Intraday Market Thoughts Archives

GOLD IS UP AGAINST all currencies after 3 consecutive daily losses, but the question is whether gold is undergoing a downleg similar to that in mid May. Notice how gold hit an NEW RECORD on Monday at $1,251 but fail to follow up into the rest of the week. CAUTION as to whether $1,250 presents a double top (May 14 & June 8). But gold bulls can be comforted by the monthly chart, which shows no signs of retreat under $1,180

UNEXPECTED 1.2% decline in US May retail sales stands in the way of the risk rally as well as $1.21 barrier. GBPUSD breaks below $1.46 trendline to call up $1.4520. The risk is for an extension of the losses towards $1.4480. USDJPY remains near its session highs of 91.70s, but the pair is known to deteriorate in the event of deepening risk aversion, especially that is caused by US data and not by European-related events. Watch 91.20 target

RISING CAD, FALLING GBP are the main movers of the day. Unexpected decline in UK April manufacturing output drag down GBPUSD by more than a full cent to $1.4640s, while GBPJPY drops back to 134.20s. CADJPY breaks 50% retracement at 88.50, eyeing 89.70s in the event of protracted gains in risk appetite. GBPUSD fails the 38% retracement at $1.4720, eyeing 1.4580. US retail sales will be key in determining risk positioning and appetite for the yen crosses. . Ashrafs CNBC appearance on BP yesterday http://bit.ly/aPSHRj

Ashrafs CNBC appearance earlier discussing the investment and political fallout from BP http://tinyurl.com/37roff9

WATCH BP's 18-year chart http://chart.ly/f6g72m and the implications of breaking below the 61.8% retracement.

THE POSITIVE ARGUMENT FOR THE BULLS TODAY is Asian equities shrugging of Wednesdays US selloff (Dow-30 and S&P500) on the heels of robust jobs figures from Australia, S. Korea & China. It is rare that Asian equities rally, whikle bucking the prior sessions selloff in the US. Such a pattern has happened twice already this week but only the 3rd time in the past 3 months. It is too ambitious to expect S&P500 and Dow-30 to regain their 200-day MAs of 1107 and 10300 respectively this week, but the interim ceiling stand at 1075 and 10077 respectively. EURUSD capped at 1.2140-50, GBPJPY eyeing 133.90s following prev targets on twitte.com/alaidi and previous IMT.

Ashraf's video Charts Analysis at Spain's IBEX35 index & $EURGBP http://bit.ly/bK6yd9

A look at USD Index & Eurozone spreads & USD Index Monthly

http://bit.ly/d1luEG

NZD IS DAYs HIGHEST PERFOMER after the RBNZs 25-bp rate hike, which lifted NZDJPY and NZDUSD to 62.20 and 0.6816 respectively. AUD, NOK and CHF follow behind as strong performers. IT WAS RARE to see Asian stocks rally despite late session turnaround in US indices. Robust jobs figures in Australia and South Korea were behind the Asian rally, which is now lifting Eurostocks higher as well as Dow futures +83 pts. We still like USDCHF below 1.14 to 1.1330s. ECB press conference at 12:30 GMT will be key. CADJPY may extend past 88.50s later today in event of positive CAN trade figures and prolonged boost to risk appetite.

RBNZ RATE HIKE? Markets price a 81% chance of a 25-bt rate hike by the RBNZ to 2.75% (21:00 GMT today) A spike in inflation expectations to an annual 2.9% in Q2 from 2.1% and unemployment dropped to 6.0% from above 7.1%, could prompt a rate hike alongside a hawkish policy statement. NZDUSD eyes 0.6780s trend line resistance, while NZDJPY faces prelim resistance at 61.80s. Key pressure stands at 62.50s. As long as Asian equities take the baton from a positive US session, the risk trade will add more gains to AUD and NZD pairs at the expense of JPY.

STERLING IS DAYs HIGHEST PERFORMER today, followed by CLOSELY by NZD and CAD out of a group of 11 currencies. The Kiwi (NZD) and Aussie both rallied on a CHINESE DATA LEAK that China exports soared 50%, well above expectations of 32%. The report was scheduled to for release later in the week. Combining Bernanke's expectedly optimistic stance on the economy at today's testimony with the Chinese figures, we expect further gains in the risk trade especially at expense of JPY. GBPJPY eyes 133.60, CADJPY eyes a break of the 87.70 onto 88.30. KIWI RALLYING AHEAD RBNZ decision today expected to raise rates by 25 bps. NZDJPY eyeing 62.20.

