http://www.ashraflaidi.com/forex-news/?a=3014
December 30, 2011 06:52 ET: German finance minister ruled out Eurozone breakup; UK house prices fell; Italian PPI rose m/m but declined y/y, Spanish annual CPI lower; France announced bond auction on January 3rd. EURJPY reached decade's low. Progress on Premium trades is found below.
The greenback is consolidating yesterday's gains and trades little changed. European equities are mixed between -0.2% to +0.4%. Relative strength winners are NZD and JPY.
German finance minister Wolfgang Schaeuble said today that Eurozone has the risk of contagion under control and ruled out Eurozone's breakup. He also reiterated that the ESM rescue mechanism will be implemented in Q1 with ESM active in mid-2012.
In the UK, nationwide house prices fell in December -0.2% from previous 0.4% m/m which translates to 1% from 1.6% y/y. Expectations are for weak activity throughout 2012 with flat or modestly lower prices. GBPUSD trades around 1.5450
On the data front, Italian PPI rose in November in line with expectations 0.2% after -0.2% contraction in October which is 4.5% from 4.7% y/y. Spanish annual CPI declined in December to 2.3% from November's 2.9%. Another sobering news came from Greece as October retail sales dropped nearly -11% y/y after -6.5% in September.
Attention on bond auctions is likely to continue as France announced today that it will attempt to sell EUR 4 4.5 bln in 3 month bills, EUR 1.8 2.2 bln 6 month bills and EUR 1.8 2.2 bln 11 month bills on January 3rd, 2012. According to MNI calculation, the total Eurozone bond issuance was EUR 821 bln in 2011.
EURJPY fell below 100 on EBS today for the first time since June 2001. The follow through has been minimal so far and pair recovered to 100.20 level.
Thursdays Premium Intermarket await the 99.80 target in the EURJPY short as well as both shorts in USDCAD. USDJPY hit all targets, while both gold & silver shorts were stopped out as the Aussie shorts. One EURUSD short is in progress. Direct Access http://ashraflaidi.com/ products/ sub01/ access/?a=576 Nonsubscribers can obtain a free 1-week trial here: http://ashraflaidi.com/ products/
There are no fundamental data releases during the NY session.
Wishing everyone a prosperous & healthy New Year
Patrik Urban
Friday, December 30, 2011
Thursday, December 29, 2011
Euro Underperforms Equities Amid Mixed Italy Auction
http://www.ashraflaidi.com/forex-news/?a=3012
December 29, 2011 08:13 ET: Mixed results from today's Italian bond auction; German CPI expected higher m/m; GBPUSD at fresh 13 week low and EURJPY nears 100 level. Market turns to jobless claims, Chicago PMI and pending home sales. Thursday's Premium trades are up (see link below).
Risk aversion stabilizes while EURUSD struggles to regain $1.29 after dipping to 1.2850s. US equity futures are modestly higher.
German December CPI is still being collected but states that have already published their results saw annual inflation in the 1.7% to 2.4% range. Monthly CPI rose 0.5% to 0.7% which is attributed to holiday season. Results for the whole of Germany will be published later today.
Italy sold EUR 7.02 bln (5 to 8.5 bln target) worth of bonds today. The yield was mixed, bonds maturing in 2014 and 2022 saw lower yield while bonds maturing in 2022 and 2018 saw higher yield. Bid to cover was on the weak side between 1.35 and 1.97. The 10 year Italian-German spread widened 13 bps immediately after the auction and stands at 519 bps. Italian business confidence fell in December to 92.5 from previous 94.0.
Thursdays Premium Intermarket Insights include EURUSD, EURJPY, AUDUSD, USDCAD, gold & silver found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=576 Nonsubscribers can obtain a free 1-week trial here: http://ashraflaidi.com/ products/
GBPUSD fell to a fresh 13 week low and reached 1.5360. During the decline, EURGBP jumped to a 0.8395 high.
EURJPY continues to trade about 40 points above the key 100 mark. Stop loss orders have likely accumulated below and given thin liquidity, the pair could plunge should these orders be tripped.
The US session starts at 8:30 am ET with jobless claims that are expected to rise to 372K from previous 364K. Print that would be in line with expectations or better could boost sentiment as prospects for a solid NFP result on Jan 6 would improve.
At 9:45 am ET Chicago PMI is due and is seen lower at 60.4 in December from November's 62.6. Pending home sales that follow at 10:00 am ET are expected to pull back to 1.5% in November after soaring 10.4% in October.
Patrik Urban
December 29, 2011 08:13 ET: Mixed results from today's Italian bond auction; German CPI expected higher m/m; GBPUSD at fresh 13 week low and EURJPY nears 100 level. Market turns to jobless claims, Chicago PMI and pending home sales. Thursday's Premium trades are up (see link below).
Risk aversion stabilizes while EURUSD struggles to regain $1.29 after dipping to 1.2850s. US equity futures are modestly higher.
German December CPI is still being collected but states that have already published their results saw annual inflation in the 1.7% to 2.4% range. Monthly CPI rose 0.5% to 0.7% which is attributed to holiday season. Results for the whole of Germany will be published later today.
Italy sold EUR 7.02 bln (5 to 8.5 bln target) worth of bonds today. The yield was mixed, bonds maturing in 2014 and 2022 saw lower yield while bonds maturing in 2022 and 2018 saw higher yield. Bid to cover was on the weak side between 1.35 and 1.97. The 10 year Italian-German spread widened 13 bps immediately after the auction and stands at 519 bps. Italian business confidence fell in December to 92.5 from previous 94.0.
Thursdays Premium Intermarket Insights include EURUSD, EURJPY, AUDUSD, USDCAD, gold & silver found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=576 Nonsubscribers can obtain a free 1-week trial here: http://ashraflaidi.com/ products/
GBPUSD fell to a fresh 13 week low and reached 1.5360. During the decline, EURGBP jumped to a 0.8395 high.
EURJPY continues to trade about 40 points above the key 100 mark. Stop loss orders have likely accumulated below and given thin liquidity, the pair could plunge should these orders be tripped.
The US session starts at 8:30 am ET with jobless claims that are expected to rise to 372K from previous 364K. Print that would be in line with expectations or better could boost sentiment as prospects for a solid NFP result on Jan 6 would improve.
At 9:45 am ET Chicago PMI is due and is seen lower at 60.4 in December from November's 62.6. Pending home sales that follow at 10:00 am ET are expected to pull back to 1.5% in November after soaring 10.4% in October.
Patrik Urban
Wednesday, December 28, 2011
EURUSD Little Changed Despite Robust Italian Auction
http://ashraflaidi.com/t/?h3010
December 28, 2011 08:10 ET: Italian bond auctions sees strong demand that results in lower yield; Swiss KOF weakest since mid 2009. Market continues to trade in narrow ranges. No data is due in NY session. US equity futures are up 0.25-0.30%. Our latest Premium trades on EURUSD, AUDUSD, USDCAD, gold & silver are found in the link below.
Despite low volatility and narrow ranges, the greenback is slightly weaker in the ongoing session. European equities are higher between 0.3% to 0.7% and the relative strength winners are NZD followed by CAD.
