Intraday Market Thoughts Archives

ASHRAFs VIDEO MARKET ANALYSIS http://bit.ly/3ysFCp Stocks shrug the decline in consumer sentiment, rallying 1% on the day, but Dow has yet to regain that 50% retracement of 10,345 and S&P500 requires a breach of 1,120. And dont forget that the Dow Transportation index needs to confirm DJIA by hitting a new high on the year (accordng to Dow Theory), which is not yet the case.

YEN STRENGTH RE-EMERGES, dragging USD, EUR, GBP across the board, with EURJPY breaking below 133.20s, eyeing 132.65. CADJPY stll eyeing 84.70. GBPUSD testing the 4 hr trend line support, looking for a possible break of $1.66 and onto $1.6580. Watch for oil retesting 76 support,followed by 75.4538% retracement from 65.00 low. USDCAD attempts to rebound above 1.0540 after smaller than expected Canadian trade deficit. USDJPY eyes 89.20. No Chinese yuan revaluation expected before end of Q1 2010, which should have minimal impact on USD.

WHILE THE MEDIA IS BUSY with the cacophony of Chinese remarks about a possible revaluation and US officials about the importance of a strong dollar, FX markets are doing what they did over the last 2 Fridays; Yen strength and prolonged oil weakness. In fact, oil, briefly broke below the 76.50s support to hit a 4-week low of $76. EURUSD held above its $1.4820 shoulder support in the reverse H&S formation, while EURGBP is seen consolidating at the 0.8890 foundation. GBP strength continues to emerge across the board, with GBPUSD slated for prolonged gains towards the $1.6750 trend line resistance. CADJPY posts 2-daily loss, eyeing 84.70.

ASHRAF'S VIDEO MARKET ANALYSIS on plunging oil, EURUSD, GBPUSD & the recurring failure FOR us stock indices to regain those 50% retracements.

http://bit.ly/6OIyH

EURUSD intensifies losses as oil accelerates declines nearing the October lows of 76.60s. Oil inventories showed a build of 1.8 mln brls in crude oil, well above expectations of 1.0 mln barrels. Oil's next key target stands at 75.00. EURUSD set to test 1.4825, which is the right shoulder of reverse Head&Shoulder formation. Only a close below it opens the door for prolonged damage towards $1.4770.

CAD IS WEAKEST performer amid major FX, partly amid prolonged declines in oil. Considering the rapid momentum in oil shorts, markets could well probe the interim target of $77.60s. EIA weekly inventory report due 16:00 GMT, expected to show an increase of 1 million barrels of crude oil and an increase of 700K barrels in gasoline. USDCAD tests Nov 8 trend line resistance at 1.0530, which will be decided after the EIA report. Bullish follow-up requires a break of 1.0590. GBPUSD seen capped at 1.6610. US Weekly claims fall to 502K--lowest since 1st week of Jan. CADJPY still capped at 86.20.

YEN IS STRONGEST PERFORMER as Asia fails once again to fails to respond to the US equity rally. Unexpected creation of a net 24.5K jobs in Australia made the Aussie second best performer against USD (after JPY). As we said in this weeks article, risk aversion plays will likely prove most positive for JPY than for USD, especially as the US currency is capped by the Feds dovish remarks and pressure on China to revalue. GBPUSD still seen at 1.6480, EURGBP fell 5 pips short of the 0.9070 target, while EURJPY fails again at 135.50 before heading back towards 134, and will likely retest 133.60.

Watch Ashraf's Video Market Analysis previewing tonights NZ retail sales and the impact from the BoE inflation report as well as a take on intermarket dynamics. http://bit.ly/5FCfg

REMINDER : Aussie Oct EMPLOYMENT figd due at 0:30 GMT after the NZ retail sales. Check out latest HOTCHART on EURGBP and EURNZD.

DOW STRUGGLING TO break above the 50% retrcmt from record high to March low of 10348 (as did S&P500 struggles to do the same to its own 50% retracement at 1097). But Dow is well above its 100-week MA if 10107, so a close above this is needed for the week. GBPUSD hits $1.6580 target from this morning IMT when it stood at $1.6660 as dollar stabilizes further during the London close. Oil's inability to regain 80.50 turns into deeper selling towards 79.20. EURGBP still seen at 0.9070. CADJPY still unable top regain 86.20.

Note how oil fails to regain 80.50 (not even talking about the more important 82) despite USD hits 15-month lowscourtesy of the latest onslaught of dovish talk from the Fed. While this may prove a green light for FX traders to want to probe last years record lows in the USD by selling it further, the converse cannot be said for oil. Thus, USD weakness can be a simultaneous RESULT of weak US figures and ensuing Fed dovishness and a CAUSE for rising equities/commodities, but there could come a time when the result (US weakness) may dominate and lead to renewed risk aversion. Today's EIA data will be delayed to Thursday due Veterans Holiday. CADJPY still struggling to retest right shoulder resistance at 86.10-15.

