Intraday Market Thoughts Archives

WIth all the talk about equities at record highs, here is the US jobs markets compares to 2007. Charting NFP, UnempRate & Jobless Claims between today and 2007, & what it means for equities. Full Analysis here

USDJPY tests the 95.80s after Japan Fin Min Taro Aso said he did not discuss the JPY with his US counterpart Lew and that yean weakness was a result of Japan's campaign to fight deflation. USDJPY continues to get the best of both worlds, propped by deepening yen weakness and emerging USD strength. Although USD strength eased off in the last 24 hours, yen weakness was relentless as risk appetite raged on due to better than expected figures from the US services ISM and a lower than expected figure in US weekly claims. NFP exp at 165K from 157K while unemployment rate seen unchanged at 7.9%. We have issued new trades in USDJPY, EURJPY, gold and US crude oil earlier this morning ahead of today's jobs reports in the US and Canada. These are found in the latest Premium Insights

Here is the recording link to Ashraf's joint webinar (on FX, gold & indices) with Fari Hamzei (on equityes and indices) & George Cavaligos (on bonds) . To obtain Audio/Video of the webinar, Click here  If you need G2W Codec software, get it here  (3rd link)

USD/JPY broke through 95.00 to the highest level since 2009. The euro was the top performer following Draghi's upbeat press conference. Chinese trade balance is the highlight in Asia. Both EURUSD longs from Feb 25 are nearing their target. The details of these trades alongside GBPUSD are found in the Latest Premium Insights. Yen pairs will be updated 60-90 mins before the NFP.

USD/JPY stole the show on Thursday as it continued a three-day, 200+ pip rally. The big news is that it broke above 95.00 which is an important psychological, and more importantly, technical level. The high in 2010 was 94.99 and by breaking that level, it opens the way for a test of 100.

The euro ended Thursday with its largest gain since early January. The takeaway from Draghi's press conference was the upbeat tone. Growth and inflation were downgraded and the door was left open for rate cuts but, overall, Draghi was encouraged about a gradual pickup in growth in the second half and he was pleased that bond-market worries due to the Italian election didn't spread beyond BTPs.

It could be a bluff from Draghi in an effort to boost confidence but he sounded genuine and in no hurry to cut rates.

Early in Asia-Pacific trading Japan released final revisions to fourth quarter GDP. The changes are pushed Q4 GDP to +0.2% from -0.4%. The change from negative to positive is important– at least psychologically.

The bigger number was the massive 1.5 trillion yen trade deficit announced for January, which breaks the record set in January 2012. Japan is traditionally an export nation and the deficit underscores the need for a weaker yen.

Later, at 0200 GMT, China releases trade data. The deficit/surplus is less important than the overall pace of trade. Imports are expected to fall 8.5% year-over-year while exports are expected to grow 8.1%.

Feb 7, 2013 ECB Conference: Draghi spoke, EUR Drops Mar 7, 2013 ECB Conference: Draghi spoke, EUR Jumps Today is only 2nd day of the year when EURUSD rises more than 1.0% from open to close (not low to high). Difference: This time, Draghi's opening remarks did NOT mention “appreciation of the euro” as a factor in downside risks to price developments as they did in February. Mentioning fewer factors to the downside price risks is naturally more positive for the currency, especially when currency appreciation itself is singled out as the distinctive factor between today and February. Click here for full article

Ashraf telling CNBC this morning his thoughts about today's BoE and ECB decisions and the likely impact on GBPUSD, EURUSD & EURGBP.  See video here 

An upbeat ADP employment report boosted USD/JPY back above 94.00 while cable fell to a two year low. The dollar was the best performer on the day while the yen lagged. Brazil's central bank added a hawkish tilt while the Bank of Canada removed one. The US dollar is the best performer so far in 2013 and upbeat economic data continues to show why. February ADP employment rose 198K compared to 170K expected. The numbers set of a round of US dollar buying that lasted throughout the day. Tune in for Ashraf's webinar on Thursday 16:00 ET, 21:00 GMT here

USD/JPY touched 93.00 yesterday in Asia but has climbed steadily since, reaching 94.13 today. A rally above last week's highs near 94.50 would likely trigger stops and a test of the important 95.00 level.

The pound is back in the doldrums, falling below 1.50 in early Asia-Pacific trading and tumbling as low as 1.4946 – the lowest since July 2010.

The Canadian dollar was also an underperformer as the BOC underscored slowing domestic growth but removing its hawkish bias and saying 'rates will remain appropriate for a period of time'. USD/CAD jumped 40 pips and is close to a cycle high.

On the flip side, Brazil's central bank dropped a line in its statement saying rates will remain stable for a 'sufficiently  prolonged period'. This is a shift toward rate hikes and demonstrates that emerging market growth is accelerating.

The Bank of Japan decision is the highlight of Asia-Pacific trading but it's likely to be a non-event as Governor Shirakawa leads his final meeting.

The Dow-30 hit a new record high exactly on the 4-year anniversary of the 12-year lows known as generational low), but it is only up 115% since that day. See how it compares to the rallies in the S&P500, Nasdaq, FTSE-100, DAX-30, Nikkei-225 & Bovespa. All the charts & analysis here

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Heads up for a DOUBLE Canadian release at 10:00 ET, 15:00 GMT, with the Bank of Canada interest rate decision and the Feb Ivey PMI, both expected to further weaken the loonie. BoC is seen tempering its hawkish tone and may go as far as dropping its readiness to raise rates. The Ivey PMI is expected at 56 from 58.9. Also worthy of note is the EMPLOYMENT component of the Ivey PMI, which has fallen below 50 for the last 2 months, for the 1^st time since Nov 2011. Our Premium Insights have pursued a long bias in USDCAD since early this year and there are currently two USDCAD longs in progress. For a more detailed fundamental & technical rationalisation of USDCAD and other pairs, please see our Latest Premium Insights.

