Instraday Market Thoughts

EUR 1.3465 on Soaring IFO, UK GDP Dips

by Patrik Urban
Jan 25, 2013 12:52

Strong German Ifo data; Repayment of the 1st LTRO begins; British Q4 GDP Negative. Market turns to Canadian CPI and new home sales. In Thursday's Premium Insights, 5 hit all targets, 5 unfilled and 3 stopped out. Last week's Insights, 10 hit all targets, 5 unfilled, 0 stopped out.  1/2 EURUSD hit all targets, the other missed 1.3280 fill by 6 pips, 2/2 USDJPY unfilled, 2 of 2 GBPUSD hit all targets, 1/2 AUDUSD in progress, the other stopped out, 1/2 EURJPY hit all targets, the other unfilled, 1/2 EURGBP hit all targets, the other missed 0.8380 by 11 pips.  2/2 Gold stopped out after 1 missed 1698 target by 2. 2/2 Silver in progress. 2/2 Oil in progress.

The greenback is mixed in the ongoing session. It is weaker against EUR and CHF, flat against NZD and stronger against the rest of the majors. European equities are gaining around 0.6%. CHF leads and JPY lags.

The common currency pushed higher across the board on the back of improving Ifo data. Business climate rose in January to 104.2 from 102.4 which marked the third increase in a row; current assessment improved to 108.0 from 107.1 and the expectations sub index increased to 100.5 from 98.0. Yesterday's solid PMIs and today's strong Ifo confirm improving conditions in Europe's largest economy.

Another factor behind the euro strength is the ECB announcement that banks will repay EUR 137.159 bln out of EUR 489.19 outstanding in early repayment of the first 3 year LTRO. 278 banks too part in the first repayment, MNI reports. EURUSD rose to 1.3463 and now trades around 1.3435.

GBP came under pressure after British Q4 GDP declined more than economists anticipated. On quarterly basis the economy shrank 0.3% after Q3 0.9% growth and on annual basis GDP was flat while market forecasted 0.2% growth. Triple dip recession now seems more than just a possibility.  GBPUSD fell to 1.5744 before bouncing to 1.5780 and EURGBP trades near session highs around 0.8515.

The US session begins at 8:30 am ET with Canadian CPI that is anticipated to rise 1.2% in December from November's 0.8% y/y while the core figure is seen rising to 1.4% from 1.2%. New home sales that are due at 10:00 am ET are anticipated to slow to 2.1% in December from prior 4.4%.

Act Exp Prev GMT
GDP (4Q) (q/q) [P]
-0.3% -0.1% 0.9% Jan 25 9:30
GDP (4Q) (y/y) [P]
0.0% 0.2% 0.0% Jan 25 9:30
BoC CPI Core (DEC) (m/m)
-0.2% 0.0% Jan 25 13:30
CPI (DEC) (m/m)
-0.2% -0.2% Jan 25 13:30
CPI - Core (DEC) (m/m)
0% Jan 25 13:30
BoC CPI Core (DEC) (y/y)
1.4% 1.2% Jan 25 13:30
CPI (DEC) (y/y)
1.2% 0.8% Jan 25 13:30
New Home Sales (DEC) (m/m)
0.385M 0.377M Jan 25 15:00
New Home Sales Change (DEC) (m/m)
2.1% 4.4% Jan 25 15:00
Business Climate (JAN)
104.2 103.0 102.4 Jan 25 9:00
Current Assessment (JAN)
108.0 107.2 107.1 Jan 25 9:00
Expectations (JAN)
100.5 99.0 97.9 Jan 25 9:00
Markit US PMI Preliminary (JAN)
56.1 53.0 54.0 Jan 24 13:58
 
 

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