Sterling rallied to $1.6797 high after UK Oct unemployment rose by 12.9K, less than the exp 20K. The BoE inflation report also helped GBP when it stated inflation would rise sharply in the medium term, before later pulling lower across the board after King said weak GBP helped rebalance exports from imports, Double top on GBPUSD 4hr chart targets $1.6580. EURGBP eyes 0.9070. GBPCAD (as mentioned in yesterday's IMT) is slated for further losses towards 1.73.

A series of USD-damaging remarks emerged from various Fed officials today (Lockhart, Yellen, Rosengren) confirming (between the lines) that liquidity will not be reduced before year-end and no exit strategy will be adopted before end of Q1. But traders must be careful from the divergence between rapid USD pullbacks and relatively capped oil prices. While USDX has hot fresh 15-month lows, oil remains unable to break the interim resistance of 80.50. Could this mean that USD weakness is the now the only reason to the rally in stocks? These dynamics could be the reason why any USD rebound will be limited and whey JPY rebounds will continue to exceed those in USD during risk aversion. Watch lower highs in AUDJPY possibly retesting 82.50. GBPUSD awaiting unemployment at 9:30 GMT (exp +20K unemployed) and BoE inflation report (10:30 GMT).

GBPCAD drops for the second straight day reaching 1.7535 and nearing the 55day MA at 1.74. But the pair will first have to retest the 1.7496 support, followed by 1.7330 low. Wednesday's release of UK Oct unemployment and BoE inflation report could risk triggering a break of the GBPCAD support. Also watch out out for the development of the weekly chart in GBPCAD. A REPLAY OF ASHRAF's BNN interview yesterday http://bit.ly/3nHM4

EURGBP drops off its 0.9016 session high after German Nov ZEW survey fell by more than expected, hitting a 4-month low of 51.1 from 56. Broad GBP weakness resulted from Fitch said UK was only major economy at risk of losing its AAA credit rating. Expect EURGBP rebound towards 0.8990, while GBPUSD capped at $1.6760. But rather than playing GBP (or any other currency) against USD, theres more downside room against JPY. GBPJPY and CADJPY eye downside at 150.50 and 85.50. S&P500 attempts hitting high for the year as did the Dow but the key resistance level stands at 1,090 100-week MA, which is just below the 101 high for the year.

USD & JPY stabilize against all currencies in Asia and into European trade after a shy reaction in Asian equities to the 2% rallies in the US. Nikkei +0.6%, Hang Seng +0.3%. USDJPY, EURJPY and GBPJPY highlight our yen bullishness, suggesting further pullbacks ahead eyeing 89.60, 134 and 148.80. German Nov ZEW Current Conditions due at 10:00 GMT exp -70 from -72.2; Economic Sentiment exp 55 from 56. Oil failed to regain 80.50, before retreating towards 79.00. CADJPY capped at 85.10.

Ashraf's interview on BNN discussing USD weakness, G30/IMF and Exiting the Exit Strategy http://bit.ly/3nHM4 Oil looking to regain $80.50 resistance. Look for short-lived risk appetite trades into Asia for NZDJPY to target 67.10, EURJPY to target 135.50.

Advancing EURGBP eyes 0.90 while on stabilizing oscillators as GBP deepens losses after Kraft news of an unchanged takeover amount. GBPUSD extends losses by more than full cent, eyeing $1.6680. But GBP selling could stabilize on UK RICS housing figures due at midnight GMT. Aussie traders watch Oct NAB business confidence at 00:30 to determine the break above the previous high of 0.9330.

GBPUSD DROPS AS KRAFT's takeover offer for Cadbury remains unchanged. Part of the reason for GBP gains emerged on expectations that Kraft would improve its offer above the original 10.2 bln. Prolonged strength in equities to boost EURGBP towards 0.8970, while GBPUSD seen vulnerable to $1.6720, with any rebound remaining limited at $1.6880. Sterling 3-month LIBOR rates rise for the 20th straight day, helping to support GBP over last 2 weeks. We expect recurring JPY strength emerging in mid week, with GBPJPY, CADJPY and EURPY seen unable to regain 151.45, 85.15 and 135.50 respectively.

Dollar takes a beating across the board on a combination of negative remarks from the IMF and silence from the G20. The IMF said the dollar remained overvalued (based on imbalances of which the budget deficit is the major factor) despite moving closer to equilibrium, At the same time, the G20 statement refrained from pressure on China to revalue its currency as was usually done in G7 meetings. GBUSD breaks the key $1.67 resistance, hitting 3-mth high, eyeing $1.6830. Lack of US data today, could prolong risk appetite further and lift GBPUSD towards $1.6880s. USDJPY remains weak due to USD weakness (not JPY strength), eyeing 89.60, while EURJPY regains 134.70s, expected to face renewed resistance at 135.50.