A risk in the ISM non-manufacturing index led to a short-lived jump in the US dollar on Tuesday. The Australian dollar coasted through the day as the best performer while CHF lagged. Late-breaking news that Venezuelan President Huge Chavez has died adds some potential pitfalls in an Asia-Pacific session that features Australian GDP.  We issued a nNew set of Premium Insights ahead of the RBA decision and a string of other central bank decisions (BoC, BoE and ECB). New trades on USDJPY, GBPUSD and AUDUSD have been issued to the Latest Premium Insights.

The Dow broke its 2007 record high after an upbeat report on the services sector. The ISM gauge rose to 56.0 from 55.0 expected. The forward-looking new orders component also jumped to 58.2 compared to 54.4 previously.

The employment component of the survey is generally a solid predictor of non-farm payrolls and it was at 57.2 which is consistent with NFP above 200K. The current consensus is 160K.

The US dollar climbed 40 pips against the yen and euro after the figures but was unable to sustain its momentum and most of the gains have evaporated. On the day, overall market changes were minimal.

The death of Chavez isn't a surprise after years of fighting cancer. His #2, Nicolas Maduro had a strong anti-US tone earlier in the day, saying Chavez' cancer was deliberately planted by imperialist attackers.

Oil was sedate after the news but could rise on signs of instability in Venezuela.

Australian GDP data is the only event on the Asia-Pacific calendar but continued comments from the incoming BOJ governor and deputies will also be closely scrutinized.

The release is at 2330 GMT and the consensus is for 0.6% quarter-over-quarter growth and 3.0% year-over-year. That's a slight bump from 0.5% expansion in Q3.

A mioest wave of risk-on trading enuses in early Tuesday Pacific trading. S&P Minis hit 1527, while Dow futures surge to 14127. We issued a nNew set of Premium Insights ahead of the RBA decision and a string of other central bank decisions (BoC, BoE and ECB). New trades on USDJPY, GBPUSD and AUDUSD have been issued to the Latest Premium Insights. Commodities will be updated on Tuesday.

Tonight's RBA rate decision is widely expected to leave rates unchanged at 3.00% for the 3^rd consecutive month following 75-bps in rate cuts over the last 9 months.  The RBA's attempt to talk down the Aussie without taking rate action worked mainly against the USD dollar due to the greenback's broadening rally. But what's for the Aussie & the JPY?  Premium Insights will appear later this evening in a separate post ahead of the RBA decision.  For FULL CHARTS & ANALYSIS click here.

The US spending sequestration shall go into effect and is expected to hit GDP mostly in Q2 and Q3. Fed Vice Chairwoman Janet Yellen said the FOMC is committed to its 6.5% unemployment threshold and that monetary easing will remain in place well into recovery. Wednesday's ADP figures and Friday's NFP & Unemp data will likely send the message that the US economy is neither too weak to trigger disaster nor too strong to discontinue Fed easing. This is a super central bank week as the RBA meets tonight, followed by the BoC on Tuesday, and ECB/BoE on Thursday. CORECTION US February US services ISM is due TUESDAY & NOT today as we stated earlier. ISM is exp at 55 from 55.2. We posted an additional Premium note in the latest Premium Insights as the 2 EURUSD longs remain in progress. 

The week begins with a focus on Australia ahead of the March 5 rate decision. The Australian dollar opens the week near 1.02 and just 50 pips from a 9-month low. We also look at the latest speculative positioning numbers.Economists overwhelming believe the RBA will hold rates at 3.00% on March 5 but there is a small minority that expects a rate cut. The interest rates market is also pricing in a 26% chance of a cut. 8 Premium trades are in progress, including 2 in EURUSD. 9 Premium trades hit all targets over the past 8 days, including 2 EURUSD shorts, 2 GBPUSD shorts and all gold, silver and oil trades. EURJPY and AUDJPY shorts were stopped out. For the latest trades, visit the Latest Premium Insights. Interestingly, we are seeing JPY resuming its losses as stocks applaud the US data and the possibility for further gains in indices alongside a neutral to strong USD.

One final factor may be the TD Securities inflation expectations report for Feb. It will be released shortly after the market open at 2330 GMT. A rise from the 2.5% January rate could diminish the chance of a rate cut.

An article in the Australian press caught our eye. It was about the oil company ConocoPhillips. Executives there said they were selling assets in Australian natural gas and Canadian oil in order to invest in US energy.

The story underlines a theme that will last for years – investment in US energy. It also highlights where that investment would have otherwise gone.

On top of the growing investment in the United States, the economy continues to show signs of strength. The February ISM manufacturing index rose to 54.2 compared to 52.5 expected. In addition, the forward-looking new orders component rose to the highest since April 2011.

Commitments of Traders - The weekly speculative futures positioning data from the CFTC:

EUR -9K vs +19K prior JPY -65K vs -66K prior GBP -36K vs -23K prior AUD +26K vs +44K prior CAD -21K vs +19K prior

One of the reasons Ashraf has continued to recommend cable shorts was that positioning was relatively neutral in GBP. That is beginning to change but it still hasn't reached the -60K extreme of October 2011.