Intraday Market Thoughts

Draghi Boosts Euro, Data Weighs on USD

by Adam Button
Jan 13, 2012 1:17

A hint of optimism from Draghi sparked the euro while the US dollar was broadly weaker on soft economic data. CHF and EUR were the best performers; NZD and USD the laggards. Asia-Pacific trading closes out the week on a quiet note. Gold & silver surpass oil as appetite stabilizes. Friday's US session may be thin ahead of Mondays Martin Luther King Holiday. 10 new Premium trades are added below.

The euro climbed to a one-week high of 1.2845 after Draghi noted a weakening of economic activity but turned a mildly optimistic note saying some survey data seem to indicate some stabilization at low levels. The ECB held rates and Draghi said policy will remain accommodative.

The ECB leaders comments on the LTRO made it clear that the facility is aimed at providing liquidity and stability to banks. He noted that sovereign yields have fallen but the indication was that this was a secondary goal.

Some money is starting to find its way into peripheral bonds, as the sales in Italy and Spain showed but its far too soon to declare a permanent shift.

10 NEW TRADES are added on Thursday evening, including EURUSD, AUDUSD, EURGBP and US crude, with existing trades in CADJPY, USDCAD, USDJPY and silver The trades are for Fridays Asia/EU/US sessions Non subscribers can get access here:

The US dollar continues to trade in more symmetrical terms with domestic economic data. Jobless claims, retail sales, business inventories and monthly budget data all disappointed. Especially concerning were indications that the US consumer was not as strong during the holidays as hoped. Sales ex-autos and gas were flat versus the 0.4% growth expected.

The S&P 50 gained 0.2% to 1296. Oil and gold strengthened early in US trading, hitting $1681 and $103 respectively, before falling back to $1648 and $99.15. The oil declines came on comments from an EU official an Iranian oil embargo will take at least six months to allow some countries to arrange alternative supply.


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