Intraday Market Thoughts Archives

Ashraf's Take on Ireland's Budget from the IFSS in Dublin

http://www.youtube.com/watch?v=JsDi2N_gljc

Ashraf tells Reuters Thomson why EURUSD will not fall below $1.30 this year

http://bit.ly/bAONjt

Ashraf's 7 mins interview on BNN discussing G20, China, Ireland, FX Controls, Taxes and EURCAD http://bit.ly/cfmbE1

55-WEEK & DAY MA CONFLUENCE; EURUSD STABILIZES, by bouncing off the 100-day MA of $1.3640, but the KEY LEVEL TO WATCH for the week is $1.3525-50, which is the 55-WEEK MA (1.3525) and 55-DAY MA ($1.3535). I discussed earlier this week how $1.3690 was a key support and has yet to be broken since being tested on Oct 19. Despite the rebound to $1.3760 from an earlier intraweek break to $1.3580, we have yet to see a weekly close. This is another reason why I continmue to favour shorts in EURCAD and EURGBP instead of EURUSD.

MY REUTERS INTERVIEW on why the euro is unlikely to fall below $1.30, despite the emerging concerns from Ireland.

http://bit.ly/bAONjt

Here's a brief video for Reuters (no charts for this one) on why the euro is unlikely to fall below $1.30, despite the emerging concerns from Ireland.

http://bit.ly/bAONjt

IF YOU REMEMBER THE EURUSD WEEKLY Death Cross I alerted on January 19 of this year, then you will remember the similarity with the CURRENT dead cross in the WEEKLY EURGBP See chart here http://chart.ly/ow7gngb I said in my previous IMT that the 55-WEEK (not day) MA has fallen below its 100-week MA for the 1st time since Dec 2007. This is the same concept (and chart pattern) to the aformentioned EURUSD Dead Cross (see chart in this article http://bit.ly/cTiHQZ ), which was alerted 18 hours before EURUSD fell 2 full figures on Jan 19, extending the sell-off. Some people claim that Dead Cross is ONLY valid when the 50 MA or the 100 MA falls below the 200 (regardless whether it is daily or weekly). This is not true. In both today;s case with EURGBP and the Jan 19 case of EURUSD, the 200-MAs stand (and stood) at a much lower level from the 55 and 100 MAs. Thus, if traders waited for the 50 to fall below the 200, the bulk of the downmove would have been missed. EURGBP is now vulnerable to retesting 0.81 before month end. EURUSD tests the 100-week MA of $1.3640, which is the value to watch for the week before $1.3529 is under focus.

THIS ARTICLE implies that I initiated yesterday's rumour about the IMF bailing out Ireland when I tweeted the rumour at 9 am GMT yesterday, but I did emphasis that it was a rumour. http://bit.ly/aSUiCN The market did fall but the Finance Ministry as well as the Central Bank denied those rumours. I was merely posting that tweet after hearing it from 1 reporter at the IFSS conference where the Governor Honohan was present.

IRISH 10-YR YIELDS hit a new high of 8.93%, extending the spread over Germany yields to a record 7.22%. EURUSD breaks back below $1.37, which is the 23.6% retracement of the rally from the 1.1876 low to the 1.4281 high. I have warned since October 19 (the day of the Chinese rate hike) that EURUSD would have to CLOSE NY under $1.37 in order for selling to accelerate. Since then, weve touched $1.3690s twice but never closed below it. 7 WEEKS LATER, this requirement still applies. EURGBP (yesterdays IMT) extends selloff to 0.8480, en-route to 0.81. EURCAD hits 1.3740 (250 pips below the HotChart). US 10-year yield stands at 2.60%, back from yesterdays 2-month highs of 2.78%. 20/30 analysts polled by Reuters see Ireland getting Int'l bailout by end of 2011.

EURGBP WEEKLY CHARTING TECHS/FUNDIES: http://chart.ly/ow7gngb

IRISH DISSENT ON BUDGET, CONFLICTING reports of IMF bailout and a less dovish than expected inflation outlook from the Bank of England triggered the biggest weekly decline in EURGBP since January (and its only Wednesday). Although the BoE continues to see inflation below the 2% target at the end of its 2-year forecast period, it did express uncertainty by noting the chances of inflation being either above or below the target by the end of the forecast period are judged to be roughly equal which is an implicitly hawkish shift, that would serve to delay any QE2 for now. The EURO SIDE OF THE STORY is largely Irish-related as PM Cowen urged opposition Labour Party that if the planned EUR 6 bln adjustment to the budget is not implemented, then the State could not undertake its EUR 50 bln in annual spending, which exceeded EUR 31 bln in receipts. Not going away with the EUR 6 bln in adjustment, would restrict spending by over 50% in services. EURGBP CHART showing a SIMILAR PATTERN TO THAT EURCAD call, whereby a key retracement held up, coupled with a major trendline resistance. The break of the 55-WEEK MA (blue line) BELOW the 100-WEEK MA represents a DEATH CROSS, suggesting further losses towards the prelim 0.84 (June lows), followed by 0.8370 and 0.8150. Only a close above 0.8870 merits re-consideration of this important downcycle. My BLOOMBERG INTERVIEW earlier today http://bit.ly/cshEOp

