Intraday Market Thoughts Archives

Ashraf's 10-minute "lively" discussion on CNBC Squawk Box reiterating his case for $1.35 EURUSD target by November, based on techno-cycles, EUR volatility trends and fundamental dynamics. Ashraf also touches upon the latest dynamics in peripheral bond yields against the moves in the single currency and the IMF's readiness to relax debt deadlines. http://youtu.be/yHIwGicEOug

Charting JP Morgan's weekly & monthly technicals against US housing http://www.cityindex.co.uk/market-analysis/market-news/607202012/jp-morgan-beats-london-whale/

RBA hints at another rate cut; German growth to increase in 2012 but decrease in 2013; Eurozone industrial production rose m/m but declined y/y; G7+IMF+WB meeting. PPI and consumer confidence is next. In the latest of the Premium Insights, 1 of 2 EURUSD longs was filled (1.2920 hit), 1 of 2 EURJPY filled (as low as 101.20) & 1 of 2 GBPUSD was filled (as low as 1.6019). See more below.

The greenback is trading weaker across the board except AUD. European equities are barely changed and the relative strength winner is NZD while AUD is the weakest.

The common currency pushed higher to 1.2985 but AUDUSD sold off its highs after the RBA governor Glenn Stevens said that the RBA has a room to move on interest rates, noting softening growth. AUDUSD trades around 1.0245 from 1.0288 high while EURAUD strengthened to 1.2653 from 1.2578 session low.

MNI reports that the German government will increase its growth forecast for 2012 from 0.7% to 1% but decrease it for 2013 from 1.6% to 1.0%. Last forecasts were published in May.

European data calendar was limited to Eurozone industrial production that rose 0.6% in August which is the same pace of growth as in July. However, on annual basis it worsened to -2.9% from -2.8%.

Along with the G7 meeting in Tokyo, the annual meeting of the IMF and the World Bank starts today and continues tomorrow. Headlines are likely to impact the markets on Monday open.

The US session opens at 8:30 am ET with September PPI that is expected to slow to 0.8% after surging 1.7% m/m (1.8% from 2.0% y/y) while the core figure is seen steady at 0.2% m/m (2.5% y/y). University of Michigan consumer confidence is due at 9:55 am ET and it is anticipated to decline in October marginally to 78.1 from previous 78.3.

The direct link to the latest Premium Insights can be found here: http://ashraflaidi.com/products/sub0/access/ ?a=686 Non subscribers can join here: http://ashraflaidi.com/products/sub01

A jobless claims number that was too-good-to-be-true was the result of a faulty adjustment. The euro was the top performer while the yen lagged. Japanese leaders will be hoping the yen lags further after the G7 meetings beginning today. Thursdays edition of Ashrafs Premium Insights is out, with new trading ideas on EURUSD, EURJPY, GBPUSD, AUDUSD, CADJPY,oil and CADJPY. In addition to the trading ideas from Thursdays Premium Insights, there are detailed chart analysis on multi-timeframe stochastics on GBPUSD. Existing trades on gold and silver and intact. See direct link below.

Initial jobless claims fell to a four-year low of 339K, much better than the 370K reading expected. Unfortunately, the euphoria over the number quickly faded when officials said the fall was due to a large drop in one state that didnt use the normal quarterly adjustment.

The euro reached as high as 1.2951, more than a full cent from the overnight lows, but later faded back to 1.2925. Other risk trades followed a similar pattern. The S&P 500 was as high as 1443 but closed flat at 1433.

The Australian dollar continued higher after the upbeat jobs data but stalled after a Bloomberg report saying that Chinas biggest banks are resisting government pressure to lower borrowing rates. The report suggested profitability was the motive but fear about defaults in the slowing economy could also be a factor. In any case, slower lending will curb growth and spill over to Australia.

The yen was broadly weaker on intervention talk and reports that a Japanese telecom company is in talks to buy Sprint, which is the third largest US telecom provider. Japanese officials have been encouraging companies to use the strong yen for M&A but this is the first sign that companies are heeding the call.

