Intraday Market Thoughts

European Worries Mounting, US Optimism Growing

by Adam Button
Jan 4, 2012 23:34

Risk trades struggled into the European close but rebounded through the remainder of US trading on Wednesday. JPY and USD led, CHF and EUR were the worst performers. The upcoming Asia-Pacific session features second-tier economic data on Australian housing and trade. Ashraf's Intermarket Insights will return to normal frequency next week. There will be only 1 edition of the Premium Intermarket Insights this week.

The trading day began with a risk averse tone after Italys Unicredit struggled to raise $9.8B, sending shares nearly 14% lower. A report that Spanish banks may need 50B euros also weighed on sentiment. US economic data was light but early news was disappointing with factory orders gaining 1.8% compared to the 2.0% expected.

Sentiment bottomed as European markets closed. US trading was also boosted by ICSC, which hiked its estimate for December retail sales, saying they may have increased 4.5% year-over-year. The bounce pushed AUD/USD back to nearly unchanged levels on the day

WTI crude hit $103.70 the highest since May after EU foreign ministers said they want to tighten sanctions against Iran. Frances foreign minister said an embargo on oil products could be announced Jan 30.

The S&P 500 closed unchanged at 1277. Gold continued its rebound, hitting $1618 after analysts at Citi reiterated a $2400 target.

Asia-Pacific Preview

A series of lower-tier indicators will be released in starting at 2230 GMT with Australias AiG performance of services index. The prior reading was 47.4. Shortly afterwards, reports on Japans monetary base and Australian home sales are unlikely to move the market. A report that could have an impact is Australian trade balance at 0030 GMT. The consensus is for a A$2.0B surplus.


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