My Bloomberg Interview from Dublin earlier today discussing Irish budget wranglings & record breaking debt spreads & the tumbling euro as well as reconfirming my bearish take on EURCAD and EURCHF :

http://www.bloomberg.com/video/64414220/

USD RUNS THE FX SHOW, rallying against every currency with CAD a close second as SP500 drops 10 pts off its overnight highs (after failing the 61.8% retracement from at 1227-28 from the all time high to the 666 low) . EURCAD extends damage 100 pips from the Short EURCAD HotChart (see prev IMT) nearing 1.3850 prelim target before $1.3570 emerges. GOLD Drops $30 off its 1424 high as USD extends rebound. EURGBP SEEN EXTENDING SELLOFF AHEAD OF tomorrow's BOE INFLATION REPORT. USDJPY seen capped at 81.90. I'm Sticking with the shorts in EURCAD and EURCHF (SEE HOTCHART http://www.ashraflaidi.com/hot-chart/?a=1988 ) Here's my August 26 IMT on Gold & Silver Seasonals & Why Q4 is Best http://bit.ly/cZ4ytN

GOLD/SILVER RATIO DROPS BELOW 50 for 1st time since March 2008 (see Spet 3 warning on G/S Ratio) GOLD EXTENDS GAINS TO FRESH HIGHS AT $1424 after breaking out of its 2-week consolidation (prevailing since early October) as the Fed announced prolonged asset purchases. The Feds failure to attaining its objectives of maximizing growth, lowering unemployment and attaining price stability has opened the door for commodity bulls. BARRING ANY SHARP USD-REBOUND (likely resulting from renewed troubles in Europe or another Chinese rate hike), gold appears set to amass further gains towards the preliminary resistance of $1,480-85/oz, which is right below the top of the 2-year channel. Any pullbacks are seen supported near $1,360 (from previous support of 1325). A close below $1,310-15 would be seen a threat to $1,260-65. SILVER EYES $38-39/oz, breaking above the 50% retracement of the decline from its $49 record high. I AM SPEAKING at IFSS Summit @ Four Seasons - Dublin Tomorrow http://bit.ly/cpzFdw speakers include Gillian Tett and Linda Yueh

RISK AVERSION broadening in early European trade, with irish concerns at the forefront. EURUSD is vulnerable to a break below $1.38, which could set off stops triggering declines towards $1.3740 and the all important $1.3690 support. EURCHF ACCELERATES losses, a pattern highly similar to that of early August when the pair collapsed more than 900 pips. Here is my updated HOTCHART on WEEKLY EURCAD, which was first initiated on Friday http://bit.ly/cEZhqv

My Video Analysis for Reuters/Thomson on the double top in German-US 10 yr spread and its relationship with the euro http://bit.ly/brrCSP Not always do yield differentials have an impact on FX, but do watch out this time.

USDJPY LOOK; Despite the Bank of Japan intervention in September and its October announcement to purchase 5 trln yen worth of assets, the yen sticks to its strength against the US dollar. 5 trln yen is the equivalent of no more than $65 bln, which is 10 times less than the total of asset purchases announced by the Fed. This is a clear signal to the markets that the scale of BoJ easing is insufficient to lift up USDJPY. As a result, daily USDJPY continued to respect the trendline resistance starting on May 2010, implying that 82.00 could act as a prolonged ceiling for the pair. This trendline also is in line with the 55-day moving average (blue dotted line). As long as the Fed remains in its path towards easing into Q2 2011 and the Bank of Japan buys no more than 5 trln yen worth of assets. I expect USDJPY to periodically retest 80 until possibly drawing the BoJ into another intervention or expanding its QE beyond 5 trln yen. But before that, we could see extended consolidation around 81-82, a break of which is seen capped at 83, coinciding with the 55-day MA. A break below 79 is not yet ruled out.

I WILL BE IN DUBLIN THIS WEEK (Tues-Wed) for CMC Markets' "Next Gen" Launch. Non-clients feel free to show up for the Launch Party at Gravity

Bar in the Guinness Storehouse for a free unlimited demo account

REGISTER HERE: http://www.cmcmarkets.ie

I will be in Dublin this week (Tues-Wed) for CMC Markets' "Next Gen" Launch. Non-clients feel free to show up for the Launch Party at Gravity

Bar in the Guinness Storehouse for a free unlimited demo account

Register your interest here: http://www.cmcmarkets.ie

GREEK REGIONAL ELECTIONS today will be a vote of confidence in the Socialist Pasok Partys austerity plan, passed by PM Papandreou. Markets will closely watch the results on Sunday evening and whether Pasok wins a clear majority. Failure to do so would trigger renewed euro jitters as it endangers the continuity of the EUR 110 bln IMF/EU-backed austerity package. PM Papandreou stated he would call a snap general elections if his party doesnt win clear majority in todays municipal elections, whose results will be known later Sunday night. The opposition conservative New Democracy party has grown in support for its protests against the tax & employment consequences of the austerity package and the generally slow pace of progress in the economy. EUR was hit on Friday as Irish Bond spreads relative to Germany extended their rise following Irelands ambitious new budget (yet to be approved in parliament) aims at cutting the deficit to 9.25%-9.5% of GDP in 2011 from the current 11.9%. EURUSD may struggle around $1.40 but more downside is seen against CAD &CHF. EURCAD ALREADY BROKE BELOW $1.41, testing its 55-week MA for the first time this year.The cross-over in weekly stochastics aiming at 1.4040-50 support, which would be followed by 1.38. HERES THAT EUR vs SPREADS CHART http://chart.ly/ sweyqkc. TIME DIFFERENCE between US Eastern Time (NY) & GMT is now 5 hours. And GMT = London.