Results from Italian bond auction helped to improve sentiment as Italy sold EUR 9 bln (9 bln target) worth of 6 month bills with average yield considerably lower at 3.251% from previous 6.504%. Bid to cover also improved to 1.62 from 1.47. The Italian treasury also sold EUR 1.73 bln (1.5 2.5 bln target) of 2013 CTZ bonds with 4.853% yield compared to previous 7.814%. Bid to cover also improved to 2.236 from previous 1.59. Lower yield and good demand could imply that ECB's LTRO is being received well and at least temporarily calmed investors. EURUSD trades little changed around 1.3070.
Latest Premium Intermarket Insights include trades on EURUSD, EURJPY, AUDUSD, USDCAD, gold & silver found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=575 Nonsubscribers can obtain a free 1-week trial here: http://ashraflaidi.com/ products/
Swiss KOF leading indicator fell in December to 0.01 from November's 0.34 which is the weakest print since mid 2009 and marks 8th month of gradual deterioration. CHF ignored the news and trades slightly stronger against the EUR at 1.2198 and also the USD at 0.9330.
WTI pushed nearly to 101.60 earlier during the session which underpinned the CAD. USDCAD fell from 1.02 to 1.0163. Despite higher oil, gold and silver remain under pressure.
Patrik Urban
December 28, 2011 08:10 ET: Italian bond auctions sees strong demand that results in lower yield; Swiss KOF weakest since mid 2009. Market continues to trade in narrow ranges. No data is due in NY session. US equity futures are up 0.25-0.30%. Our latest Premium trades on EURUSD, AUDUSD, USDCAD, gold & silver are found in the link below.
Despite low volatility and narrow ranges, the greenback is slightly weaker in the ongoing session. European equities are higher between 0.3% to 0.7% and the relative strength winners are NZD followed by CAD.
Results from Italian bond auction helped to improve sentiment as Italy sold EUR 9 bln (9 bln target) worth of 6 month bills with average yield considerably lower at 3.251% from previous 6.504%. Bid to cover also improved to 1.62 from 1.47. The Italian treasury also sold EUR 1.73 bln (1.5 2.5 bln target) of 2013 CTZ bonds with 4.853% yield compared to previous 7.814%. Bid to cover also improved to 2.236 from previous 1.59. Lower yield and good demand could imply that ECB's LTRO is being received well and at least temporarily calmed investors. EURUSD trades little changed around 1.3070.
Latest Premium Intermarket Insights include trades on EURUSD, EURJPY, AUDUSD, USDCAD, gold & silver found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=575 Nonsubscribers can obtain a free 1-week trial here: http://ashraflaidi.com/ products/
Swiss KOF leading indicator fell in December to 0.01 from November's 0.34 which is the weakest print since mid 2009 and marks 8th month of gradual deterioration. CHF ignored the news and trades slightly stronger against the EUR at 1.2198 and also the USD at 0.9330.
WTI pushed nearly to 101.60 earlier during the session which underpinned the CAD. USDCAD fell from 1.02 to 1.0163. Despite higher oil, gold and silver remain under pressure.
Patrik Urban
Tuesday, December 27, 2011
Consumer Confidence & Latest Premium Trades
http://ashraflaidi.com/t/?h3008
December 27, 2011 07:12 ET: USD is little changed as markets continue to trade in a narrow range. European equities are higher by about 0.5% and the relative strength winner is CHF. US consumer confidence & housing prices are due. Link to latest Premium trades is found below.
The only fundamental news out of Europe this morning was Swiss UBS consumption indicator that fell in November to 0.81 from previous 0.9. The Franc sold on the news but quickly recovered its losses and is currently trading stronger against the EUR and the USD as well. EURCHF trades right above 1.22 support while USDCHF trades near 0.9330.
An interesting development came yesterday when China and Japan unveiled a currency deal that allows their companies to exchange Chinese currency Yuan directly into Japanese Yen without having to use USD in the process. This step will cut costs between two major Asian economies, boost trade and strengthen Yuan's global role. It will also allow Japanese firms to raise a debt that is denominated in Chinese Yuan (CNY). CNY closed today at 6.3223 against the USD, slightly lower compared to Monday's 6.3198.
Pressure on periphery bonds is reappearing again as Italian 10 year yield moved back above 7% and reached 7.14% high. Italian-German spread reached 5.20% high before pulling back to 5.14%.
Tuesdays Premium Intermarket Insights are found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=575 Nonsubscribers can obtain a free 1-week trial here: http://ashraflaidi.com/ products/
With UK and Canada still on holidays, volatility is likely to remain subdued.
The NY session will bring S&P/CS composite index due at 9:00 am ET which is seen lower at -3.2% in October from -3.59% in September followed by December consumer confidence and Richmond FED manufacturing due at 10:00 am.
US Dec Consumer confidence is expected to rise to 58.5 from 56 while manufacturing sector in Richmond is anticipated higher at 6 from previous 0. This could be the first month with positive growth indicating improving conditions since June.
Patrik Urban
December 27, 2011 07:12 ET: USD is little changed as markets continue to trade in a narrow range. European equities are higher by about 0.5% and the relative strength winner is CHF. US consumer confidence & housing prices are due. Link to latest Premium trades is found below.
The only fundamental news out of Europe this morning was Swiss UBS consumption indicator that fell in November to 0.81 from previous 0.9. The Franc sold on the news but quickly recovered its losses and is currently trading stronger against the EUR and the USD as well. EURCHF trades right above 1.22 support while USDCHF trades near 0.9330.
An interesting development came yesterday when China and Japan unveiled a currency deal that allows their companies to exchange Chinese currency Yuan directly into Japanese Yen without having to use USD in the process. This step will cut costs between two major Asian economies, boost trade and strengthen Yuan's global role. It will also allow Japanese firms to raise a debt that is denominated in Chinese Yuan (CNY). CNY closed today at 6.3223 against the USD, slightly lower compared to Monday's 6.3198.
Pressure on periphery bonds is reappearing again as Italian 10 year yield moved back above 7% and reached 7.14% high. Italian-German spread reached 5.20% high before pulling back to 5.14%.
Tuesdays Premium Intermarket Insights are found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=575 Nonsubscribers can obtain a free 1-week trial here: http://ashraflaidi.com/ products/
With UK and Canada still on holidays, volatility is likely to remain subdued.
The NY session will bring S&P/CS composite index due at 9:00 am ET which is seen lower at -3.2% in October from -3.59% in September followed by December consumer confidence and Richmond FED manufacturing due at 10:00 am.
US Dec Consumer confidence is expected to rise to 58.5 from 56 while manufacturing sector in Richmond is anticipated higher at 6 from previous 0. This could be the first month with positive growth indicating improving conditions since June.
Patrik Urban
Friday, December 23, 2011
10 Year Gilt Yield At Record Lows Below 2%
http://www.ashraflaidi.com/forex-news/?a=3006
December 23, 2011 08:26 ET: UK net mortgage lending at record low, new mortgage approvals decline. Index of services fell, 10 year Gilt yield at lows. SNB reassures 1.20 floor for EURCHF. Durable goods, personal income and spending and Canadian GDP are next.
Currencies are trading in narrow ranges ahead of Christmas break. European equities rose by about 0.6% to 1%. Many European exchanges close early today, bonds and gold trading will end one hour earlier than usual so liquidity is likely to be thin.
UK net mortgage lending reached a record low in November at GBP 0.32 bln from October's GBP 0.825 bln. New mortgage approvals declined slightly to 34.78K from previous 35.2K. The index of services declined to -0.7% in October from a previous unchanged print which pushed the 10 year Gilt yield to record low below 2%.GBPUSD has been stuck within 1.5650 1.5720 range for a few days and it currently trades around 1.5670.
