Intraday Market Thoughts

Eurozone Auctions Decent, IMF to Increase Lending

by Patrik Urban
Jan 18, 2012 13:12

IMF proposes lending expansion to $1 trillion; UK jobless claims rose, unemployment rate ticks up; Swiss ZEW improved; Eurozone construction output rose. Decent German and Portuguese auctions. Market turns to PPI, capacity utilization, industrial production and BOC press conference. All of last night's 13 new Premium trades are in progress, find which hit all targets below.

Sentiment improved after IMF sources said the Fund is looking to increase its lending abilities up to USD 1 trillion. BRIC countries together with Japan and some oil exporting nations should be the biggest contributors. The deal should be concluded before the G20 meeting at the end of February.

On the data front we learned that:

In the UK, December jobless claims rose 1.2K and the claimant count remained at 5%. The ILO unemployment rate ticked up to 8.4% from 8.3%.

Swiss ZEW economic expectations index improved in January to -50.1 from previous -72.

Eurozone November construction output rose 0.8% m/m from -1.4% (0.2% y/y)

Germany sold today EUR 3.44 bln worth of 2 year bonds (EUR 4 bln target). The average yield dropped to 0.17% from previous 0.29% and bid to cover improved to 2.2 from 1.4. Portugal reached its full target as it sold EUR 2.5 bln worth of bills. The debt market will focus on Spanish auction tomorrow that targets EUR 4.5 bln.

As has become the norm recently, the ECB deposits reached a new high on Tuesday at EUR 528.18 bln, more than EUR 25 bln over Monday's record.

Busy US session is ahead today. It kicks off at 8:30 am with December PPI that is expected to decline to 5.1% from 5.7% on annual basis (core PPI exp. 2.8% from 2.9%) followed by net long term TIC flows at 9:00 am that are seen higher at USD 27.3 bln in November from October's USD 4.8 bln.

Capacity utilization and industrial production are both due at 9:15 am and are anticipated higher at 78.2% from 77.8% and 0.5% from -0.2% respectively.

CAD traders will watch the 10:30 EST BoC monetary policy report, followed by the 11:15 BoC press conference.

Coming up before the end of the session at 4:45 pm ET is New Zealand's Q4 CPI that is expected to drop to 2.6% from 4.6% y/y but remain steady at 0.4% q/q.

ALl of our 13 Premium Intermarket have either hit all targets or are in progress, with new Daily & Weekly oscillator charts on gold & EURUSD.

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