Intraday Market Thoughts

Euro Stabilises on Spanish Auction & Greek Coalition Talks

by Patrik Urban
Jun 19, 2012 13:12

Greek coalition; G20 statement; UK CPI eases further; German and Eurozone ZEW drop; Spanish auction. Market turns to housing market data and Canadian wholesale sales. EURUSD & GBPUSD remain well underpinned atop their 2-week trendline supports. 1 of the 2 AUDUSD longs hit all targets, while EURUSD longs were stopped out. See the rest of the Premium Insights below.

USD eases on reports that a Greek coalition among ND, PASOK and Democratic Left parties could be formed today, and also by the G20 statement that implies continued European banking integration and tighter fiscal rules to fight the debt crisis. Market positioning ahead of tomorrow's FOMC statement also plays a role.

GBP initially sold off but quickly recovered against the USD after UK CPI eased further in May to 2.8% from 3.0% y/y. The core figure rose to 2.2% from previous 2.1%. This is the lowest print in over two years and also the first time since 1996 that May monthly CPI fell. Falling fuel prices contributed to the fall. EURGBP pushed higher to 0.8055.

EURUSD saw a similar price action as cable. It dropped to 1.2570 on disappointing ZEW results but within two hours regained all losses and currently trades above 1.2610. German ZEW economic sentiment survey for June dropped 27.7 points to -16.9 from previous 10.8 which is the sharpest fall since 10/1998. Worsening banking sector in Spain and insecurity regarding Greek election contributed to the decline. Current situation sub index declined to 33.2 from 44.1. Economic sentiment index for the Eurozone dropped to -20.1 from previous -2.4.

Spain was able to reach a full take up as it told bonds totaling EUR 3.039 bln vs. EUR 3 bln target. Bid to cover improved but average yields rose rapidly. In case of 12 month bill, the yield reached the highest level since euro inception (5.074% vs. previous 2.985%).

The US session starts at 8:30 am ET with building permits that are seen higher in May at 730K from previous 715K and housing starts that are expected to rise to 720K from 717K. Today also marks the first day of the FOMC meeting.

Canadian wholesale sales that are due at the same time are seen steady in April at 0.4%.

1 of 2 AUDUSD longs hit all targets; Both EURUSD longs & Crude longs were stopped out. Both GBPUSD longs are in progress; USDCAD not yet filled; Gold nearing 1635 target, while other gold long also remains in progress. For direct Access to these trades, click here: Non subscribers can join in here:


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