Quarterly SNB bulleting reiterated that the SNB will enforce EURCHF floor at 1.20 and is ready to take further measures if needed. EURCHF is slightly higher trading around 1.2235 after it found support at 1.22.
The NY session will kick off at 8:30 am ET with durable goods orders that are seen higher in November at 2% from previous -0.5%. Personal income is expected steady at 0.4% and personal spending should rise to 0.3% from 0.1%.
Canadian GDP which is due at the same time should rise in November 0.1% from 0.2% m/m and 2.7% from previous 3% y/y. USDCAD has been steadily falling since 12/19 and trades below 1.02.
November new home sales due at 10:00 am is anticipated higher at 315K from previous 307K.
Patrik Urban
December 23, 2011 08:26 ET: UK net mortgage lending at record low, new mortgage approvals decline. Index of services fell, 10 year Gilt yield at lows. SNB reassures 1.20 floor for EURCHF. Durable goods, personal income and spending and Canadian GDP are next.
Currencies are trading in narrow ranges ahead of Christmas break. European equities rose by about 0.6% to 1%. Many European exchanges close early today, bonds and gold trading will end one hour earlier than usual so liquidity is likely to be thin.
UK net mortgage lending reached a record low in November at GBP 0.32 bln from October's GBP 0.825 bln. New mortgage approvals declined slightly to 34.78K from previous 35.2K. The index of services declined to -0.7% in October from a previous unchanged print which pushed the 10 year Gilt yield to record low below 2%.GBPUSD has been stuck within 1.5650 1.5720 range for a few days and it currently trades around 1.5670.
Quarterly SNB bulleting reiterated that the SNB will enforce EURCHF floor at 1.20 and is ready to take further measures if needed. EURCHF is slightly higher trading around 1.2235 after it found support at 1.22.
The NY session will kick off at 8:30 am ET with durable goods orders that are seen higher in November at 2% from previous -0.5%. Personal income is expected steady at 0.4% and personal spending should rise to 0.3% from 0.1%.
Canadian GDP which is due at the same time should rise in November 0.1% from 0.2% m/m and 2.7% from previous 3% y/y. USDCAD has been steadily falling since 12/19 and trades below 1.02.
November new home sales due at 10:00 am is anticipated higher at 315K from previous 307K.
Patrik Urban
Thursday, December 22, 2011
US Consumer Weighs on Growth Revision
http://www.ashraflaidi.com/forex-news/?a=3004
December 22, 2011 08:23 ET: US jobless claims hit fresh 3-year lows at 364K, final US Q3 GDP revised down to 1.8% from 2.0% partly due to personal consumption revision to 7% from 2.3%. UK final GDP revised higher q/q; UK current account deficit at record highs; French downgrade rumor reappears again. Market turns to final Q3 GDP, UOM consumer sentiment, leading indicators and house price index.
USD is mixed in the ongoing session. It is weaker against AUD, NZD and CAD. Relative strength winner is AUD. European equities are higher by 1% to 1.4%.
Riskier assets were higher across the board when the rumor about French downgrade reappeared yet again. Markets quickly sold off but were able to recover.
Italian PM and finance minister Mario Monti called for the senate to approve the budget today. He said that passing of the austerity measures means Italy can face the crisis but warns that the situation is still critical.
UK final Q3 GDP was revised higher to 0.6% from 0.5% q/q and remained unrevised at 0.5% y/y. However, Q2 growth was lowered to 0% from 0.1% q/q. Any improvement in sentiment towards the GBP is likely to be negated by current account deficit that widened considerably in Q3 to the highest level on record to GBP 15.2 bln from GBP 7.4 bln. Current account as a proportion to GDP reached 20+ year high. Considering that most analysts predict zero or close to zero growth in Q4, the Q3 revision higher is likely to be quickly forgotten. GBPUSD trades back below 1.57 nevertheless above 1.5650 support.
CHF continues to fall further, albeit at a slow pace, as Swiss finance minister examines further measures to weaken the Franc. However, Swiss parliament has rejected motions that would allow negative interest rates. EURCHF trades around 1.2230, not far from a session highs.
US final Q3 GDP was revised down to 1.8% from 2.0% partly due to personal consumption revision to 7% from 2.3%. US jobless claims hit fresh 3-year lows at 364K. The news is helping stocks to push up further, alongside a boost to oil prices.
The final December university of Michigan consumer sentiment due at 9:55 am ET should see and increase to 68 from initial 67.7.
November leading indicators are seen lower at 0.3% from previous 0.9% and October house price index is expected to decline to 0.2% from 0.9%. Both indicators are due at 10:00 am.
The latest PREMIUM TRADES show Ashrafs strategy of favouring CAD & oil continues to make up for those unfilled trades. Here are is direct access to those remaining trades http://ashraflaidi.com/ products/ sub01/ access/ ?a=573 Non-members, can get a Free Trial here http://ashraflaidi.com/ products/ sub01/
Patrik Urban
December 22, 2011 08:23 ET: US jobless claims hit fresh 3-year lows at 364K, final US Q3 GDP revised down to 1.8% from 2.0% partly due to personal consumption revision to 7% from 2.3%. UK final GDP revised higher q/q; UK current account deficit at record highs; French downgrade rumor reappears again. Market turns to final Q3 GDP, UOM consumer sentiment, leading indicators and house price index.
USD is mixed in the ongoing session. It is weaker against AUD, NZD and CAD. Relative strength winner is AUD. European equities are higher by 1% to 1.4%.
Riskier assets were higher across the board when the rumor about French downgrade reappeared yet again. Markets quickly sold off but were able to recover.
Italian PM and finance minister Mario Monti called for the senate to approve the budget today. He said that passing of the austerity measures means Italy can face the crisis but warns that the situation is still critical.
UK final Q3 GDP was revised higher to 0.6% from 0.5% q/q and remained unrevised at 0.5% y/y. However, Q2 growth was lowered to 0% from 0.1% q/q. Any improvement in sentiment towards the GBP is likely to be negated by current account deficit that widened considerably in Q3 to the highest level on record to GBP 15.2 bln from GBP 7.4 bln. Current account as a proportion to GDP reached 20+ year high. Considering that most analysts predict zero or close to zero growth in Q4, the Q3 revision higher is likely to be quickly forgotten. GBPUSD trades back below 1.57 nevertheless above 1.5650 support.
CHF continues to fall further, albeit at a slow pace, as Swiss finance minister examines further measures to weaken the Franc. However, Swiss parliament has rejected motions that would allow negative interest rates. EURCHF trades around 1.2230, not far from a session highs.
US final Q3 GDP was revised down to 1.8% from 2.0% partly due to personal consumption revision to 7% from 2.3%. US jobless claims hit fresh 3-year lows at 364K. The news is helping stocks to push up further, alongside a boost to oil prices.
The final December university of Michigan consumer sentiment due at 9:55 am ET should see and increase to 68 from initial 67.7.
November leading indicators are seen lower at 0.3% from previous 0.9% and October house price index is expected to decline to 0.2% from 0.9%. Both indicators are due at 10:00 am.