The focus will remain on Japan in Asia-Pacific trading. The Japanese corporate goods price index will be released at 2350 GMT; expectations are for a 1.4% y/y decline.

The top event will be the G7 meeting in Tokyo. Japan is working to win support for currency intervention. It will be difficult for Japan to argue excessive volatility with USD/JPY vols at the lowest levels of the year. Officials hinted at Plan B on Thursday, saying they could act even against US objections.

The direct link to Thursdays Premium Insights can be found here: http://ashraflaidi.com/products/sub01/access/?a=686 Non subscribers can join here: http://ashraflaidi.com/products/sub01

-AB

Ashraf tells CNBC Arabia of his intermediate bullisness in US Crude oil prices, eyeing 96, on S&P500 likely retesting of 1420s and a short term bounce in Apple before a retest of 600. His take on EURUSD's 200-dma remaining a key support until further clarity from Spain determines whether 1.3080s will be taken out. http://youtu.be/kmO2KlKBzmQ

US Jobless claims plunged by 30K to the lowest level since 2008. Euro ignores Spanish downgrade; AUD labor market data mixed; French CPI declined. The latest edition of Ashrafs Premium Insights is out, with new ideas on EURUSD, EURJPY, GBPUSD, oil and CADJPY. See direct link below.

USD weaker across the board, except JPY and has lost all of yesterday's gains. European equities are gaining 0.6% and the relative strength winner is NZD while JPY lags.

Positive sentiment helped the common currency to push higher and back above the 1.29 figure which is somewhat surprising given yesterday's Spanish downgrade by the S&P to BBB- from BBB+ with negative long term outlook.

AUDUSD gained from 1.0216 to 1.0265 after September employment was above expectations at 14.5K after previous decline by 9.1K. Rising full time employment along with a higher participation rate meant that the Aussie strengthened despite the unemployment rate that rose sharply to 5.4% from previous 5.1%. AUDUSD trades around 1.0285.

On the data front, German September CPI was unrevised at 2.0% y/y, French CPI declined 0.3% from 0.7% m/m and slowed to 1.9% from 2.1% y/y and Greek unemployment rate rose in July to 25.1% from 24.8%.

US Initial jobless claims plunged by 30,000 to 339,000 the lowest level seen since February 16, 2008 when claims were also 339,000. No special factors were listed from the data, but volatility was mentioned when the seasonal adjustment is expecting large swings in claims.

The US trade gap widened in August to $44.2 bn from a revised $42.5 bn, largely due to rising energy prices. Visible trade gap widened to $59.3 bn $57.8 bn.

Markets also await the FOMC member and the FED governor Jeremy Stein's speech on asset purchases which is scheduled to start at 10:00 am ET.

Todays Premium Insights are titled Breaking down GBP Stochastics. A Direct link can be found here: http://ashraflaidi.com/products/sub01/access/?a=686 Non subscribers can join here: http://ashraflaidi.com/products/sub01

On the day of the 5-year anniversary of the FTSE-100s record high, BoE governor hinted that price stability may no longer need to be the Banks sole objective.Is this what it takes to keep new market anniversaries going. Meanwhile, there are serious rumblings about the Dow Theory. Read on for full charts and analysis: http://www.cityindex.co.uk/market-analysis/market-news/502922012/five-year-anniversary-industrialstransportation-divergence/

Italian tax cut; French and Italian industrial production rose; Italian auction. Markets turn to wholesale inventories and FED's Beige book.

Currencies are little changed, trading within a narrow range in the ongoing session. European equities are losing about 0.4%.

In a somewhat surprising move, Italian PM Monti announced an income tax cut designed to aid low earners. Also, the VAT will increase only 1% instead of 2% as initially intended. Today's risk events include a meeting between the Spanish PM Rajoy and French president Hollande in Paris and also the EU parliament debate regarding the banking union proposal.

The common currency did not benefit from French and Italian industrial production figures that were above expectations on both monthly and yearly basis. French IP rose 1.5% in August from previous 0.6% and Italian IP increased 1.7% after a 0.1% decline seen in July. EURUSD trades around 1.2870.

