates to -0.18% after repetitively failing to regain positive territory since June 2009. The yield spread implications for EURUSD are such that $1.30 will likely come under assault before our medium term target of $1.27 emerges. EURO BULLS WILL NEED TO SEE A CLOSE above $1.3260-70 on Friday in order for the downtrend to be challenged into a concrete rebound. ASHRAF's VIDEO MARKET HIGHLIGHTS http://bit.ly/gkBKWS

Ashraf's analysis on gold for Cantos Charts focusing on the 55-week MA confluence with the June trendline http://bit.ly/eJ6hWt And for a closer daily look at gold, you can review yesterday's video on here http://bit.ly/gcP5af

Ashraf's Video Market Highlights dissecting the $1389 level in gold and the 1206 barrier in the S&P500

http://www.youtube.com/watch?v=pCkAk-Sq79o

Ashraf telling CNBC earlier today "Let's get real, when was the last time QE was good for a currency? " http://bit.ly/eifYVL

USD briefly dropped during NY Lunch on news that US will committ to helping Europe expand its facility fund. But USD strength re-asserted itself

EURO HITS $1.3180, USD DROPS across the board as US officials show committment to expanding the European Union Stability Fund. The news initially drove up the euro against USD before dragging down USD across the board. EURUSD resistance stands at $1.32 while GBPUSD has yet to break above $1.5640s/

US Nov Manuf ISM slipped to 56.6 from 56.9, while new orders and employment indices also edged lower to 56.6 from 58.9 and to 57.5 from 57.7. Oct Construction spending rose 0.7% vs. expectations of a 0.4% decline. Need to see if the reports are good enough to extend 10 year yields above their 2.96% barrier reached on Nov 15, which was the highest in 3-months. The key resistance remains at 3.1%, coinciding with the 200-day MA, last broken since in May 13. EURUSD is seen remaining capped at $1.3180 before retreating gradually towards $1.2920 and $1.2770. GBPUSD faces $1.5640s as the intermediate resistance, a break of which could retest $1.5760. USDJPY regains 84 mainly on broadening JPY weakness as risk appetite improves across the board. Medium term outlook remains in favour of prolonged gains towards 87.20. CATCH ASHRAF on CNBC EUROPE TODAY at 16:10 GMT

CAD is the highest performer so far today among top 10 trade currencies, followed by NOK, NZD, SEK and AUD. Swiss Franc is the weakest, followed by the yen. Risk appetite improves as Chinas manuf PMI hits 8-month highs and UKs manuf PMI surges to 16-year highs. EURUSD eyes 1.3120 short term trend line resistance. $1.32 stands as the next barrier. GOLD BREAKS above the $1387 resistance in overnight Asia and could well extend towards $1400 in the event that it closes Wednesday above $1387. Markets await US figures on Nov ADP (exp +69K from +43K) and Nov ISM (exp +56.5 from 56.9). The shooting star on the monthly S&P500 suggests a possible decline towards 1130s but a daily close below 1170 is required first. AUDUAD seen capped at 0.9660. The much talked about H&S formation shall remain valid as long as 0.9740 is held. FRENCH SPEAKERS can watch ASHRAF's INTERVIEW discussing currency wars, quantitative easing and currency interventions http://www.vodfinance.tv/?g=53&l=1982

Ashraf discussing on Arabia TV the euro, Ireland, Portugal, monthly reversals in USDX, euro & SP500 in Arabic : http://bit.ly/gVsQN2 Ashraf will be on ALJAZEERA-ENGLISH Wednesday morning at 7:15 GMT, 11:15 Dubai Time.

Ashraf's Video Analysis with Reuters Thomson dissecting the rare MONTHLY in USD Index and EURGBP : http://link.reuters.com/pup77q

EURUSD DROPS BACK BELOW $.1.30 as S&P places Portugal's 'A-' long-term and 'A-2' short-term credit ratings on CreditWatch.

Gold needs to close the NY session above $1,387 in order to break out of the Head & Shoulder formation.

EURUSD BREAKS BELOW $1.30 amid concerns over the adequacy of the 85 bln plan to Ireland are fuelling the broad euro selling. The plan is more of a handout to Irish banks than a sovereign bailout. Unlike in the case of Greece, when the EUR 110 bln bailout was part of a shock-&-awe EUR 750 bln package from the EU and IMF, The EUR 85 bln is far from overwhelming. Out of the EUR 85 bln, EUR 50 bln goes to the sovereign and EUR 35 bln goes to the banks, EUR 17.5 bln of which is provided by Irish pockets (national pension fund). Renewed threats by opposition parties to block next weeks Budget is also disrupting the austerity continuity upon which the loan guarantees from the IMF are essential. THE ROAD TOWARDS $1.27 is further strenthened since last Tuesday when I first called this target following the break below ther 55-week MA. EURGBP breaks below 0.84, eyeing 0.8370 MA. 0.81 is the medium term target. As was warned 2 weeks ago, FX markets function on, good US data being positive for USDX partly based on the binary intepretation of Fed's QE2 explained earlier.

Ashraf's Cantos Video Charting of German-US Yield Spreads and of EU-US 3-month LIBOR Differentials http://bit.ly/hNrxrd

Ashraf's Video of Afternoon Market Highlights discussing EURUSD GBPUSD and crude oil. Not a single word about the Irish bailout because price and trend dynamics have completely re-asserted dominance. http://bit.ly/hL6tcp

Ashraf's interview on BNN discussing 3-month LIBOR spreads, Irish banks and reminding about the historical importance of breaking below the 55-week MA in EURUSD http://bit.ly/h5z74X There is no change in my $1.27 for EURUSD, while rebounds seen limited near $1.3350s. EURCHF eyes 1.3070 for now.

Ashraf talking FX technicals (Spanish) at the CMC Markets booth in Barcelona Borsadiner http://bit.ly/gcpKKO and http://bit.ly/h4ERaA

ASIDE FROM THE EURUSD testing $1.3100, which is the 50% retracement of the rally from the June low (still eyeing $1.27), EURGBP shorts are now catching up w/ other EURO CROSSES, testing the 0.84 support61.8% retracement of the rally from the June low to the Oct high (0.894). 0.84 looks like will become the next focal point, but medium term objective remains at the trendline support of 0.8340, followed by 0.8260. You have seen the Nov 14 article charting the MONTHLY & WEEKLY charts on EURGBP http://bit.ly/bg1Cvj calling for 0.8370 and 0.8150.