Intraday Market Thoughts

Strong Data Underpin EUR Ahead Of Tomorrow's LTRO

by Patrik Urban
Feb 28, 2012 13:48

ECB suspends Greek debt as collateral; another strong Italian auction; German GfK rose; Eurozone economic sentiment and business climate improved; UK CBI better. Market turns to durable goods, SP Case Shiller and consumer confidence. See details below on our Monday Premium Intermarket trades.

The USD trades slightly stronger against most majors. European equities are higher by 0.2% to 0.5% and the relative strength winner is EUR while NZD is the weakest.

ECB temporarily suspended Greek debt from being used as collateral after yesterday's downgrade by S&P to selective default from CC. Greek debt will become eligible again in the middle of March when new collateral framework becomes effective.

Another strong auction ahead of tomorrow's LTRO came from Italy today as it reached a full take up with 5 year and 10 year bonds totaling EUR 6.25 bln. Average yields declined.

On the European data front, German GfK consumer sentiment improved marginally in March to 6.0 from 5.9 in February, Eurozone economic sentiment rose to 94.4 in February from previous 93.4 and business climate improved slightly to -0.18 from -0.21.

In the UK, CBI realized sales remained negative but improved considerably to -2 in February from -22 a month earlier. Stagnating wages and high energy prices suggest that consumers continue to be constrained and outlook remains concerning.

The NY session starts today at 8:30 am ET with durable goods orders that are expected to contract 0.8% in January after December's 3% growth (core is anticipated unchanged).

December's S&P Case Shiller index due at 9:00 am ET is anticipated to drop 3.6% after 3.7% decline seen in November and February consumer confidence due at 10:00 am is anticipated to improve to 63.1 from 61.1.

CHF and GBP volatility could increase at 12:30 pm and at 2:00 pm when SNB interim chairman Jordan and BOE deputy governor Tucker deliver their speeches in Zurich and in London respectively.

Our longs in gold and EURGBP remain in progress and so is one of the shorts in USDCAD. AUDNZD short remains in progress, as well as oil long, while ES short was stoped out. ACCESS to these charts & trades: CLICK HERE to Subscribe:


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