Intraday Market Thoughts

Euro Resists Poor PMIs, Awaiting US Housing & Philly Fed

by Ashraf Laidi
Jun 21, 2012 13:15

German and Eurozone PMIs weak; UK retail sales rose; Spanish auction. The NY session will bring jobless claims; markit manufacturing PMI; Philly FED and existing home sales. 1 of 2 EURJPY longs hit all targets, so did USDCAD. 8 trades in progress. In these Insights, Ashaf gives the argument for his latest bias on USDJPY. See more below.

The USD is slightly weaker against most currencies except JPY in the ongoing session and major European equity indices are losing about 0.5%.

German manufacturing PMI declined further in June to 44.7 from previous 45.2 and reached a three year low while services PMI fell to a seven month low at 50.3 from 51.8. New business intakes decreased, business outlook dropped into negative territory for the first time in 2012 and manufacturing private employment fell at the fastest rate since 1/2010.

The result for the whole Eurozone was not much better as manufacturing PMI worsened to 44.8 from 45.1 which is 36 month low and services sector slowed the rate of its decline as PMI rose marginally to 46.8 from 46.7. EURUSD dipped back to 2643 before bouncing back to 1.2687.

UK retail sales bounced back sharply in May as they grew 1.4% from April's -2.4%. However, this optimistic result is not likely to change the easing outlook as the BOE is seen extending the asset purchase program by GBP 50 bln at its July meeting. GBPUSD trades around 1.5716.

Spain reached a full take up again as it sold bonds totaling EUR 2.22 bln vs. 1-2 bln target. Cover improved but all average yields rose. Spanish 10 year yields eased from 6.76% session high to current 6.53%.

WTI broke below the 80 mark for the first time since October 2011 and hit 79.93. It erased a part of the loss and currently trades around 80.50.

The US session starts at 8:30 am ET with jobless claims that are seen lower this week at 381K from 386K followed by Markit manufacturing PMI at 9:00 am which is expected to slow in June to 53.4 from 54.0.

Philly FED index and existing home sales are due at 10:00 am and they are anticipated to rise to 0.7 in June from -5.8 and slow to 4.58M from 4.62M respectively. The last Philly Fed survey had unexpectedly tumbled to -5.8 from 8.50, which was the first negative reading since September--when Optn Twist was started.

CAD traders should note May retail sales that are due at 8:30 am ET and are seen lower at 0.2% from 0.4% (core sales higher at 0.3% from 0.1%) and the BOC governor Mark Carney's speech that starts at 11:45 am ET.

One of yesterdays two EURJPY longs hit all targets, USDCAD long hit all targets, while both EURUSD and USDJPY are in progress as is the gold long. Yesterdays Premium Insights PREMIUM INTERMARKET INSIGHTS were issued 20 mins before the Fed decision and are in progress. USDJPY & EURJPY are brought back. Click here for direct access to today's trades. access/?a=657 Non subscribers can click here:


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