Intraday Market Thoughts Archives

HOLLAND-SPAIN WORLD CUP FINAL: Lets first state the facts and say that these tow teams have met 9 times before, with 4 wins for each team and 1 draw. Spains last win was in 1983 during the qualifiers for the Euro1984. Holland won each of the last two games played in 2000 and 2002. English ref Howard Webb will officiate the final, which is the first WCup final refereed by an English ref since the 1974, when Holland unexpectedly lost to West Germany. Mr/ Webb refereed Spains first WCup game (against Switzerland), which it lost 1-0. The game involved a few crucial refereeing errors (penalties & redcards) in favour of Spain. Never has a team lost its first WCup game to go on winning the Championship. The

odds are predominantly in favour of a Spain win. Spain has the confidence and talent to create a match with rapid short passes to the extent of exhausting its opponents. Hollands midfielders will try to prevent the quick-passing of the Spaniards but will not succeed, therefore their forwards must be bolstered with a true left wing. Robbens rightwing wonders may prove too overwhelming for left back Capedevila so Xavi and Iniestas defensive abilities must be used fully. I would say Spain is going to win, but since I mentioned Holland before the tournament, I shall stick with Holland for a close win. Both teams deserve it. GERMANY to Beat URUGUAY in Extra time. Both Suarez and Forlan will be present but Klose will attempt to break the goalscoring record.

WEEKLY GOLD may appear to show a bullish candle, but due to the lack of a confirmed downtrend, the effectiveness of the candle is in doubt. A clearer formation is the weekly stochastics, which suggest 1155-60 is the next prelim target for the month. Such downside move in gold would most likely be associated with persistent EUR resilience. Expecting a shorter-term bounce to 1220-30 before a subsequent pullback.

STELLAR CANADIAN JOBS REPORT as June unemployment unexpectedly drops to a 14-month low of 7.9% from 8.1%, with the payrolls rocketing by 93K from 24K vs forecasts of 15K. OUR FOLLOWERS ON TWITTER were told of the 1.0340 target (61.8% retracement) in the event of a robust report. Over the past week, weve lauded the Canadian dollar based on its favourable fundamentals and favourable treatment for foreign investors (compared to the US). Downside risk from a double-dip in the US remains an evident red flag, but in the meantime, CAD should be among the top performers in each and every round or risk bounce. EURCAD EYES 1.2980. GBPCAD eyes 1.5560. Twitter followers were warned of falling GBP after negative trade figures and PPI, calling for $1.5130 prelim target. FOLLOW US ON TWITTER http://twitter.com/alaidi

CANADA JUNE JOBS report due at 11:00 GMT, unemployment rate expected unchanged at 8.1% (14-month low) and payrolls seen +15K from +24.7K. Follow post-data analysis on Twitter.

http://twitter.com/alaidi

BANK OF KOREA surprisingly raised rates by 25 bps to 2.25% after yesterdays hike from Malaysia. Weekly reversal in USDKRW suggests 1.160 is viable especially on a risk appetite play at expense of USD. Recall the Won was the biggest victim back in May when markets were hit by a combination of Korean-nuclear tensions and European sovereign debt concerns. But the Won rocketed in mid June after the PBOC announcement to add currency flexibility triggered expectations of an RMB revaluation.Citigroup global equity strategists prefer Russia, Turkey, Korea & Taiwan as their top markets, cut its LatAm equity allocation to underweight on weakening earnings & challenging interest rate envmt.

YIELDS AND STOCKS TURN HIGHER at the expense of JPY. USDJPY joins the rest of yen crosses in robust 3-day climb. But the combination of US earnings season and European stress tests starting next week, equities will face another sobering obstacle. The expiration of US jobless benefits and homebuyer credits could speed the way for fresh downside in USDJPY. For now, the pair seems to target 89.40, but a beach of 90.30 is unlikely.