The latest PREMIUM TRADES show Ashrafs strategy of favouring CAD & oil continues to make up for those unfilled trades. Here are is direct access to those remaining trades http://ashraflaidi.com/ products/ sub01/ access/ ?a=573 Non-members, can get a Free Trial here http://ashraflaidi.com/ products/ sub01/
Patrik Urban
Wednesday, December 21, 2011
Euro Tries to Hold on to Strong LTRO Boost
http://www.ashraflaidi.com/forex-news/?a=3000
December 21, 2011 08:01 ET: Riskier assets soared after the LTRO announcement but declined equally quickly; 3 year LTRO allotted nearly EUR 490 bln; MPC minutes reveal unanimous votes, some members note that more QE may be needed. UK net public borrowing soared. Market turns to Canadian retail sales, US existing home sales, Eurozone confidence and later to NZ GDP. New Wednesday Premium Trades are up focus on US crude & CAD.
USD was initially lower across the board, especially immediately after the ECB LTRO was announced. However, sentiment reversed sharply and the USD was able to recover all losses. Biggest relative strength loser is CHF. Major European equities are higher by 0.5% to 1%.
Euro was inching higher ahead of the ECB LTRO announcement. In its first three year LTRO, the ECB allotted EUR 489.2 bln considerably more than expected EUR 300 bln which caused a spike higher in riskier assets. In its three months LTRO, the ECB allotted almost EUR 30 bln. EURUSD soared nearly to the 1.32 figure immediately after the release but has quickly given up its gains perhaps as the market could become concerned that banks would overexpose themselves to the Eurozone debt.
Periphery-German 10 year yield spreads widened again after they narrowed following the ECB announcement. Bunds traders note that low liquidity is causing choppy price action.
BoEs MPC minutes revealed that all members voted to hold rates steady during the 12/8 MPC meeting and that they agreed there was a little merit in changing asset buying. However, some noted that the outlook has deteriorated and that more QE may well be needed. In other news, public sector net borrowing has jumped in November to GBP 15.2 bln from previous GBP 3 bln. However, this increase was expected. GBPUSD trades below 1.57 after reaching a high at 1.5770.
Most of Tuesdays premium longs in Aussie, ES and CAD were unfilled due to rapid market moves, while both of the gold shorts were stopped out. Here are Wednesdays premium trades contain with a focus on oil, Aussie and CAD CAD http://ashraflaidi.com/ products/ sub01/ access/ ?a=573 Nonsubscribers can click here: http://ashraflaidi.com/ products/ sub01/
The NY session starts at 8:30 am ET with Canadian retail sales that are seen lower at 0.5% in October from 1% in September. Core sales are also seen lower at 0.3% from 0.5%.
US existing home sales are due at 10:00 am and are anticipated to rise in November to 5.09M from 4.97M. December Eurozone consumer confidence which is due at the same time is expected to decline to -21 from -20.4
Later in the session at 4:45 pm New Zealand will announce Q3 GDP growth that should reach 0.6% from 0.1% q/q and 2.2% from 1.5% y/y.
Patrik Urban
December 21, 2011 08:01 ET: Riskier assets soared after the LTRO announcement but declined equally quickly; 3 year LTRO allotted nearly EUR 490 bln; MPC minutes reveal unanimous votes, some members note that more QE may be needed. UK net public borrowing soared. Market turns to Canadian retail sales, US existing home sales, Eurozone confidence and later to NZ GDP. New Wednesday Premium Trades are up focus on US crude & CAD.
USD was initially lower across the board, especially immediately after the ECB LTRO was announced. However, sentiment reversed sharply and the USD was able to recover all losses. Biggest relative strength loser is CHF. Major European equities are higher by 0.5% to 1%.
Euro was inching higher ahead of the ECB LTRO announcement. In its first three year LTRO, the ECB allotted EUR 489.2 bln considerably more than expected EUR 300 bln which caused a spike higher in riskier assets. In its three months LTRO, the ECB allotted almost EUR 30 bln. EURUSD soared nearly to the 1.32 figure immediately after the release but has quickly given up its gains perhaps as the market could become concerned that banks would overexpose themselves to the Eurozone debt.
Periphery-German 10 year yield spreads widened again after they narrowed following the ECB announcement. Bunds traders note that low liquidity is causing choppy price action.
BoEs MPC minutes revealed that all members voted to hold rates steady during the 12/8 MPC meeting and that they agreed there was a little merit in changing asset buying. However, some noted that the outlook has deteriorated and that more QE may well be needed. In other news, public sector net borrowing has jumped in November to GBP 15.2 bln from previous GBP 3 bln. However, this increase was expected. GBPUSD trades below 1.57 after reaching a high at 1.5770.
Most of Tuesdays premium longs in Aussie, ES and CAD were unfilled due to rapid market moves, while both of the gold shorts were stopped out. Here are Wednesdays premium trades contain with a focus on oil, Aussie and CAD CAD http://ashraflaidi.com/ products/ sub01/ access/ ?a=573 Nonsubscribers can click here: http://ashraflaidi.com/ products/ sub01/
The NY session starts at 8:30 am ET with Canadian retail sales that are seen lower at 0.5% in October from 1% in September. Core sales are also seen lower at 0.3% from 0.5%.
US existing home sales are due at 10:00 am and are anticipated to rise in November to 5.09M from 4.97M. December Eurozone consumer confidence which is due at the same time is expected to decline to -21 from -20.4
Later in the session at 4:45 pm New Zealand will announce Q3 GDP growth that should reach 0.6% from 0.1% q/q and 2.2% from 1.5% y/y.
Patrik Urban
Tuesday, December 20, 2011
Sentiment Improves On Positive Data And Solid Spanish Auction
German IFO improves, GfK confidence remains steady and PPI slows. Spanish bill auction results in significantly lower yield, UK CBI retail sales improve, Canadian CPI lower. Market turns to housing market data.
The greenback is lower across the board in the ongoing session as positive data improved sentiment. The relative strength winners are NZD, AUD and CHF. Major European equities are higher by about 1%.
The common currency is bid and trades nearly 100 points above today's lows boosted by German IFO business climate that improved in December to 107.2 from previous 106.6. Other components also helped to underpin riskier assets as expectations improved to 98.4 from 97.3 and current assessment remained steady at 116.7 better than expected 116. German PPI rose 5.2% in November, slightly lower compared to previous 5.3% and finally GfK consumer confidence survey remained steady at 5.6.
Another reason for the improved risk appetite came from Spain as it exceeded its target EUR 3.5-4.5 bln and sold EUR 5.64 bln worth of bills today with significantly lower yields compared to the previous auction. 6 month bill sold at 2.43% from previous 5.23% and 3 month bill sold at 1.73% compared to 5.11%. Bid to cover was solid 4.06 and 2.86 respectively. 10 year periphery-German spreads started to narrow immediately after the auction.
In other news, Swedish Riksbank cut its repo rate 25 bps to 1.75% as expected citing slowing economy and deteriorating outlook.
In the UK, December CBI retail sales bested expectations and reached the highest point since May as data improved to +9 in December from previous -19. and Canadian CPI slowed in November to 0.1% from previous 0.2% (core CPI 0.1% from 0.3%) m/m but remained steady at 2.9% (core steady at 2.1%) y/y.
The US session will bring building permits that are seen slightly lower in November at 635K from previous 644K and housing starts that are expected higher at 635K from 628K in October. Both are due at 8:30 am ET.
By the end of the trading session at 4:45 pm ET New Zealand will release current account deficit that should widen in Q3 considerably to NZD -3.77 bln from NZD -0.92 bln.
Patrik Urban
The greenback is lower across the board in the ongoing session as positive data improved sentiment. The relative strength winners are NZD, AUD and CHF. Major European equities are higher by about 1%.
