Intraday Market Thoughts Archives

As was warned earlier, the unemployment rate turned out to be the shocker rather than payrolls, soaring by 0.4 points to 7.2% in Dec-- the highest since January 1993. This is the third 0.3-point increase in the unemployment rate in the last five months. December payrolls fell by 524K after a revised 584K decline, bringing the total number of 2008 jobless to 2.6 million, the highest since 1945. The 7.2% unemployment rate in December brings the increase from the 2007 trough of 4.1% to 3.2 points, which is higher than the average difference between unemployment rate troughs and peaks on the last 3 recessions. USDJPY rebound seen capped at 92.20 right shoulder.

More bad Canadian job news fuelling the rally in European FX vs CAD.

CAN Dec payrolls fell by 34K--another worse than expected figure--while unemp rate rose to higher than exp 6.6% from 6.3% affirming the lag in job deterioration between US and CAN. GBPCAD knives through 1.81 ( in line with latest article) but EURCAD struggles to follow through. USDCAD eyes key support at 1.1640--100day MA and the 50% retracement of the rise from the Sep 2008 low to the Oct 2008 high. Negative US data surprise and positive CA data surprise may break this level onto 1.1520. Upside capped at 1.1970.

Although much focus is on US non-farm payrolls side of the labour report, the unemp rate should play a major role in gauging market reaction. December unemployment rate is expected to soar by 0.3 points to 7.0% (highest since June 93), bringing the increase to a hefty 2.0 points between April and December, which is nearly equal the average increase in unemployment rates during past 3 US recessions from trough to peak. In each of the recessions of 1981-2, 1990-91 and 2001-02, the US unemployment rate rose by 3.1, 2.3 and 2.3 points ... Rest of Content Available to Subscribers of Intraday Market Thoughts.

The Bank of England went with consensus forecasts of a 50-bp rate cut to 1.50%, triggering broad gains in sterling as the decision marks a stark departure from the last two cuts of 100-bps and 150-bps. Sterling has already knived through our projected resistance of $1.5150, making yesterdays $1.5280 high a less challenging target, especially amid potentially negative US jobs data ahead (weekly claims and payrolls). GBP likely to demonstrate the usual pattern of tempering current gains going into the US opening bell before rebounding later in NY trading. $1.5350 appears a viable... Rest Available to Subscribers of Intraday Market Thoughts.

BoE decision in 25 minutes. The last 24 hours have witnessed an escalation in the probability for 50-bp rate cut , which would bring rates down to a record low of 1.50%. But there's also dealer chat that BoE will doONLY 25-bps in which case could fuel cable to as high as $1.55. Still, a 50-bp would also be positive for the currency given the last rate cuts were 100 bps and 150 bps.

SUBSCRIBERS OF ASHRAFLAIDI.COM should have benefited from the trading ideas in last month's article "More Risk Appetite as Stimuli Gone Wild" (See below Dec 08, 2008) making the fundamental and tehcnical case for a year-end rally in equities by forecasting $1.5250 target for GBPUSD from $1.47 and signalling the 925 target in the S&P500. Subscribers of Intraday Market Thoughts obtain investable ideas with 2-5 day horizons in full content. Ashraf will be back in New York at the NY Money Show in February 22-24, signing his book and holding mini-seminars on FX and intermarket analysis.

Commodity currencies are taking a back seat after the higher than expected crude stock builds drove the Feb contract by $5 to below $45 pb. AUD and CAD are only holding well against the broadly falling USD, but prolonged gains in GBPCAD and GBPAUD and rebounding EURAUD and EURCAD highlight the selloff in commodity FX. Despite having rallied by over 900 pips, GBPCAD...Rest of content available to subscribers of Intraday Market Thoughts (not articles).

Daily GBPUSD illustrates the 2-week cycle intervals of recent peaks , each of which corresponded with peaks in the stochastics. This makes $1.51 a tentative target for today, especially as it coincides with the 50-day moving average. $1.52 stands as the 61.8% retracement of the . . . Rest available to subscribers.

CAD broadens gains with USDCAD below 1.18...key support stands at 1.1640, which is both the 50% retracement and the 100-day MA. CADJPY hits 7-week highs at 80.40 making the best of both worlds (improved risk appetite weighing on the JPY and ...

Eurozone flash CPI plunged to a 22-month low of 1.6% y/y in December from 2.1% in November, falling well below consensus of 1.8%. Eurozone inflation had surged to an all time high of 4.1% earlier this summer. Combining the latest CPI figures with the new record low in services sector purchasing ... Rest available to subscribers of Intraday Market Thoughts.

Cable +300 pips, reaching my $1.47 target mentioned earlier (see previous Intraday Market Thought) despite today's broad USD rally. Today's GBP advances mark the building blocks of a possible $1.5050 reading before Thursday's Bank of England rate decision. Market chatter leaning towards a smaller rate cut of as little as 50 bps, but 75-bp cut, would also help extend GBP gains on the foundation that the BoE may be nearing the end of the easing.

USDJPY breaks out to 4-week highs at 93.56, cheering the extended pick up in global risk appetite, which is boosting all major yen crosses. I warned in Fridays note "Risk Appetite Pushes Envelope" that a breach of 92.50 in USDJPY would be followed by a major trend line resistance of 97.50 on the weekly chart. But the interim resistance of 94.00 will... Rest of analysis available to subscribers of Intraday Market Thoughts.

GBPUSD was initially dragged by both the sell-off in EURUSD and the latest record low in UK CIPS construction survey, which hit 29.3 in December from 31.8 in November. Odds remain with a 75-bp rate cut to 1.25%, which could remain GBP negative especially if the BoE continues to reveal no sign of macro-improvement in its post-meeting statement. Nevertheless, intra-week technicals suggest prolonged recovery towards $1.4700 before the... Rest available for subscribers.