Intraday Market Thoughts

Awaiting Yellen's Risk Push & Aussie Jobs Report

by Adam Button
Jun 7, 2012 0:32

Markets turn to Fed Vice Chairwoman Janet Yellens comments about the economy due at 20:00 EST (1:00 London Time), which could open the door for further Fed stimulus. Speculation about a deal to bailout Spanish banks with European money stole the spotlight from the ECB and Fed. The Australian dollar was the top performer while the yen lagged as US stocks posted their largest gains of the year. The highlight of the Asia-Pacific session is the Australian employment change but comments from Yellen will also be eyed. Wednesdays Intermarket Insights include trading ideas and charts on EURUSD, AUDUSD, GBPUSD, USDCAD, US crude and gold. See below for detail.

Reports about a deal that would recapitalize Spanish banks with ESM funds continue to circulate. The loans will not come with fresh austerity conditions attached except for banking reforms. Reports suggest Spain will still carry the liability to repay these loans but officials are in a battle to manage the message so not to upset the bond market.

The greater development might be signs Germany is softening and showing flexibility.

The ECB held rates at 1.00% but pressure to cut is growing. Draghi conceded at the press conference that some members wanted lower rates.

The Feds Beige Book surprised market participants by hiking the assessment to moderate growth from modest-to-moderate growth. Only 1 of the 12 districts reported that growth was slowing. Comments from Lockhart and Williams were fractionally more dovish but nothing to indicate QE3 or a fresh Operation Twist on June 20.

At 0130 GMT, Australia will release May employment data on the heels of yesterdays upbeat GDP report. Expectations are modest with a consensus estimate of no change in jobs and a rise in the unemployment rate to 5.1% from 4.9%. The Aussie has been driven by better sentiment about Europe but this report could easily move AUD/USD 50 pips.

Another event to watch is a speech from Fed vice chair Yellen in Boston. She is speaking on the economy in what is a likely preview of Bernankes testimony on Thursday. The absence of a tilt toward more QE would rule out a hint about QE3 from the Fed chief and could reverse the recent USD selling.

WILL JANET YELLEN EXTEND THE BOUNCE IN RISK APPETITE? Tonights Intermarket Insights provide the trading ideas and charts on EURUSD, AUDUSD, GBPUSD, USDCAD, US crude and gold. Click here for direct access to todays edition: Click here to subscribe: Click here for direct access to todays edition:



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