Intraday Market Thoughts Archives

Here is the audio/video of Ashraf's 60-minute Thursday webinar, making his calls on EURUSD, USDJPY, AUDJPY, gold, EURJPY, USDJPY,EURAUD and more FTSE-100. His webinar is followed by George Cavaligos and Fari Hamzei on bonds and stocks. Click here to download

Those preparing for the seasonal decline in global equities may be getting what they wanted. Add a few arguments from upcoming earnings season such as negative impact of foreign exchange translation and poor visibility from Europe and we may see 1,525 and 6,100 in the S&P500 and FTSE-100 respectively. Full Charts & Analysis here

The lowest NFP figure since June (88K vs exp 150K) did not stop USDJPY from gaining another 90 pips as the unemployment rate dropped to 7.6%--lowest since December 2008. But the shockingly bad news from Canada; -54.5K -- biggest fall since Feb 2009; and the unemployment rate to 7.2% from 7.0% have damaged CAD to the benefit of gold. The implications for the next BoC meeting are significant. We issued 2 new trades on USDCAD, GBPJPY and gold (6 in total). See all these trades in the latest Premium Insights.

Ashraf will speak tomorrow (Saturday) at the Traders Forum, to be held at the British Library. This is a full day event from 9 am to 5 pm, where lunch will be served.  Please see here for details. 4 other traders/analysts will be participating (John Burford, Neil Norton, Ghassan Chedid, Paul Wallace and Kevin Barry) Full details/registration/payment here

A wild day of central bank decisions left traders breathless. The moves in the yen crosses were massive with EUR/JPY gaining 500 pips in the largest one day move since 2008. The market will get a breather with no major releases in the Asia-Pacific zone but the sequel is Friday's non-farm payrolls report. New Premium trades were added onto USDJPY and EURAUD. Both EURUSD hit targets, so did the short-end of last night's dual trade in OIL. The long has now been filled and in progress alongside both gold and silver. For full detail on Premium signals and charts, please see latest Premium Insights

The Bank of Japan decision to double the size of its balance sheet reverberated throughout the session and it left the market on edge for the ECB decision.

Rates were left unchanged by the ECB as expected but there was considerable speculation Draghi could foreshadow an imminent rate hike. As his press conference began he appeared to be heading in that direction, emphasizing downside risks.

But the payoff never came. Draghi said the ECB stands ready to act but said inflation risks were balanced. He also emphasized that the ECB can only do so much and that political action is needed.

The euro fell slightly below 1.2750 and then ripped more than a pip higher. A second leg of buying came after EUR/USD broke the 200-day moving average at 1.2889 and it culminated in a rally to 1.2950 – more than 2 full cents from the low.

The moves in the yen crosses were spectacular and left large, imposing patterns on all the yen charts. At some point there will be partial retracements but Kuroda has shown he can wield a bazooka as well as any central banker and that will leave yen longs frightened.

The lone items on the calendar are the BOJ monthly report and Japan's leading index. Neither is generally a market mover but the reverberations from the BOJ decision are surely to keep markets on edge. The Japanese 30-year bond yield fell 22 basis points to a paltry 1.30% yesterday and that will leave investors scrambling to find other places to put their money. The questions is: will it go into Japanese equities or overseas? There might be room for both.

Euro recovers ground after an initial dip driven by Draghi's accentuating the long term nature of contained inflation expectations and removal of projections to any stabilization for the first half of the year. Both these elements have increased expectations of an ECB rate cut to take part towards the end of this quarter. here is what Draghi said that was different and how the BoJ decision is hostoric.  Full Charts & Analysis here Webinar is coming up at 9 pm London time.

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Signs of a softer US economy weighed on the dollar on Wednesday while the yen was the best performer on speculation the Bank of Japan lacks ammunition for today's decision. Australian retail sales are the other main event on the calendar. We added 2 new Premium trades on USDCAD, gold, silver and oil as the weekly Death Cross deepens in gold, oil loses over 200 points and CAD firms ahead of Canada jobs report. The existing Dual trades on EURUSD await Thursday's ECB decision. Tonight's oil trades were also dual in natures as the daily plunge remains insufficient to overturn monthlies. All the trades are in the latest Premium Insights.

The details of the ISM data were also soft as employment fell to the lowest since November. That component and the ADP numbers had economists shifting non-farm payrolls forecasts toward 160K from 200K.

The US dollar weakened across the board in US trading as the market loses confidence the Fed will taper purchases. Interesting comments, however, came from the Fed's Williams who said the Fed could begin to taper 'by summer' if the economy grows as forecast.

