Intraday Market Thoughts

EURUSD Little Changed Despite Decent Data & Auctions

by Patrik Urban
Jan 24, 2012 12:37

Eurozone industrial orders fell but PMIs improved; German PMIs also stronger. UK public net sector borrowing declined; solid Spanish auction. Market turns to Canadian retail sales while awaiting news from EconFin. 1st of 2-day FOMC meeting starts today. Monday nights Premium trades are mostly in progress, and are relevant into Wednesday evenings FOMC decision.

EURUSD holds above $1.30 after extending as high as 1.3060s earlier. USD is weaker against the GBP and firmer against JPY, CAD and AUD. Major European equities are losing nearly 1% and the relative strength winner is GBP.

Eurozone industrial orders fell -1.3% in November after 1.5% growth seen in October, January PMI manufacturing printed 48.7 from 46.9 and PMI services improved to 50.5 from 48.8. German January PMI manufacturing rose to 50.9 from 48.4 and PMI services grew strong 54.4 from 52.4. Despite the improving January data EURUSD could not rally and continues to trade right above the 1.30 level.

UK public sector net borrowing reached GBP 10.8 bln in December which is a narrower deficit compared to November's GBP 15.1 bln.

Spain sold EUR 2.51 bln worth of bills today (target EUR 1.5-2.5 bln). Results are solid as yields declined and bid to cover rose. One indication that the European periphery carry trade is not as widely employed as some believe are ECB deposits that continue to be elevated and on Monday were virtually unchanged compared to Friday at EUR 490.5 bln.

Today marks the second day of the Eurozone finance ministers meeting. Markets will be on a lookout for news and rumors of progress on the ESM-EFSF bailout mechanism and developments with the ongoing Greek debt talks. Formal offer on Greek bond swap should be announced on 2/13.

The US session starts at 8:30 am ET with Canadian retail sales that are seen lower in November at 0.3% from previous 0.7% (core sales lower at 0.2% from 0.7%) followed by Richmond manufacturing due at 10:00 am which is expected to rise to 6 in January from December's 3.

CHF volatility could increase at 11:15 am when SNB governing member J. P. Danthine speaks in Zurich. Heavy stops on EURCHF below 1.2050 and "massive" stops below 1.20 are reported. The OECD said today that the SNB should weigh benefits of FX intervention. GBP could experience erratic moves at 3:00 pm when BOE governor Mervyn King speaks in Brighton.

EURUSD, USDCAD, AUDNZD, USDJPY premium trades are partly in progress. Click here for direct access to all 14 trades To subscribed, click here:


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