Intraday Market Thoughts Archives

You'd have to go back to 1999-2000 to find 12 consecutive monthly readings of +100K NFP. And here's our chart showing the US-German sield spread at 10-year Highs. Full analysis & chart

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Forward guidance is the latest weapon for European policymakers as Carney and Draghi both introduced measures Thursday. The Australian dollar was the top performer while GBP lagged. The Asia-Pacific calendar is light ahead of Friday's non-farm payrolls report. We added 1 new USDCHF long today after yesterday's modified long remained unfilled by 5 pips. Today's EURUSD short hit all targets, while yesterday's 2 shorts await fill ahead of tomorrow's NFP. USDCHF, USDJPY, AUDUSD USDCAD and EURGBP trades are in progress. All these trades and their charts are found in the Latest Premium Insights

For years, ECB leaders exclaimed that they never pre-commit on rates but that all changed Thursday as Draghi said the governing council expects the key ECB interest rates to remain at present or lower levels for an extended period of time. He emphasized that it injected a downward bias on interest rates. He struck a further dovish tone noting there was an extensive discussion on potential rate cuts.

The euro immediately fell a full cent and broke below 1.2900. Ashraf has advocated for euro shorts and Draghi added additional reasons to bet against the common currency.

Commodity currencies stand to benefit from a more dovish BOE and ECB and that was the case on Thursday as all three rallied. The new stances should encourage global growth, boost commodity prices and improve the carry advantage.

Carney also surprised markets Thursday by initiating a statement following the BOE decision. The statement warned about negative effects from the post-FOMC rises in market interest rates. The MPC said any rises that imply future rises in the bank rate are 'not warranted'.

Both Draghi and Carney unleashed carnage in their own currencies as they warned against the growth repercussions of rapid rise in market interest rates. Said otherwise, both central bankers are concerned at their economies' inability to handle soaring borrowing costs, stemming from Fed Chairman Bernanke's candid assessment in suggesting that reducing asset purchases will begin this year.  See EURUSD's Summer Inflection Points

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EURUSD traders are torn between the ensuing battle of opposing forces; positive dynamics (July 2012 trendline support and May 2013 trendline support continuing to hold at 1.2950s); vs negative dynamics (TRIPLE DAILY MA confluence at 55, 100 & 200 DMAs near 1.3070s). The ongoing support above 1.2930-50s faces a host of event risks (ECB conference, US jobs report, Egypt protests /power shifand thin Holiday Trade in the US). As we integrate the developing technical dynamics in Portugal's 10-year bond yields to multi-time frame momentum analysis in EURUSD, we issue 2 new trades in EURUSD as well as move the unfilled trade in USDCHF. All of these charts and trades as well as the ongoing AUDUSD and USDCAD trades are in the latest Premium Insights.

Ashraf discusses Portugal's soaring bond yields, the ECB choices between OMT & rate cuts, BoE's Carney and the UK PMI's  http://watch.bnn.ca/#clip958274

Here's the Audio/Video link to last night's Webinar from Ashraf, followed by George Cavaligos (Bonds) & Fari Hamzei (Equities)  Recording Link  

Election winds are blowing in Portugal after a second top politician resigned in as many days. The US dollar was the top performer Tuesday while AUD slumped. The upcoming session features data on the Australian trade balance and retail sales. 1 more USDJPY was added after 1 USDJPY hit all targets and the other went unfilled by 5 pips (highest entry was at 99.45). This follows today's 2 trades in USDCAD/charts, yesterday's USDJPY and USDCHF trades. For full access, see latest Premium Insights.

A storm of US dollar buying hit the market as North American markets opened and USD/JPY hit Ashraf's initial target of 1.0060. Dollar buying also sparked a 21-month high in USD/CAD. Initially, the euro fell as well but support ahead of last week's low of 1.2985 held and it bounced to 1.3039.

The euro began to break down when Portugal's foreign minister announced his resignation. It comes a day after the finance minister quit and led to a 30 bps rise in Portuguese 10-year yields. The government will be forced to call new elections if the junior coalition partner withdraws support, at that is growing increasingly likely.

Oil has been out of the spot light for much of the year but it threatens to make headlines as WTI nears $100 for the first time in 2013. The gains Tuesday are especially bullish because they came on a weak day for broader commodities and a strong day for the dollar. However some caution is warranted as emerging markets continue to struggle. Brazil's Bovespa fell 4% on Tuesday to the lowest since 2010.

At 0200 GMT, markets get a look at the official Chinese non-manufacturing PMI. The prior reading was 54.3. Later, the HSBC version will also be released.

At 0230 GMT, Australian releases trade balance numbers for May; a surplus of 53 million is expected. The more important number will be May retail sales, which are forecast to rise 0.3%.

The latest on Mark Carney's likely policies, forward guidance and charting the FTSE-100. Full analysis and charts

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Ashraf's joint webinar with Fari Hamzei and George Cavaligos "Currency, Debt & Equity Markets Timing" starts at 4 pm ET, 9 pm BST. Register free here

A decent US manufacturing report and continued unwind of the 'taper tantrum' lent a bid to risk trades on the first trading day of Q3. The Australian dollar was the top performer while the yen lagged. The RBA is expected to hold rates at 2.75% at today's meeting but clues about future policy moves will be critical. We added 2 new Premium trades in USDJPY with daily and weekly charts as well as 2 new trades in USDCHF after the 3 longs from June 20 hit all targets. All these can be seen in the latest Premium Insights.

The ISM manufacturing index improved in June, climbing to 50.9 from 49.0 and beating the 50.6 consensus. The good news was partially blunted as the employment index slipped to 48.7 from 50.1 in the first sub-50 reading since Sept 2009.

The overarching theme was yen weakness as risk trades improved. The S&P 500 gained 0.6%, largely on flows due to the new month. USD/JPY climbed as high as 99.86 then backed off to 99.58.

The Australian dollar is in the spotlight ahead of the RBA decision at 0430 GMT. A relief rally boosted AUD/USD to 0.9229 from a cycle low of 0.9113 on Friday.

AUD/JPY climbed to a two-week high of 92.24 and is showing signs of carving out a bottom, at least temporarily. The pair plunged more than 1200 pips in May and early June and even a modest bounce would stretch to 0.9400 and relieve oversold conditions.

The latest thinking on the RBA is that a cut is unlikely after the recent fall in the Australian dollar. The quick drop immediately makes commodity inflation a factor and it could spread to consumer goods. The final line of the statement will be key.

The June 4 statement said: “The Board also judged that the inflation outlook, as currently assessed, may provide some scope for further easing, should that be required to support demand.” The Aussie fell hard on the dovish bias with AUD/JPY sinking more than 200 pips that day and continuing lower for several days afterwards. If the easing bias is erased, look for AUD to rebound significantly.

The damaged Aussie attempts some stabilization after a 14% decline over the last 2 months but little has changed in the way of fundamentals. Last week's IMF's report warning of capital flight out of the Aussie, the prior week's rebound in Chinese money market rates, and recent indications from the Federal Reserve suggesting an earlier than anticipated tapering of asset purchases are all negatives against the once darling of the carry trade. See full article and chart