Intraday Market Thoughts Archives

Profit-taking weighs on the Aussie as traders curtail up 3-days worth of gains of 4 cents vs USD. This is occurring despite stocks trimming their losses and other currencies rallying against the USD. But the April 7th rate decision by the Reserve Bank of Australia may offer renewed boost for the currency in the event interest rates are held steady again at 3.25%, I mentioned last week that the odds for an April rate cut were diminishing. The latest decline in retail sales proved a short-term bump for the currency as has each bout of selling in global equities. With the govt set to activating its latest stimulus package soon, it may be viable for the central bank to remain on hold this time around. Weekly stochastics suggest 73.50 cents is viable next week.

The good news is that the US jobs numbers were in line with expectations (8.5% unemp. rate and -663) payrolls, the bad news is that the revisions have shown a deterioration. The 741K decline in January was a sharp revision from the prior -655K. Interestingly, the US unemp. rate is now above that of Germany's.. a sobering way of measuring the macroeconomic damage in US Main Street. USDJPY pushed father beyond 100 but higher targets are found in todays Hot-Chart. USDCAD faces upside potential towards 1.2500.

US payrolls will likely show renewed pick up in rate of declines after stabilization in recent months (-681K in Dec, -655K in Jan and -650K in Feb). Check out today's Hot-Chart on USDJPY. CAD has picked up ground in the past 2 sessions but these gains are attributed to the $4 rally in oil than any improved fundamentals for Canada. If US jobs report bears negatively on risk appetite then we could see CAD lead the losers against USD and JPY. Interim USDCAD target stands at 1.2520.

Watch Ashraf's analysis on the G20's increased funding to the IMF, sales of gold and more... http://watch.bnn.ca/#clip156778 Despite the 3-4% rally in US equities, Asian markets may show a more understated performance ahead of Friday's US jobs report, whose forecast has now been raised to -700K and the unemp rate to 8.5% from 8.3%.

The only possible explanation for the ECBs surprisingly smaller than expected 25-bp rate cut across its interest rate facilities is its intention to keep the door open for further conventional easing and starting non conventional easing as early as the next meeting. But as long as stocks are applauding the funding of the IMF, path of least resistance remains dollar selling (even against JPY as USDJPY fails to break above 100). 72 cents remains a target for Aussie. If EURGBP closes above 0.9155-60 it coudl suggest a more definitive bottom and a subsequent rebound.

Selling accelerates in against dollar and yen as G20 ups funding for the IMF by $500 billion to $750 billion. The news gives extra boost to FX risk appetite, prompting Aussie above 71 cents for first time in 3 months. EURUSD breaks above $1.3360s (beware of any negative surprises from ECB). Todays HotChart calls for near bottoming in GBPAUD after the recent one favouring AUDJPY has now been chattered on the upside. Gold drops towards $915 as markets and financials applaud more resources from the IMF.

Aussie and Nokkie leave all major currencies behind with the greenback and yen at the bottom of the currency chain as FTSE-100 rallies 2.5%, following Nikkeis 4.4% rise. Swiss franc tumbles as Swiss National Bank reiterates the need to intervene to limit further franc appreciation. UK construction PMI rose to 30.9 in March from 27.8, while German can registrations gain 20% in March. With improved risk appetite benefiting Aussie, Nokkie and sterling, these should continue to be favored plays against CHF, JPY and USD. Markets await ECB decision/press conference.

Stocks off the lows after Mar ISM edged up to 36.3 from 36.8, but the spectacular 742K decline in US private payrolls as forecasted by the ADP survey confirms the assessment that unemployment is far from its peak. Number of US states with 10% unemployment rises to seven. National unemp rate is at 8.1% and could well reach 9% before end of Q2. Gold quietly nears the $930 figure, as the combination of negative economic data, uncertainty with the US auto industry and the risk of indecision over global coordination by G20 leaders helps support the metal. Having held above $880 since the March 18 FOMC decision, gold is set up for the next leg up towards $1.050. I'll be in a plane returning from Singapore for the next 12 hours so no updates for rest of the day.

Euro traders unlikely to push the currency above the $1.34 ahead of Thursday's vital rate decision from the ECB and the subsequent press conference from JC Trichet. Consensus expects a 50-bp rate cut, but increased chatter of a shock rate cut of 75-100-bps is now doing the rounds. Such a scenario would have a negative knee-jerk reaction for the euro, and would cause a break below the key $1.3080 support--the 50% retracement as well as the trend line support from the March 4 low. Low likelylihood of such scenario.

RIEN NE VA PLUS? What is supposed to be a G20 filled with policy coordination and harmonization has so far highlighted national differences towards fiscal discipline with the US/UK/Japan favouring increased spending and Germany/France saying the $400 billion stimulus package approved by the EU was enough. Obamas 180 degree turn on US automakers bankruptcy being imminent is weighing on markets across the board. Better than expected UK PMI may further fuel GBP vs CAD, AUD, NZD and USD.