The common currency is bid and trades nearly 100 points above today's lows boosted by German IFO business climate that improved in December to 107.2 from previous 106.6. Other components also helped to underpin riskier assets as expectations improved to 98.4 from 97.3 and current assessment remained steady at 116.7 better than expected 116. German PPI rose 5.2% in November, slightly lower compared to previous 5.3% and finally GfK consumer confidence survey remained steady at 5.6.
Another reason for the improved risk appetite came from Spain as it exceeded its target EUR 3.5-4.5 bln and sold EUR 5.64 bln worth of bills today with significantly lower yields compared to the previous auction. 6 month bill sold at 2.43% from previous 5.23% and 3 month bill sold at 1.73% compared to 5.11%. Bid to cover was solid 4.06 and 2.86 respectively. 10 year periphery-German spreads started to narrow immediately after the auction.
In other news, Swedish Riksbank cut its repo rate 25 bps to 1.75% as expected citing slowing economy and deteriorating outlook.
In the UK, December CBI retail sales bested expectations and reached the highest point since May as data improved to +9 in December from previous -19. and Canadian CPI slowed in November to 0.1% from previous 0.2% (core CPI 0.1% from 0.3%) m/m but remained steady at 2.9% (core steady at 2.1%) y/y.
The US session will bring building permits that are seen slightly lower in November at 635K from previous 644K and housing starts that are expected higher at 635K from 628K in October. Both are due at 8:30 am ET.
By the end of the trading session at 4:45 pm ET New Zealand will release current account deficit that should widen in Q3 considerably to NZD -3.77 bln from NZD -0.92 bln.
Patrik Urban
Monday, December 19, 2011
Awaiting Draghi's Testimony
http://www.ashraflaidi.com/forex-news/?a=2993
December 19, 2011 08:54 ET: European finance ministers hold a conference call; Eurozone current account deficit widened and construction output fell; BoEs Paul Fisher comments weigh in on the GBP. Canadian wholesale sales edge up, NAHB housing market awaited as well as ECB president Mario Draghi's testimony.
USD is mixed in the ongoing US session; weaker against NZD, CAD and CHF and stronger against GBP. The relative strength winner is CAD followed by CHF. Major European equities are higher by about 0.5% to 0.7%.
European finance ministers will hold a conference call today scheduled to begin at 9:30 am ET in which they will discuss EUR 200 bln in bilateral IMF loans and details of the fiscal union, such as stricter budget rules, negotiated at the EU summit on 12/9. Considering that market sentiment deteriorated rapidly after the EU summit, it would be surprising to see any lasting optimism based on the result of today's conference call.
On the data front, Eurozone seasonally adjusted current account deficit widened to EUR -7.5 bln in October from EUR +2.2 bln in September while the non seasonally adjusted deficit widened to EUR -1.7 bln from previous EUR -0.7 bln. Eurozone construction output fell in October -1.4% from previous -1.5% m/m and -2.8% after +0.1% y/y . September was revised lower to -1.5% from -1.3%.
GBP weakened slightly after BOE's policy maker Paul Fisher said that present situation is potentially more dangerous than 2008 and that downside risks from Eurozone are bigger than inflation. He further said that UK banks are not as robust as the BOE would like. GBPUSD oscillates around the 1.55 figure.
Canadian wholesale sales rose 0.9% in October from previous +0.5%. US NAHB housing market index due at 10:00 am ET is seen at 21 in December from 20.
Market volatility could increase at 10:30 am ET when ECB president Mario Draghi testifies before the EU economic and monetary committee. This comes one day after Draghis interview to the FT warning about the consequences of nations leaving the Eurozone as well as the breakup of the single currency area.
7 of Fridays Premium trades are in progress. 1 EURUSD long & 1 AUDNZD short hit all targets. The latter trade has stood for 2 weeks. Direct access to these trades is found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=571 Non Subscribers can click on here: http://ashraflaidi.com/ products/ sub01/
Patrik Urban
December 19, 2011 08:54 ET: European finance ministers hold a conference call; Eurozone current account deficit widened and construction output fell; BoEs Paul Fisher comments weigh in on the GBP. Canadian wholesale sales edge up, NAHB housing market awaited as well as ECB president Mario Draghi's testimony.
USD is mixed in the ongoing US session; weaker against NZD, CAD and CHF and stronger against GBP. The relative strength winner is CAD followed by CHF. Major European equities are higher by about 0.5% to 0.7%.
European finance ministers will hold a conference call today scheduled to begin at 9:30 am ET in which they will discuss EUR 200 bln in bilateral IMF loans and details of the fiscal union, such as stricter budget rules, negotiated at the EU summit on 12/9. Considering that market sentiment deteriorated rapidly after the EU summit, it would be surprising to see any lasting optimism based on the result of today's conference call.
On the data front, Eurozone seasonally adjusted current account deficit widened to EUR -7.5 bln in October from EUR +2.2 bln in September while the non seasonally adjusted deficit widened to EUR -1.7 bln from previous EUR -0.7 bln. Eurozone construction output fell in October -1.4% from previous -1.5% m/m and -2.8% after +0.1% y/y . September was revised lower to -1.5% from -1.3%.
GBP weakened slightly after BOE's policy maker Paul Fisher said that present situation is potentially more dangerous than 2008 and that downside risks from Eurozone are bigger than inflation. He further said that UK banks are not as robust as the BOE would like. GBPUSD oscillates around the 1.55 figure.
Canadian wholesale sales rose 0.9% in October from previous +0.5%. US NAHB housing market index due at 10:00 am ET is seen at 21 in December from 20.
Market volatility could increase at 10:30 am ET when ECB president Mario Draghi testifies before the EU economic and monetary committee. This comes one day after Draghis interview to the FT warning about the consequences of nations leaving the Eurozone as well as the breakup of the single currency area.
7 of Fridays Premium trades are in progress. 1 EURUSD long & 1 AUDNZD short hit all targets. The latter trade has stood for 2 weeks. Direct access to these trades is found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=571 Non Subscribers can click on here: http://ashraflaidi.com/ products/ sub01/
Patrik Urban
Friday, December 16, 2011
Appetite Rebounds, Italy Passes Austerity, CPI Next
http://www.ashraflaidi.com/forex-news/?a=2989
December 16, 2011 07:52 ET: Italian Lower House approves austerity, German FDP support leaders backing ESM; Eurozone trade surplus decline; Euro stabilizes on improved appetite, AUDUSD above parity, gold above 1600, CHF consolidates yesterday's gains. Focus turns to consumer inflation, two FOMC members' speeches and Canadian international securities transactions.
Improved sentiment combined with position squaring helped to push riskier assets slightly higher throughout the London session. Relative strength winners are NZD and AUD. European indices are mixed between -0.4% to +0.5%.
Event though a referendum among chancellor Merkel's coalition failed to reach the necessary quorum, nearly 55% of those who voted supported party's leaders who back the ESM. German economics minister Roesler said that the FDP remains pro-European and that today's result is a victory for Angela Merkel.
On the data front, Eurozone trade surplus shrank in October to EUR 1.1 bln from previous EUR 2.7 bln. On seasonally adjusted basis it shrank to EUR 0.3 bln from EUR 2.2 bln as imports (+7%) rose faster than exports (+6%). Pro-export Germany saw a 1.7% decline in exports. EURUSD trades firmly above 1.30 but has not been able to break above 1.3045 resistance.