FROM CHINA TO CANADA. As US lawmakers stand against China's Anshan plans to form a joint venture Mississippi-based Steel Development Co on the basis of threatening US job and national security, Chinese companies are encouraged to go North of the Border. USD billions more from Chinese companies will be spent in Canadian oil and gas properties in coming years, according to Canadas Globe and Mail newspaper. CNOOC Canada said in recent interview "there will be more billion dollar deals between China and Canadian companies". USDCAD eyes 1.0380, CADCHF looks for an important rebound at 1.0220, while CADJPY to test 85.70.

MODERATE HAIRCUT SCENARIOS are assumed by European banking stress tests relative to what is priced by the market, thus further helping risk appetite and EUR. The 16-17% haircut assumed for Greek banks is half of what is traded in the market, but equities will likely extend the end of this week higher before likely locking in profits ahead of next weeks US corp. earnings. ANOTHER STELLAR AUSSIE JOBS report instrumental in greasing the wheels of the Asian bulls as June unemp. rate dipped to 17-month low of 5.1% and payrolls jumped +49.5K vs. expectations of 17.5K. AUDUSD eyes 0.8780, while robust manuf. Figures will likely lift Cable back towards the 1.5250s resistance.

JULY 7th MARKS THE ANNUAL "RUN WITH THE BULLS" in Plaza San Fermin, and Spain did exactly that today as it ran the ball with the Wall St bulls as US indices rallied +3%. Spain showed the world how to play chess with the football, keeping the Germans from touching the ball for 3-4 mins and preventing the referee from whistling any fouls for a remarkable 7-10 mins. Spain started today's game with 6 Barcelona players, passing, shielding, dribbling around the German players who had little choice but to use their superfitness and run around in circles. To its credit, the Muler(less) Germany did manage to scare with gripping counterattacks, albeit sporadic-were almost lethal. I pointed out in prev IMT the rationale for my forecast favouring Spain citing their far superior skill/intelligence/ballcontrol to the likes of Argentina (skillfull but clueless in midfield + lacking tactics), England (skillless + clueless) and Mexico (unlucky +intimidated). Sunday's final will see an explosion of talent in midfield+forwards btwn HOL + SPN. My prediction for a dutch WorldCup win is becoming very fragile as Spain has the confidence and indiv talent to keep the ball from Holland's back/midfield. Robben + Shneijder will have to work extra hard to remind Madrid why it was a costly mistake to let them go. More later in week. And USDCAD, GBPUSD and EURUSD all hit their targets of the day.

Ashraf''s appearance earlier on Fox Business News discussing the potential for a recurring NEGATIVE TRIFECTA

http://bit.ly/abbiTU

WORLDCUP WATCH: EVALUATING HOLLANDs STRENGTH via its impressiveness is irrelevant in this World Cup because Germany looked anything but impressive against Serbia and Ghana, while Spain was far from it against Switzerland, Chile and Paraguay. Lets not forget that Holland has yet to lose a game in this World Cup and of course readers of this website know that Holland has not lost since September, 6, 2008 (defeat against Australia). Now on to Germany whose performance against Argentina and England was as efficient as it was entertaining. But praising German strength must not be confused with Englands cluelessness and Argentinas midfieldlessness and coachlessness. Both ENG and ARG had serious deficiencies especially Argentina, which managed to impress the inexperienced footballing audience despite erroneous and illegal goals vs. Mexico. SPAIN has beaten GERMANY in two crucial matches (1-0 in Euro 2008 and 2-0 in Euro 1984 semi finals). Without Muller in the front, Germany will still have its fitness, creativity and total football, but Spain is tipped to edge ahead tonight. Spain supporters ought to wish for no grave errors from Casillas.