Yen holds up despite Japan's Tankan sentiment survey fell to a record low of -58 vs expectations of -55. We mentioned earlier this week that dismal Tankan surveys have historically failed to weigh on the yen after their release mainly due to the positive yen impact from falling equities. The subsequent turnaround in Nikkei is now capping yen gains. Aussie dropped across the board after retail fell 2.0% in Feb vs exp of +0.3%. On the positive side, Aussie residential approvals rose 7.8% after back to back declines. Aussie traders will find long term positives in the latest USDA report showing US farmers to reduce total acres with corn, soybeans and wheat this year. Planned wheat plantings to drop 7.1% from last year when seedings were the highest in 10 years. Chapter 8 of my book shows the relationship between the Aussie and prices of wheat dur to Australia's major global role in growing the crop.

Yesterday's HotChart targetting +200 pip move in USDCAD to 1.2660 had already gained 100-pip and is now slated for the 1.2660 target garnering the intended 200 pips. Today's Hot-Chart favoring AUDJPY is already 60 pips up.

Feel free to verify the 2-MONTH ARCHIVE of daily Hot-Charts for accuracy and performance. AshrafLaidi.com is the ONLY WEBSITE providing FREE DAILY CALLS on FX, commodities and equities, illustrating the fundamental and technical rationale for each trade.

China's demands for a new global currency are being publicly supported by Russia according to the top economic adviser for Russian PM Medvedev. Cognizant that their requests carry less weight than those by the US, Eurozone or Japan, both Russia and China may resort to making headline-grabbing statements such as on currencies, world economic order and US economic dominance at tomorrow's G20 statements. Recall that former PM Putin long ago mentioned the possibility for Russian oil companies to price revenues in EUR than USD, but nothing has happenned. Incoming Aussie retail sales, US ADP on private employment and ISM will remain key.

Canadian dollar fights off selling largely due to rallying equities, but the 0.7% decline in January GDP is keeping any upside capped. Though the 0.7% decline was within expectations, the third consecutive monthly growth contraction underlines CAD's lag behind US underperformance. The sharper than expected decline in US home price declines goes largely unnoticed by equities, which is helping sustain AUD, EUR and GBP vs USD. We still expect USDCAD to regain 1.26, while AUDNZD is seen recovering 1.23 in the event of positive Aussie retail sales later tonight (0.30 GMT).

Aussie and Nokkie putting previous losses behind as European bourses break the deadlock of losing global equities, setting up the ground for prolonged upside in AUDJPY and USDNOK towards 68.70s and 6.67. Relative data vacuum. A close above 810 in the S&P500 should set up broad-based losses in USD (with exception for against JPY) into Asian trade. It is also unlikely that govt officials will make any market-negative remarks in tomorrow's G20- talks as the emphasis will lie on global policy cordination. Keep an eye on the 12:30 GMT release of Canada's Jan GDP seen at -0.7% from -1.0%. If the expected improvement does not materialize and we get a decline greater than 0.7% than CAD may fall behind risk currencies and USDCAD to remain underpinned atop 1.2460s.

Pres Obama first appeared to say that bankruptcy of GM is out of the question, but adding an extra 60-day grace period was interpreted as delaying rather than avoiding bankruptcy, which is dragging on equities. Markets are down 3-4% on these developments and the economic calendar has not even begun. Wednesday's G20, Thursday's ECB decision and Fridays US jobs report are all key. Although the Nikkei fell over 4.5% overnight, we could see an additional 2-3% decline in Tuesday trade, in which case will place our USDCAD HotChart further in the green (above 1.2630s). EURUSD seen testing $1.3070, as markets may anticipate a very dovish rate cut from the ECB on Thursday.

While much talk revolves around the ouster of GMs Wagoner, the broader questions revolve around the implications for US Automakers failure to pass their own stress tests since demanding new lifelines from the US Treasury later last year. Will the same revelation occur in US banks? S&P500s failure to breach above the 860-865 reiterates the view that the recent bounce was bear market rally, but this also does not suggest prolonged losses beyond 770. USDCAD +50pips since today's HOTCHART.

Watch Ashraf on Today's CNBC's Squawk Box discussing the ouster of GM's Wagoner, the ECB rate decision, the Tankan index and global equities http://www.cnbc.com/id/15840232?video=1077657486&play=1 . And Ashraf discsussing US Treasuries and Chinese FX worries. . .

http://www.cnbc.com/id/15840232?video=1071918765&play=1

Watch Ashraf's 13 minute interview on Bloomberg TV earlier today discussing, gold vs other commodities, currencies, central banks and his book. http://www.bloomberg.com/avp/avp.htm?clipSRC=mms://media2.bloomberg.com/cache/vsfLnF0V2_zs.asf

Despite broadly negative forecasts for this week's release of Japan's Tankan survey, FX traders are cautioned that often times when expectations were gloomy, sources of positive surprise emerged from better than expected Capex component as well as a yen bounce from the decline in risk appetite. yen is already pushing higher after Asian bourses' profit-taking of previous gains, especially on the back of Friday's losses in NY. USDjPY may retest 97 and EURJPY may probe below 128.80. Also watch our much-published warning of cable breaking below $1.42. I'm in Singapore until mid week therefore the frequency of updates will be more erratic than usual.