Intraday Market Thoughts Archives

Hitting fresh 4 month highs, FTSE 100 is underpinned by the following technicals. CLICK HERE for more http://www.cityindex.co.uk/market-analysis/ashraf-laidi-blog.aspx

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AshrafLaidi.com

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RBA statement; Chinese trade data; Catalonia asked for help; UK PPI; Japanese sales tax to double; German CPI confirmed. Market turns to Canadian labor market data, US import prices and budget deficit. Premium subscribers can see the rationale for CADJPY ahead of the Canada jobs report. 1 of 2 EURUSD hit all targets. See more below.

The Aussie weakened during the Asian session after the RBA monetary policy statement suggested that strong AUD could have a more negative impact on growth than in the past. Weak Chinese trade data that was well below expectations (July surplus dropped to USD 25.1 bln from 31.7 bln) then pushed AUDUSD even lower to a session low right below the 1.05 handle. The pair now trades around 1.0520 amid rumors of a Chinese RRR cut that already started to circulate.

Spanish 10 year yield pushed higher to 6.92% on reports that Catalonia has asked the government to speed up the disbursement of financial aid designed to help regions with bond redemptions as it is quickly running out of cash. MNI also reports that up to 8 Spanish regions may ask the government for a bailout.

UK PPI input declined 2.4% y/y in July after falling 3.0% in June. Output prices eased to 1.7% from 2.0% and PPI core output slowed to 1.3% from 1.7%. Annual output and core output figures show the smallest rise since the end of 2009. GBPUSD fell to 1.5577 but recovered to 1.5600 while EURGBP continues to consolidate above 0.7860.

In other news, Japanese parliament enacted doubling of the sales tax from 5% to 10% by 2015 and German CPI for July was confirmed at 0.4% m/m and 1.7% y/y which was in line with initial estimates.

The US session starts at 8:30 am ET with Canadian employment that is expected to rise to 9.6K in July from previous 7.3K while the unemployment rate is seen unchanged at 7.2%.

US reports are limited to import prices due at 8:30 am that are anticipated to rise 0.2% in July after dropping 2.7% a month earlier and later in the session at 2:00 pm to budget deficit that is expected to narrow to USD 103 bln from previous 129.4 bln.

1 of 2 CADJPY trades hit all targets. Same for dual EURUSD trades as the short hit all targets. Premium subscribers can see the rationale for CADJPY ahead of the Canada jobs report. 1 of 2 EURUSD hit all targets See more below. Direct access here: http://ashraflaidi.com/products/sub01/access/?a=673 To subscribe, pls click here: http://ashraflaidi.com/products/sub01/

Euro loses a full cent as traders unable to extend gains above the key 55-day moving average (a technical level not broken with conviction since April). Chinas weak data seen as an excuse to take profit from last week risk-on positioning, but support is so far seen at $1.2190. Similarly, GBPUSD is widely seen .... Read more here

http://www.cityindex.co.uk/market-analysis/ashraf-laidi-blog.aspx

Ashraf on BNN about the latest Chinese CPI & Retail Sales http://watch.bnn.ca/the-street/august-2012/the-street--august-9-2012/#clip736338

Ashraf on CNBCArabia about China, EURUSD & GBPUSD http://youtu.be/alLf5sqsXKI

Aussie jobs data beats expectations, China retail sales at 2-yr lows, No new easing from BoJ; UK trade deficit sharply wider. Market turns to jobless claims and trade balance from the US and Canada. The first part of our dual EURUSD Premium trades hit all targets. For the rest of our Premium Insights on EURUSD, GBPUSD, AUDJPY, gold and oil, see below.

The greenback is stronger across the board except JPY and CAD. European equities are losing around 0.3% and the relative strength winner is JPY.

USDJPY continues to trade in relatively narrow after the BOJ left rates unchanged under 0.1% and did not announce any new easing measures. EURJPY sold off to 96.45 and EURGBP to 0.7863 as the common currency came under pressure across the board.