Euro is underpinned by narrowing 10 year spreads. Italy-Germany narrowed to 441 bps while Spain-Germany spread narrowed to 326 bps. However, German 2 year yields only 0.22% while its US counterpart yields 0.23% which may limit EURUSD recovery.
CHF has been consolidating yesterday's gains and continues to trade near its highs despite rumors of SNB selling after EURCHF peg was confirmed at 1.20. EURCHF trades around 1.2230 with reported large stop loss orders sitting below the figure.
The New York session will bring CPI due at 8:30 am ET that is expected to remain steady at 3.5% y/y (+0.1% from -0.1% m/m). Core CPI is also seen steady at 2.1% y/y and 0.1% from 0.1% m/m.
Canadian international securities transactions also due at 8:30 am ET are expected to rise to CAD 8.23 bln from previous CAD 7.35 bln
The market volatility could also increase at 11:15 am and at 12:00 pm when Chicago Fed president and FOMC member Charles Evans and Dallas Fed president and FOMC member Richard Fisher deliver their speeches.
Patrik Urban
December 16, 2011 07:52 ET: Italian Lower House approves austerity, German FDP support leaders backing ESM; Eurozone trade surplus decline; Euro stabilizes on improved appetite, AUDUSD above parity, gold above 1600, CHF consolidates yesterday's gains. Focus turns to consumer inflation, two FOMC members' speeches and Canadian international securities transactions.
Improved sentiment combined with position squaring helped to push riskier assets slightly higher throughout the London session. Relative strength winners are NZD and AUD. European indices are mixed between -0.4% to +0.5%.
Event though a referendum among chancellor Merkel's coalition failed to reach the necessary quorum, nearly 55% of those who voted supported party's leaders who back the ESM. German economics minister Roesler said that the FDP remains pro-European and that today's result is a victory for Angela Merkel.
On the data front, Eurozone trade surplus shrank in October to EUR 1.1 bln from previous EUR 2.7 bln. On seasonally adjusted basis it shrank to EUR 0.3 bln from EUR 2.2 bln as imports (+7%) rose faster than exports (+6%). Pro-export Germany saw a 1.7% decline in exports. EURUSD trades firmly above 1.30 but has not been able to break above 1.3045 resistance.
Euro is underpinned by narrowing 10 year spreads. Italy-Germany narrowed to 441 bps while Spain-Germany spread narrowed to 326 bps. However, German 2 year yields only 0.22% while its US counterpart yields 0.23% which may limit EURUSD recovery.
CHF has been consolidating yesterday's gains and continues to trade near its highs despite rumors of SNB selling after EURCHF peg was confirmed at 1.20. EURCHF trades around 1.2230 with reported large stop loss orders sitting below the figure.
The New York session will bring CPI due at 8:30 am ET that is expected to remain steady at 3.5% y/y (+0.1% from -0.1% m/m). Core CPI is also seen steady at 2.1% y/y and 0.1% from 0.1% m/m.
Canadian international securities transactions also due at 8:30 am ET are expected to rise to CAD 8.23 bln from previous CAD 7.35 bln
The market volatility could also increase at 11:15 am and at 12:00 pm when Chicago Fed president and FOMC member Charles Evans and Dallas Fed president and FOMC member Richard Fisher deliver their speeches.
Patrik Urban
Thursday, December 15, 2011
FX Stabilizes Ahead of Busy US Session
http://www.ashraflaidi.com/forex-news/?a=2986
December 15, 2011 07:57 ET: Eurozone CPI remains at 3% and core at 1.6%, quarterly employment declined; GBPUSD slightly stronger despite falling CBI industrial orders; CHF rose after SNB kept floor at 1.20. NY session will bring PPI, empire state manufacturing, TIC data, industrial orders and Philly fed manufacturing. Link to latest Premium Trades & Cyclical Charts is below.
USD consolidates recent gains and it is only little changed against most majors. The one exception is CHF against which the USD is noticeably weaker. The relative strength winners are NZD and CHF. Major European equity indices are higher by about 0.5% to 1%.
Spain sold over EUR 6 bln worth of debt today, considerably above its EUR 3.5 bln target. In its largest auction today, it sold EUR 2.45 bln January 2016 bonds with significantly lower yield 4.02% from previous 5.27%. However, bid to cover fell to 1.99 from previous 2.83. Relatively decent auction helped the Euro to recover a part of its losses as it trades around 1.30, about 50 points above today's low.
In his speech in Berlin, the ECB president Mario Draghi said that the deposit facility is at the same levels as after Lehman Brothers collapsed and that funding pressure will continue to exist not only for banks but also corporates. The ECB president expects that reserve ratio cut freed up to EUR 100 bln in liquidity.
On the data front, Eurozone headline consumer inflation remained at 3% and core CPI stayed at 1.6% in November. Eurozone quarterly employment contracted by -0.1% from 0.2%.
GBPUSD has rallied back above 1.55 despite UK CBI industrial order expectations falling further in December to -23 from November's -19. Total orders fell to the lowest point since 10/2010 and export orders dropped to lowest point in nearly two years.
EURCHF dropped sharply from nearly 1.24 to 1.2250 after SNB kept its floor at 1.20 and reiterated that it will defend the cap with utmost determination. The SNB still sees the Franc as overvalued but SNB Chairman Hildebrand noted that the cap has corrected massive Franc overvaluation. The SNB has kept its libor rate below 0.25%.
The NY session has a busy calendar today. 8:30 am ET will bring PPI which is expected to rise 0.2% in November from -0.3% m/m (2.9% from 2.8% y/y); jobless claims are seen slightly higher at 389K from 381K; Empire state manufacturing index should rise in December to 3 from 0.6.
Net TIC flows due at 9:00 am are expected decline to USD 53.4 bln in October from USD 68.6 bln in September and industrial production due at 9:15 am ET is anticipated to rise mere 0.1% in November from previous 0.7% rise.
The last data release for today is Philly Fed manufacturing due at 10:00 am which is seen higher in December at 5 from November's 3.6.
There are 12 new Premium trades from Thursday night, which can be accessed directly at http://ashraflaidi.com/ products/ sub01/ access/ ?a=570 Non-Subscribers can click here to join: http://ashraflaidi.com/ products/
Patrik Urban
December 15, 2011 07:57 ET: Eurozone CPI remains at 3% and core at 1.6%, quarterly employment declined; GBPUSD slightly stronger despite falling CBI industrial orders; CHF rose after SNB kept floor at 1.20. NY session will bring PPI, empire state manufacturing, TIC data, industrial orders and Philly fed manufacturing. Link to latest Premium Trades & Cyclical Charts is below.
USD consolidates recent gains and it is only little changed against most majors. The one exception is CHF against which the USD is noticeably weaker. The relative strength winners are NZD and CHF. Major European equity indices are higher by about 0.5% to 1%.
Spain sold over EUR 6 bln worth of debt today, considerably above its EUR 3.5 bln target. In its largest auction today, it sold EUR 2.45 bln January 2016 bonds with significantly lower yield 4.02% from previous 5.27%. However, bid to cover fell to 1.99 from previous 2.83. Relatively decent auction helped the Euro to recover a part of its losses as it trades around 1.30, about 50 points above today's low.
In his speech in Berlin, the ECB president Mario Draghi said that the deposit facility is at the same levels as after Lehman Brothers collapsed and that funding pressure will continue to exist not only for banks but also corporates. The ECB president expects that reserve ratio cut freed up to EUR 100 bln in liquidity.