USDCAD EYES ANOTHER ATTEMPT towards the 1.0470 support tested yesterday, as equities extend higher in a data-less US session. S&P500 bulls are eyeing the previous key support of 1042, now a acting as an interim resistance, a break of which will most aptly reward CAD and GBP against USD and not against JPY. AUD traders sitting tight ahead of Thursdays June JOBS FIGURES-- due 1:30 GM--(see calendar http://www.ashraflaidi.com/economic-calendar/), which are seen softer than May figures, but with a steady unemployment rate of 5.2%. ALTHOUGH Wednesdays Wall St. failed to sustain its intraday 1.7% gains, todays internals may suggest a more optimistic conclusion for the session, in which case 1.0470, 1.2670 and 1.5240 may prove more durable in USDCAD, EURUSD and GBPUSD respectively.

Watch Ashraf's Take on "INSIDE COMMODITIES" http://bit.ly/aOKfu3

Those who have read Ashraf's book "Currency Trading & Intermarket analysis" have already read about the warnings for Stocks-Gold Ratio

GLOBAL EQUITIES STRUGGLING again after the 1.7% intraday gains in Wall Street were halved by end of session, translating into lower sessions in Asia. This propped USD and JPY back up against most currencies, but continued to weigh on USDJPY, which I continue to project below 85 in late Q4. USDCAD stabilized above the 1.0470 support before regaining 1.06, but a return to that 1.0680 double top is unlikely to emerge today, barring any intensification of selling. Here is a REPLAY OF MY INTERVIEW about JAPAN's choice to opt for the low-interest rate/deflationary spiral and the implications for the JPY, conducted for Singapores FUNDSUPERMART.com http://bit.ly/cvvcqE

CMC Markets Tops 1-month & 3-month FX forecasts http://bit.ly/dfhunW

STOCKS SHRUG BROAD declines in the June services ISM survey, whose headline index slipped to 53.8 from 55.4. New orders fell by neary 3 pts to 54,4 and the employment index dropped back below 50. Stocks extended their gains after the report, (Dow +1.5% to 9834, S&P500 +1.7% to 1040) but 10 yr yields little changed at 2.98%. CAD AMONG FASTEST GAINERS as USDCAD drops past 1.0530 target to 1.0490, following the prominent double-top at 1.0680 (4hr chart). USDCAD eyes 1.0470 support38% retracement of the gains from 1.0137 lows. USDJPY losses focus on the USD portion of the pair as JPY remains pressured against all other currencies. USDJPY may eye 87.00 for now.

Watch Ashraf's appearance on CNBC earlier today, including a discussion w/ Nouriel Roubini chrystalizing the role of the USD in the event of continued sluggishness in global growth

View Clip: http://bit.ly/b5CNGT

More frequent updates & trades on: http://twitter.com/alaidi

SWISS FRANC vs. GOLD IS HIGHEST PERFORMING currency against gold since June, +9%, followed by JPY and EUR, which are +5.5% and 3.7% against the yellow metal. CHF was the best performing currency in June after the Swiss National Bank is widely perceived to back off its sporadic interventions, as these have shifted from being an act of stabilization to catching a falling EURCHF knife. The francs safe haven allure has not only gained from outgoing Spanish and Greece funds, but also from Baltic and Eastern European investors. USDCHF has fallen for FIVE consecutive weeks, the longest since Q1 2008. 1.04 appears as a medium term support, but downside remains intact as no major event risks emerge against risk appetite. ASHRAF will be on CNBC-US Squawk at 7:30 EDT (11:30 GMT)

Ashraf's BNN interview earlier today discussing the US data, EURUSD, RBA and even the World Cup http://watch.bnn.ca/#clip321558 . More broad weakness for GBP after those UK PMI figures, as cable eyes $1.5030 for later in week.

GBP struggles on disappointing data as UK June services PMI slipped to 54.4 from 55.4, hitting a 10-month low. While the prices component remain robust, GBPUSD looking shaky in 4-hour charts, looking to test $1.5030 from current $1.5150 as market volumes fizzle out into the US holiday session. Yet, the pair must breach below $1.49 in order for the 6-week uptrend to be neutralized. USDCAD still unable to regain 1.0680, which will likely remain a considerable barrier ahead of Fridays Canadian job figures.