Italy reached a full take up as it sold 3 and 12 month BOTs totaling EUR 11 bln. The average yield rose to 0.765% from 0.7% respectively to 1.941% from 1.692% but cover has improved.

The data calendar for the US session is light today. Wholesale inventories are due at 10:00 am ET and they are expected to rise 0.5% in August from previous 0.7%. The key event is the FED's Beige book that is due at 2:00 pm. There are also two speeches, Minneapolis FED president Kocherlakota speaks at 2:25 pm and Dallas FED president Fisher at 4:45 pm. Audience questions follow both speeches.

The euro unwound all its gains from last week, falling to the lowest levels of the month. The Australian dollar was the best performer on Chinese stimulus hopes. The upcoming session is light on data but may feature some interesting central bank commentary. A new edition of Premium Insights will appear later this evening.

The market struggled to find a theme but worries about Europe and the global economy eventually emerged and the euro sank as low as 1.2858 after opening the week above 1.30.

The IMFs warning about slowing growth outweighed signals that Greece will receive its next aid tranche. Middle East tensions also hampered sentiment and sent oil $3 higher to $92/barrel.

European leaders continue to slowly move toward unity after a summit paper circulated that appears to endorse a Eurozone budget. The Austrian finance minister also said that 11 countries are prepared to commit to a financial transaction tax.

The S&P opened flat but deteriorated to close down 1%. However, after the bell, aluminum giant Alcoa posted revenues that slightly beat expectations.

The focus shifts to Australian when, at 2230 GMT, Westpac releases consumer confidence data. The index was at 98.2 in September and is likely to deteriorate despite the RBA rate cut.

At 0030 GMT, Yellen speaks in Tokyo. Later, the ECBs Noyer and SNBs Jordan will also speak at the same event. With EUR/CHF above 1.21, it will be interesting to hear commentary from the SNB leader.

-AB

16% in 16 weeks. That is the percentage rise in the S&P500 between its June low and year's high attained last month. Here is he technical view based on weekly and monthly charts http://www.cityindex.co.uk/market-analysis/market-news/458932012/sp-500-technicals/

Ecofin meeting continues; IMF lowers growth forecasts; Draghi's testimony; UK industrial production declines further. US session brings second tier releases. A recording of Ashraf's Thursday webinar previewing NFP and charting his insights on FX, gold, silver and S&P500 is found below at the bottom paragraph.

Market sentiment deteriorated significantly after London traders got to their desks. USD gained across the board and the common currency fell from 1.2980s to 1.2907. The buck lost some of its gains but still trades stronger across the board except JPY.

Yesterday's Ecofin meeting in Brussels did not bring anything significant. The meeting continues today so trading could be impacted by headlines and rumors. Noteworthy is also chancellor Merkel's visit to Athens where she meets the PM Samaras. Meanwhile, the IMF cut its global growth forecasts and sees alarmingly high risk of a deeper slump as the EZ crisis intensifies, Bloomberg reports.

In a testimony before the economic committee of the European parliament, the ECB president Draghi said that the ECB will not print money to replace lack of government action. He also said that the ECB is thinking about publishing minutes of meetings.

The GBP has weakened significantly over the past two days and given today's data, there is a scope for further losses. Industrial production declined additional 1.2% in August from -0.8% y/y while manufacturing production fell 1.2% from previous -0.7% y/y. Monthly figures also disappointed. GBPUSD fell to 1.6001 and now trades around 1.6020.

The data calendar for the US session is light today. Canadian housing starts are due at 8:15 am ET and they are expected to decline to 201K in September from previous 224.9K. At 10:00 am NIESR will release its UK GDP estimate for September and US IBD/TIPP economic optimism index for October is seen higher at 52.3 from previous 51.8.

A recording of my Thursday webinar previewing the NFP and giving my insights on FX, equities and commodities is dound here: https://www.hamzeianalytics.com/Educational_Webinars.asp

JPY strengthens; Chinese HSBC services PMI higher; Eurogroup meeting; Swiss deflation eases marginally; Eurozone investor confidence improves and German industrial production rose. US and Canadian banks are closed today. Equities seen at risk of etering a losing week, with S&P500 and Dow-30 vulnerable to 1420 and 13300 respectively. Both EURUSD & cable stopped out, with CADJPY it all targets and metals in progress. See more detail below.