On the data front, Eurozone headline consumer inflation remained at 3% and core CPI stayed at 1.6% in November. Eurozone quarterly employment contracted by -0.1% from 0.2%.
GBPUSD has rallied back above 1.55 despite UK CBI industrial order expectations falling further in December to -23 from November's -19. Total orders fell to the lowest point since 10/2010 and export orders dropped to lowest point in nearly two years.
EURCHF dropped sharply from nearly 1.24 to 1.2250 after SNB kept its floor at 1.20 and reiterated that it will defend the cap with utmost determination. The SNB still sees the Franc as overvalued but SNB Chairman Hildebrand noted that the cap has corrected massive Franc overvaluation. The SNB has kept its libor rate below 0.25%.
The NY session has a busy calendar today. 8:30 am ET will bring PPI which is expected to rise 0.2% in November from -0.3% m/m (2.9% from 2.8% y/y); jobless claims are seen slightly higher at 389K from 381K; Empire state manufacturing index should rise in December to 3 from 0.6.
Net TIC flows due at 9:00 am are expected decline to USD 53.4 bln in October from USD 68.6 bln in September and industrial production due at 9:15 am ET is anticipated to rise mere 0.1% in November from previous 0.7% rise.
The last data release for today is Philly Fed manufacturing due at 10:00 am which is seen higher in December at 5 from November's 3.6.
There are 12 new Premium trades from Thursday night, which can be accessed directly at http://ashraflaidi.com/ products/ sub01/ access/ ?a=570 Non-Subscribers can click here to join: http://ashraflaidi.com/ products/
Patrik Urban
Wednesday, December 14, 2011
EURUSD at 1.2960, Rumours of French Downgrade
http://www.ashraflaidi.com/forex-news/?a=2982
December 14, 2011 07:39 ET: EURUSD hit $1.2970s, UK labor market data mixed; Swiss ZEW declined; Eurozone industrial production lower. Italian auction results in higher yield and lower cover but reaches intended target. NY session will bring import prices, Canadian leading indicators and manufacturing sales. Here is Ashraf's interview in later September making the case for $1.29 by year-end http://youtu.be/ wSodzBHN7Y4
USD is higher across the board as the attack on the Euro continues. EURUSD breaks below 1.30 at lowest since January 2011. European equities are losing -0.8 to -1.5%.
Rumours of a France downgrade are swirling again as markets await the reaction by S&P to the EU Summit. But French 10-yr yields are actually down at 3.19%, while the spread w/ German 10 yr yields is 1.23% from the 1.90% high reached in Nov.
In the UK, claimant count rate remained at 5% in November while jobless claims reached 3K from previous 2.5K. Even though the claims were significantly below expectations of 14K, the total number of claimants reached the highest level in nearly two years. The ILO unemployment rate kept steady at 8.3%. According to the Office for Budget Responsibility, the unemployment would reach 8.7% in 2012. GBPUSD moved higher on the release but has since lost its gains and trades below 1.55
Swiss ZEW economic expectations index dropped in December to -72 from previous -64.3 supporting the expectations of a sharp slowdown. Somewhat surprisingly, 70% of surveyed experts are expecting the price level to remain steady. The eagerly awaited SNB meeting which could possibly result in an increase of the EURCHF peg is due tomorrow at 3:30 am ET. EURCHF trades firmly above 1.23
Eurozone industrial production declined in October -0.1% after it declined -2.0% in September which translates to 1.3% from 2.2% annual growth.
Italy was able to sell EUR 3 bln 2016 BTP reaching its intended target amount. However, the average yield increased to 6.47% from previous 6.29% while bid to cover declined to 1.42 from 1.47. After the auction, 10 year Italian-German spread increased to over 500bp. Meanwhile, Germany completed 2011 funding with today's auction and sold its 2 year with the lowest yield since Euro introduction.
The New York session kicks off at 8:30 am ET with November import price index that is expected to rise to 1% m/m from previous -0.6% but decline y/y to 10.1% from 11%.
Canadian leading indicators are seen higher in November at 0.4% from 0.2% while manufacturing sales are anticipated lower in October at -0.6% from 2.6%. Both are due also at 8:30 am ET.
Crude oil inventories due at 10:30 am ET are expected to drop -2.2M barrels after growing 1.3M barrels last week.
Patrik Urban
December 14, 2011 07:39 ET: EURUSD hit $1.2970s, UK labor market data mixed; Swiss ZEW declined; Eurozone industrial production lower. Italian auction results in higher yield and lower cover but reaches intended target. NY session will bring import prices, Canadian leading indicators and manufacturing sales. Here is Ashraf's interview in later September making the case for $1.29 by year-end http://youtu.be/ wSodzBHN7Y4
USD is higher across the board as the attack on the Euro continues. EURUSD breaks below 1.30 at lowest since January 2011. European equities are losing -0.8 to -1.5%.
Rumours of a France downgrade are swirling again as markets await the reaction by S&P to the EU Summit. But French 10-yr yields are actually down at 3.19%, while the spread w/ German 10 yr yields is 1.23% from the 1.90% high reached in Nov.
In the UK, claimant count rate remained at 5% in November while jobless claims reached 3K from previous 2.5K. Even though the claims were significantly below expectations of 14K, the total number of claimants reached the highest level in nearly two years. The ILO unemployment rate kept steady at 8.3%. According to the Office for Budget Responsibility, the unemployment would reach 8.7% in 2012. GBPUSD moved higher on the release but has since lost its gains and trades below 1.55
Swiss ZEW economic expectations index dropped in December to -72 from previous -64.3 supporting the expectations of a sharp slowdown. Somewhat surprisingly, 70% of surveyed experts are expecting the price level to remain steady. The eagerly awaited SNB meeting which could possibly result in an increase of the EURCHF peg is due tomorrow at 3:30 am ET. EURCHF trades firmly above 1.23
Eurozone industrial production declined in October -0.1% after it declined -2.0% in September which translates to 1.3% from 2.2% annual growth.
Italy was able to sell EUR 3 bln 2016 BTP reaching its intended target amount. However, the average yield increased to 6.47% from previous 6.29% while bid to cover declined to 1.42 from 1.47. After the auction, 10 year Italian-German spread increased to over 500bp. Meanwhile, Germany completed 2011 funding with today's auction and sold its 2 year with the lowest yield since Euro introduction.
The New York session kicks off at 8:30 am ET with November import price index that is expected to rise to 1% m/m from previous -0.6% but decline y/y to 10.1% from 11%.
Canadian leading indicators are seen higher in November at 0.4% from 0.2% while manufacturing sales are anticipated lower in October at -0.6% from 2.6%. Both are due also at 8:30 am ET.
Crude oil inventories due at 10:30 am ET are expected to drop -2.2M barrels after growing 1.3M barrels last week.
Patrik Urban
Tuesday, December 13, 2011
Will FOMC Inaction Hurt Metals Some More?
December 13, 2011 08:08 ET : UK inflation eases; German and Eurozone ZEW improves; Spanish auction well received; Swiss government lowers GDP and inflation forecast. Market turns to US retail sales, which IBD/TIPP economic optimism and later to FOMC rate announcement. See Ashrafs latest analysis on Gold, Silver & the technical of Gold/Silver Ratio below.
USD drops across board as risk appetite improves, courtesy of better than expected Spanish auctions. Relative strength winners are AUD, NZD and CHF. European equities show nearly 1% gains.