ECB monthly report showed that the survey of professional forecasters predicts the inflation to ease to 1.7% in 2013 which is below previous expectations of 1.8%. The economy should contract 0.3% in 2012 from previous expectation of 0.2% contraction and growth for 2013 was revised lower to 0.6% from 1%. EURUSD fell from 1.2384 session high to 1.2306.

UK trade deficit widened sharply in June to GBP 10.1 bln from previous GBP 8.4 bln which is the biggest deficit since 9/2011. However, the data is distorted as June lost two working days due to the Queen's Jubilee. Goods exports dropped 8.4% while imports declined only 1.2%. GBPUSD continues to oscillate around 1.5650.

The US session begins at 8:15 am with Canadian housing starts that are seen lower in July at 213K from previous 222K followed by Canadian trade deficit at 8:30 am that is expected to widen to CAD 0.9 bln in June from previous deficit 0.8 bln. Note that Canadian housing starts have doubled since their 2009 low while unemployment is near a 3-yr low

US data is limited to trade deficit at 8:30 am that is anticipated to narrow to USD 47.4 bln in June from May's USD 48.7 bln and jobless claims that analyst predict higher at 371K from previous 365K

LATEST PREMIUM INSIGHTS, on EURUSD, GBPUSD, CADJPY, AUDJPY, Gold, & US crude are found here http://ashraflaidi.com/products/sub01/access/?a=673 Non Subscribers can join here: http://ashraflaidi.com/products/

China's Jul CPI slowed to 1.8% from 2.2% (vs expectations of a lower 1.7% figure), which is the lowest level since Jan 2010. Aussie Jul jobs figures came out at a higher than exp +14K from prev revised-28K, while the unemp rate fell to 5.2% from a revised 5.3%. Another round of good Aussie news further delays the next RBA cut and attempts a move towards 1.07. Here are the LATEST PREMIUM INSIGHTS, on EURUSD, GBPUSD, CADJPY, AUDJPY, Gold, & US crude. http://ashraflaidi.com/products/sub01/access/?a=673 Non Subscribers can join here: http://ashraflaidi.com/products/

GBP rises after inflation report; Swiss consumer climate falls; German trade surplus rose but industrial production declined; German auction and Spanish yield. Market turns to non farm productivity and unit labor costs.

The greenback lost most of its recent gains and trades slightly weaker against most majors except EUR and CHF. European equities are losing around 0.5% and the relative strength winner is GBP.

GBP was soft ahead of the BOE inflation report drifting to 1.5575. The report reiterated unusually uncertain outlook and cut growth and inflation forecasts. The BOE sees 2012 growth under 1% and over 2% by the end of 2013 while inflation should be below target from mid 2013 through mid 2015. The GBP rose after governor King said that a rate cut would be counter productive and would not significantly improve the economy. GBPUSD jumped to 1.5665 and EURGBP fell to 0.7890.

On the data front, Swiss SECO consumer climate declined further to -17 in July from -8, German trade surplus rose in June to EUR 19.9 bln from previous 15.6 bln but industrial production declined 0.9% in June from previous 1.7%.

Germany did not reach a full target as it allotted only EUR 3.4 bln of its 10 year bond vs. EUR 4 bln target. The average yield rose to 1.42% from 1.31% but cover improved to 1.8 from 1.5.

Spanish 10 year yield has been rising again, nearly touching the 7% level. Spain continues to resist a bailout if new conditions are attached and bond buying pledged by the ECB is contingent on the government's request to intervene in the primary market via EFSF/ESM, MNI reports. Spanish industrial production fell 6.3% y/y.

The US data calendar is limited to Q2 non farm productivity that is seen 1.4% higher after falling 0.9% in Q1 and unit labor costs that are expected to decline to 0.5% from 1.3%.

After the end of the NY session at 6:45 pm New Zealand will announce its labor market data. Employment change in Q2 is seen steady at 0.4% q/q and higher at 1.2% from 0.9% y/y. The unemployment rate is anticipated lower at 6.5% from 6.7%.