More bad news on the UK austerity front as the independent Office for Budget Responsibility concludes the government will likely miss its target of reducing public by 2016/17. As much as 15 bn per year in savings will have to be made.

USD mixed in the ongoing session. It is weaker against JPY, unchanged against commodity dollars and stronger against EUR, GBP and CHF. European equities are losing about 1.25%.

Despite the fact that Japanese banks were closed in observance of Health-Sports day, the JPY has been gaining across the board throughout the Asian and London sessions. USDJPY declined about 50 points to 78.12 while EURJPY fell 100+ points to 101.12.

The AUD stopped sliding and trades slightly higher after Chinese HSBC services PMI rose in September to 54.3 from previous 52. AUDUSD oscillates around 1.0175. A break below would cause a technical damage as the zone around 1.0150 is a key support on the weekly chart.

Reports that suggested that Spain would not ask for a bailout over the weekend proved to be accurate so the focus is on the Eurogroup meeting in Luxembourg. Markets will also watch for headlines regarding the decision on the next tranche of bailout funds for Greece.

In other news, Swiss annual CPI printed -0.4% in September from previous -0.5% while the unemployment rate remained unchanged in September at 2.9%. Eurozone sentix investor confidence improved marginally in October to -22.2 from previous -23.2 and German industrial production rose 0.5% in August after 1.3% growth seen in July.

There are no reports due during the NY session as the US observes Columbus Day Holiday while Canadian banks are closed in observance of Thanksgiving day. The sole risk event comes at 5:00 pm ET when New Zealand releases its Q3 business confidence survey.

Our Pre-NFP Premium Insights remain in progress, EURUSD missed the 1.3080 final target before being stopped out. Metals and oil longs remain in progress, while EURJPY were stopped out. CADJPY hit all targets. Direct access is found here: http://ashraflaidi.com/products/sub01/access/?a=685 Nonsubscribers can join here: http://ashraflaidi.com/products/sub01

Fridays non-farm payrolls was close to expectations but a drop in the unemployment rate raised eyebrows. The Australian dollar slumped badly while CAD rallied on strong Canadian jobs data. Weekly CFTC positioning data showed aussie bulls bailing. 1 of 2 EUR longs hit all targets. Rest of detail is below.

Payrolls increased 114K compared to 115K expected. The prior numbers were revised higher but it was entirely due to government jobs, not private hiring that would signal an economic pickup.

But the significance of the underlying numbers was completely overshadowed by political insinuations related to an unexpected fall in the unemployment rate to 7.8%. That set off calls of a conspiracy as the campaign (mercifully) enters its final month.

The US dollar and yen initially slumped on the jobs data, sending the euro to a two-week high of 1.3072. Later, risk trades receded and EUR/USD wrapped up the week at 1.3031.

The Canadian dollar benefitted from 52.1K new jobs in September, most in the full-time space. That easily beat the +10K estimate, sending USD/CAD as low as 0.9735.

The big mover to close out the week was the Australian dollar. The aussie cascaded lower despite the positive risk sentiment early in the session and continued lower as sentiment worsened. AUD/USD fell as low as 1.0152, losing a full cent after NFP.

Speculation about the Spanish and Greek bailouts continue with no progress or news on either front.

CFTC Commitments of Traders (as of Tuesdays close)

EUR net - 50K vs -50K prior

JPY net +29K vs +21K prior

GBP +long 30K vs +27K prior

AUD +long 64K vs +90K prior

CAD +long 101K vs +105K prior

NZD +long 21K vs+20K prior

Although the Australian dollar position was scaled back heavily, longs were generally at parity and above and will be vulnerable to a further decline in the week ahead.

Our Pre-NFP Premium Insights remain in progress, with 1 of 2 EURUSD longs hit all targets. Direct access is found here: http://ashraflaidi.com/products/sub01/access/?a=685 Nonsubscribers can join here: http://ashraflaidi.com/products/sub01