View Ashraf's Video Charts presentation with Cantos dissecting the technicals of Eurozone spreads (Spain & France vs Germany) http://bit.ly/d1luEG as well as the USD dollar index. EURUSD drifts in a tight 30-40 pip range since Asia after Asian equities shrugged the late session rally in NY. USDCHF continues to struggle at the 1.1660s, which appears to be a double top with the April 16 highs, risking a possible retreat towards 1.1470, followed by 1.1330.

US STOCK INDICES RETESTING the May 25 level, which was a 6-month low. S&P500 eyes the 1014, while Dow-30 is vulnerable to 9,418. OIL in a possible double top (75.70 & 75.40), followed by the 72.50 lower high and coinciding with the May 18 high. The implied target could well be a retest of 65. EURUSD & risk trade losing the day's earlier bounce, looking for 1.1870.

RECURRING INTERVENTION TALK ABOUT SNB as EURCHF jumps 70 pips from $1.3746 low, prompting EUR crosses higher across the board, including EURUSD at 1.1980s. EURCHF seen capped at 1.3910. Japanese Finance Ministry officials also jawboning as they issue the standard warning against excessive disorderly moves, sending USDJPY by merely half a yen to 90.20s. YEN REMAINS DAYs best performer. GBPJPY and CADJPY facing their own right shoulder resistance at 133.50 and 87.50 respectively. Here are the rumours of the OTHER Oil SPILl reportedly occurring on April http://bit.ly/cjXlbH

SPAIN YIELDS NOW AND THEN: SPAIN-GERMAN 10-year yields hit a new high of 2.14%. Heres the chart from our May 31 warning http://chart.ly/xprxsy when the spread was at 1.53%. We alerted last Monday that the breakout of the 3-year channel meant a rally towards 1.80% and 2.00% (200 bps). Today the spread hit 2.14%, which now implies 2.50% later this month. It is a question of time when EURUSD breaks back below $1.1870 and calls up our $1.1660 target. Spanish strikes was the fundamental catalyst for today's euro deterioration and yield spike.

Ashrafs interview on JAPAN's SWELLING DEBT

http://bit.ly/cvvcqE

Ashraf on EURO's BARGAIN TRAPS

http://bit.ly/bux3eF

Ashraf on GOLD's UPSIDE

http://bit.ly/ahGryb

Ashraf on the USD's WORST KEPT SECRET

http://bit.ly/9vhpzH

Ashraf's interview on BNN http://watch.bnn.ca/#clip310485 and on CNBC earlier today http://bit.ly/bg7l7d

USD DOLLAR INDEX LOOKING FOR ITS 7th MONTHLY CONSECUTIVE increase, the longest winning streak since the history of the 39-year old index. Watch Ashraf's appearance on CNBC earlier today http://bit.ly/bg7l7d

EURGBP deepens losses after to the lows of Nov 2008 at 0.8220s, showing no respite ever since the break below key support of 0.8440. Were still targeting 0.8175-80the 50% retracement of the rally from the 0.6540 low to the 0.8913 high. Meanwhile, US stocks are unable to show upward leadership, especially after the Dow closed below the May 6 lows on Friday. USDCAD eyeing 1.0630 as oil is vulnerable to closing below the $70. WATCH S&P500 testing the 1040 level and the DOW MAKING ANOTHER CLOSE below the May 6 low.

A THIN DATA WEEK IN THE US will give way to Fed Chairman Bernankes Budget testimony to Congress on Wednesday, while US audiences will watch Bernankes interview with ABCs Sam Donaldson on Monday evening. EURCHF session low was 20 pips below our 1.3870 target in Fridays IMT. EURUSD is hit a fresh 4-year low of 1.1878 before regaining a full cent, but any prolonged gains are seen capped at $1.2050. We said numerous times on this website and twitter.com/alaidi that our medium target stands at $1.17, but on Friday, we revised it to $1.1660 with an 80% certainty by first week of July. EURCHF is capped at $1.3980-85, while EURGBP faces 2-week trendline resistance at 0.8295.