Intraday Market Thoughts

Euro Set to Extend Gains on Auctions

by Kyle Morrison
Jan 13, 2012 9:03

Italian 3-yr bond auction may extend euro gains, UK producer prices set to slip back as inflation pressures ease, US December trade balance due. 10 new Premium trades are added below, 2 of which are nearing their target in EURUSD longs.

The latest euro rebound could be a precursor to an even stronger recovery in the short term without undermining the overall weaker tone seen in recent weeks. Yesterdays positive outcomes to both the Spanish bond auction and Italian bills auction saw investors become more comfortable holding sovereign bonds, despite economic data continuing to exhibit worrying weakness.

This could also stem from cheap 3-year funding made available by the ECB last month as banks play the carry differential between the funding and the higher yields on government debt.

Todays auction of three year Italian debt (results around 10 am GMT) could well see yields go the same way as Italy looks to sell 3bn of 2014 paper. The real test will come in a couple of weeks when Italy tries to sell longer term paper of between five and ten year paper.

UK December input prices are expected to slip 0.2% m/m, with the annualised measure dropping back below 10% to 9.1%. Output prices are expected to be flat, down from 0.2% rise in November.

In the US later the latest trade balance numbers for December are due out along with the preliminary Michigan confidence numbers for January.

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:


Latest IMTs