EURUSD at its 55-dma for the first time in 3 months, while stocks at new 3-months highs. RBA keeps rates steady; UK manufacturing production falls; German factory orders disappoint; Swiss CPI. Market turns to Canadian PMI and building permits and NIESR estimate for UK GDP.

USD weaknes anew against most majors and European equities are trading within -0.15% to 0.75% range.

AUDUSD pushed higher above the 1.06 figure after the RBA held rates steady at 3.5% and further dampened expectations for further tightening. The statement was balanced and predictable, noting that monetary policy was appropriate and that the global outlook is more subdued than a few months ago. AUDUSD then fell back to 1.0570s and continues to struggle with the 1.06 handle.

UK manufacturing data worsened but still came in above expectations which helped to push GBP higher. Both industrial and manufacturing production dropped 4.3% in June from previous -1.8% y/y. GBPUSD rose from 1.5575 to 1.5630 and continues to traded firmly above the figure.

EURUSD did not respond to disappointing German factory orders that declined 1.7% in June after growing 0.7% in May but EURGBP fell to a session low around 0.7933 where it continues to trade.

Swiss monthly deflation intensified as CPI declined to -0.5% in July from previous -0.3%. However, the annual figure rose to -0.7% from previous -1.1%. Yesterday's spike on EURCHF from 1.2012 to 1.2083 was not erroneous and EBS confirmed that the trade was valid.

Reports during the US session are limited to Canadian building permits at 8:30 am ET that are expected to drop 3.5% in June after rising 7.4% in May followed by Ivey PMI at 10:00 am that is seen higher at 52.0 in July from previous 49.

GBP could respond to NIESR UK GDP estimate for July that is also due at 10:00 am. For June the figure was -0.2%.

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Wednesdays release of the Bank of England quarterly inflation report is expected to show another downgrade in growth prospects. 2013 GDP may be revised to as low as 1.5% from over 2.0% in the May inflation report. The BoE will likely reiterate its forecast that CPI will fall below the 2.0% target before year-end from its current 2.4%. More on CPI, GBP & QE here: http://www.cityindex.co.uk/market-analysis/ashraf-laidi-blog.aspx

FX consolidate but equities remains buoyed; complaint with the German constitutional court extended; Eurozone Sentix investor confidence lower; UK Halifax HPI declined; bond issuance and periphery yields. Premium Insights will be released later this evening.

Germanys DAX-30 Index is attempting its 7th straight weekly gain, which would be its longest winning streak since Apr/May 2009.

Friday's risk rally has seen no follow thru in FX as most currencies are consolidating their gains against the USD. GBPUSD is the exception as it fell back to 1.5546. European equity indices are higher by about 0.5% and the relative strength winner is JPY while GBP is the weakest.

The complaint with the Germany's constitutional court against the ESM now also includes opposition to any banking license for the ESM, German press reported today. German president Joachim Gauck awaits the court ruling that is scheduled for September 12th before signing the ESM and fiscal compact into a law.

On the data front, Eurozone Sentix investor confidence declined further in August to -30.3 from July's -29.6 which was still above expectations of a fall to -31 and UK Halifax HPI fell to -0.6% in July from previous 0.8%. EURUSD retraced to 1.2355, GBPUSD declined to 1.5546 which helped to push EURGBP to fresh recent highs at 0.7944.

Eurozone sovereign bond issuance this week is expected at mere EUR 4.5 bln compared to last week's EUR 16.1 bln. Only Germany and Belgium are scheduled to come to the market. As far as bills, issuance is seen around EUR 10.5 bln vs. EUR 10.2 bln issued last week. Netherlands, France, Greece and EFSF are scheduled to come to the market, MNI reports. Spanish and Italian 10 year yields are trading marginally lower around 6.78% and 6.04%.

There are no reports due during the US session. The only event will begin at 9:00 am ET when the FED chairman Bernanke delivers a speech via satellite titled "Economic measurement" to a conference in Boston.