Intraday Market Thoughts

EURCHF Approaching Floor; New Premium Trades are out

by Adam Button
Jan 31, 2012 14:32

Progress on swap negotiations; German retail sales fell but unemployment change declined; UK mortgage approvals rose but net consumer credit fell; the ECB is buying Portuguese bonds via SMP; EURCHF near 1.20 floor. Canada GDP disappointed. US Chicago PMI and consumer confidence due next. Latest Premium Trades are out Buy the Euro Dip of Sell the Euro Bounce? See below.

USD is broadly weaker today as the risk rally continues. Major European equities are gaining 1% and relative strength winners are NZD followed by CAD.

The risk rally continues, fuelled by Eurogroup's Juncker and Greek PM Papademos comments of significant progress towards a Greek swap agreement.

German data was mixed today as monthly retail sales fell -1.4% in December after -1% contraction seen in November (-0.9% from +0.9% y/y) but the number of unemployed people fell -34K in January after December's improvement by -22K.

The UK also had mixed reports today. Mortgage approvals rose in December to 52.9K from previous 52.6K which is the highest print since the end of 2009 but net consumer credit declined by GBP 377M, the largest monthly fall on record. In the Eurozone, the unemployment rate remained steady at 10.4% in December.

Portugal yields soared yesterday (5 year to 23% and 10 year to 18%) but pulled back today a bit. Traders noted ECB buying via the SMP.

Noteworthy is also that EURCHF trades just a few dozen points above the SNB determined floor 1.20. Whether the SNB decides to flush out the reported large stop losses right below the level remains to be seen but from a credibility point of view it is hard to imagine that the SNB would give up defending the 1.20 floor.

Canadian GDP fell 0.1% in Nov vs expectations of a rise of 0.2%, following an unchanged reading in October.

January Chicago PMI is due at 9:45 am and should show a slight increase to 63.1 from 62.5. Consumer confidence which comes 15 minutes later is seen higher at 68.2 from 64.5.

Our latest Premium Intermarket Insights for Tuesday are out Buy the Euro Dip of Sell the Euro Bounce, with new trades in EURUSD, AUDUSD, CADJPY and US crude oil



Latest IMTs