At 0030 GMT, Australia releases retail sales for and building approvals for February. Approvals are expected up 2.5% in the month while sales are forecast to rise 0.3%. Retail sales are easily the more important indicator and could push the RBA toward a more neutral stance but there is plenty of data before the next meeting.

The main event of the day is the BOJ decision, which generally comes around 0330 GMT. The BOJ is expected to add about 15 trillion yen in annual asset purchases (to 80T) but it's Kuroda's first meeting and me may wish to shake up the market with a more aggressive program.

Either way, look for big moves in the yen.

As we await tonight's BoJ decision and stocks lick wounds from those Nth Korea comments, We added 2 new Premium trades on USDCAD, gold, silver and oil as the weekly Death Cross deepens in gold, oil loses over 200 points and CAD firms ahead of Canada jobs report. The existing Dual trades on EURUSD await Thursday's ECB decision. Tonight's oil trades were also dual in natures as the daily plunge remains insufficient to overturn monthlies. All the trades are in the latest Premium Insights.

Ashraf's joint webinar on "Currency, Debt & Equity Markets Timing" with Fari Hamzei and George Cavaligos starts on Thursday, April 4th at 3 pm Chicago, 4 PM NY and 9 pm London. Click here to register

The pound slumped the most in three weeks in a sustained flurry of selling. The New Zealand dollar was the best performer as it rose to a six-week high while cable lagged. The upcoming session features Australian trade data and Chinese services PMIs. 1 of 2 gold shorts hit all targets, EURUSD fell 1 pip short of our final 1.2880 target. USDCAD, USDJPY and EURGBP were stopped out. The first portion of a new Premium Insights will be issued during the Asian Wednesday session.

GBP/NZD was in focus on Tuesday as it fell more than 200 pips to a 36-year low. There wasn't a straight-forward answer for the strong moves in either currency but there was chatter about a large insurance payout from a UK insurer as a result of the New Zealand earthquake. That may have set off a flurry of activity and stops in both currencies.

The situation in Cyprus continues to look dire and a split from the Eurozone still can't be ruled out. The finance minister resigned amid investigations into suspicious transfers out of the country in the days leading up to the deposit levy. The government also agreed to austerity terms that include higher taxes, fees, privatizations and a hike in the VAT. If everything goes to plan, the bailout funds will be repaid in 22 years.

Gold sank following the Cyprus news, perhaps on diminished need for safety and perhaps on flows ahead of potentially strong US jobs numbers. The metal fell $24 to $1576 in the worst one-day decline in six weeks. The Feb low of $1555 is the next level of support.

The Bank of Japan begins its two day meeting with Kuroda's first decision as a potential watershed. In the meantime, the market will focus on Australian trade balance numbers for February. The consensus is for a $1 billion deficit after a similar number in January.

The focus then shifts to China for the official March non-manufacturing PMI at 0100 GMT. The prior reading was 54.5. At 0145 GMT, the services PMI from HSBC will give an independent look at the same sector.

As the yen rises back to its old ways, the Bank of Japan will have to formally announce the removal of its “bank note” rule to force FX traders into selling the currency. Here's how combined asset purchases are charted against the currency and the policy options facing the BoJ this week. Full charts & analysis here

A soft reading on US manufacturing raised fresh questions about the US economy. The US dollar was the laggard on the day following the ISM manufacturing data while the yen was the best performer. The RBA decision is the highlight of Asia-Pacific trading.  Friday's Premium long trade in EURUSD targeting 1.0870 awaits full execution (some platforms did show 1.0770), while cable awaits both short legs in progress.  See Premium Insights for the complete set-up. A new edition will be added on Tuesday evening.

The March ISM manufacturing fell to 51.3 compared to 54.2 expected. The new order component dropped to 51.4 from 57.8 while employment improved to 54.2 from 52.6.

The US dollar immediately dropped following the figures. The most compelling chart is USD/JPY, which is testing the 61.8% retracement of the mid-Feb to mid-March rally (93.13) and the 55-day moving average (93.03). If those levels break, look for the pair to decline further ahead of Thursday's BOJ decision.

The RBA sets interest rates for Australia at 0330 GMT. No economists surveyed by Bloomberg see the central bank shifting from its 3.00% but the market is pricing in a slight, 8% chance of a cut. The bias also remains to the downside with 25 basis points of cuts priced in over the next 12 months.

The main risk is that the RBA abandons its dovish bias and shifts firmly into neutral. The current statement says “an accommodative stance of monetary policy is appropriate” and that rates could be lowered “should that be necessary to support demand.”

If the RBA removes references to lower rates, AUD/USD is primed for a run to 1.0500 and perhaps beyond. In general, the RBA takes a more measured approach and it will be sensitive to moves that inflate AUD so look for a more subtle, gradual shift.