Intraday Market Thoughts

EURUSD At 10 Week High After Solid IFO

by Patrik Urban
Feb 23, 2012 12:59

Strong German IFO report; EU commission lowered Eurozone's GDP forecast; UK mortgage approvals rose and CBI orders improved. Jobless claims and oil inventories are next. Both EURUSD longs in Wednesdays Premium trades are done. EURGBP, USDCAD, GBPCAD, gold, US crude and USDJPY are in progress.

German data boosted risk today as all components of the February IFO release not only improved on a monthly basis but also beat expectations. The business climate improved to 109.6 from 108.3, the current assessment rose to 117.5 from 116.3 and the expectations sub component printed 102.3 from 100.9. The business climate has been improving for four months in a row and reached the highest reading since July 2011. The risk that Germany would fall into a recession seems slightly smaller now (Q4 GDP was -0.2%). EURUSD jumped on the release to 1.3342, the highest it has been since 12/2011.

Despite the improvement seen in Germany, the EU commission has lowered its 2012 Eurozone GDP growth projection to -0.3% from 0.5%. Furthermore, EU commissioner Olli Rehn said that prospects have worsened and that decisive action to boost growth is needed.

In the UK, January mortgage approvals rose to 38.1K from 36.6K jumping 33% on the year and printing the best result since 12/2009. CBI industrial orders improved to -3 from January -16.

ECB deposits rose on Wednesday to EUR 466.4 bln from Tuesday's EUR 449.05 bln.

USDJPY continues to push higher with shallow retracements, gold trades in a narrow range consolidating yesterday's large gains and EURCHF trades only 50 points above the 1.20 floor defended by SNB. Reported gigantic stop loss orders right below 1.20 could come to focus.

The list of data releases due during the US session is short today. At 8:30 am ET jobless claims are seen slightly higher at 352K from 348K followed by crude oil inventories at 11:00 am that are expected higher at 0.9M barrels from previous -0.2M.

The latest Premium trades (announced earlier) include EURUSD, EURGBP, USDCAD, GBPCAD, gold, oil and ESH. Direct Access to Wednesday's Trades is found here: access/?a=606 Non subscribers click here:


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