UK inflation pressure continues to ease as anticipated. The CPI declined to 4.8% in November from 5.0% in October while the core CPI declined to 3.2% from 3.4%. The decline is attributed to lower price of food, petrol and clothing. The reaction on GBPUSD was minimal as the result was in line with expectations.
The pressure on the euro may ease in the short term as positive surprises regarding sentiment were released. German ZEW economic sentiment printed -53.8 in December, slightly better than November's -55.2 while its Eurozone's counterpart showed -54.1 from previous -59.1. EURUSD currently trades firmly above 1.32.
Spanish bond auction was well received, further underpinning the Euro. Spain sold EUR 3.44 bln in 12 months bills at 4.05% with bid to cover at 3.1 and additional EUR 1.5 bln of 18 months bills at 4.226% with bid to cover at 5.0. As a consequence, Spanish-German 10 year spread paired back widening seen earlier during the session and it currently stands around 409 bps.
The Swiss government lowered its forecast for 2012 GDP growth to 0.5% from 0.9% and sees deflation reaching -0.3% from previous projection of an inflation of +0.3%. Growth should reach 1.9% in 2013. On a positive note, if the Eurozone crisis does not worsen, it is projected that the downturn is expected to be relatively short. Considering the projected deflation and recent SNB comments that the Franc is still overvalued, the rumors that the SNB will increase the EURCHF peg on Thursday gained credibility.
The US session starts at 8:30 am ET with November retail sales that are seen higher at 0.6% from previous 0.5%. However, core sales are expected to decline to 0.5% from previous 0.6%.
IBD/TIPP economic optimism index due at 10:00 am is anticipated to rise to 42.6 in December from previous 40.6.
The key event will come at 2:15 pm ET when the FOMC delivers its statement. The fed funds rate will remain below 0.25%. Given the recent improvements in US data, mainly lower unemployment rate, the FED is unlikely to hint new easing measures and will instead adopt the wait and see approach.
See Ashrafs latest analysis on GOLD, SILVER & GOLD/SILVER Ratio Technicals here: http://ashraflaidi.com/ hot-chart/ ?a=2977
Patrik Urban
USD drops across board as risk appetite improves, courtesy of better than expected Spanish auctions. Relative strength winners are AUD, NZD and CHF. European equities show nearly 1% gains.
UK inflation pressure continues to ease as anticipated. The CPI declined to 4.8% in November from 5.0% in October while the core CPI declined to 3.2% from 3.4%. The decline is attributed to lower price of food, petrol and clothing. The reaction on GBPUSD was minimal as the result was in line with expectations.
The pressure on the euro may ease in the short term as positive surprises regarding sentiment were released. German ZEW economic sentiment printed -53.8 in December, slightly better than November's -55.2 while its Eurozone's counterpart showed -54.1 from previous -59.1. EURUSD currently trades firmly above 1.32.
Spanish bond auction was well received, further underpinning the Euro. Spain sold EUR 3.44 bln in 12 months bills at 4.05% with bid to cover at 3.1 and additional EUR 1.5 bln of 18 months bills at 4.226% with bid to cover at 5.0. As a consequence, Spanish-German 10 year spread paired back widening seen earlier during the session and it currently stands around 409 bps.
The Swiss government lowered its forecast for 2012 GDP growth to 0.5% from 0.9% and sees deflation reaching -0.3% from previous projection of an inflation of +0.3%. Growth should reach 1.9% in 2013. On a positive note, if the Eurozone crisis does not worsen, it is projected that the downturn is expected to be relatively short. Considering the projected deflation and recent SNB comments that the Franc is still overvalued, the rumors that the SNB will increase the EURCHF peg on Thursday gained credibility.
The US session starts at 8:30 am ET with November retail sales that are seen higher at 0.6% from previous 0.5%. However, core sales are expected to decline to 0.5% from previous 0.6%.
IBD/TIPP economic optimism index due at 10:00 am is anticipated to rise to 42.6 in December from previous 40.6.
The key event will come at 2:15 pm ET when the FOMC delivers its statement. The fed funds rate will remain below 0.25%. Given the recent improvements in US data, mainly lower unemployment rate, the FED is unlikely to hint new easing measures and will instead adopt the wait and see approach.
See Ashrafs latest analysis on GOLD, SILVER & GOLD/SILVER Ratio Technicals here: http://ashraflaidi.com/ hot-chart/ ?a=2977
Patrik Urban
Monday, December 12, 2011
Euro Adds to Losses, Swiss Premium Piece
http://www.ashraflaidi.com/forex-news/?a=2972
December 12, 2011 08:15 ET: Euro Deepens Sell-off S&P to decide on Ezone downgrades in coming days; German WPI lower; Swiss employment higher; Italy sells 1 year bill with lower yield; French auction later today. The US session brings federal budget deficit data. See out extensive Premium piece on the CHF & one way to exploit franc weakness ahead of Thursdays quarterly SNB meeting.
Relatively tight ranges seen during the Asian session were broken when London traders got to their desks and started to buy the greenback. The USD is higher across the board and European equities are losing slightly less than 1%.
It seems that Friday's EU summit with its new treaty was quickly forgotten as traders continue to sell the common currency. EURGBP trades just a few points above the critical support given by November 10th low at 0.8485 and should this level be broken, the market would target the support zone around 0.8350 and in extension even 0.8150. On the back of the EURGBP selloff, GBPUSD jumped from 1.5540 to above 1.56.
S&P head in France Carol Sirou said that the S&P will decide whether to downgrade Eurozone countries in coming days so it is reasonable to assume that as long as the rating downgrade looms the willingness to open long Euro positions will be slim.
Latest Premium piece on trading CHF Fundamentals & Technicals ahead of Thursdays SNB meeting is found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=56
The European economic calendar was light today. German November WPI printed 4.9% y/y, marginally lower from previous 5% and Swiss employment level rose to 4.05M in Q3 up from previous 4.02M.
Italian treasury was able to sell EUR 7 bln in 1 year bills with 5.952% yield, slightly lower compared to previous 6.087% with bid to cover at 1.925. Despite the lower yield, EURUSD continues to trade heavy bellow 1.33. French bond auction is scheduled for later today and given the downgrade threat, the risks of higher yields and/or low demand are high.
The US data is limited to the federal budget deficit due at 2:00 pm which is expected to widen in November rather substantially to USD -138.5 bln from previous USD -98.5 bln.
CAD traders should pay attention at 1:10 pm when BOC governor Mark Carney delivers a speech on Canadian economic developments in Toronto and also at 2:10 pm when he holds a press conference.
Patrik Urban
December 12, 2011 08:15 ET: Euro Deepens Sell-off S&P to decide on Ezone downgrades in coming days; German WPI lower; Swiss employment higher; Italy sells 1 year bill with lower yield; French auction later today. The US session brings federal budget deficit data. See out extensive Premium piece on the CHF & one way to exploit franc weakness ahead of Thursdays quarterly SNB meeting.
Relatively tight ranges seen during the Asian session were broken when London traders got to their desks and started to buy the greenback. The USD is higher across the board and European equities are losing slightly less than 1%.
It seems that Friday's EU summit with its new treaty was quickly forgotten as traders continue to sell the common currency. EURGBP trades just a few points above the critical support given by November 10th low at 0.8485 and should this level be broken, the market would target the support zone around 0.8350 and in extension even 0.8150. On the back of the EURGBP selloff, GBPUSD jumped from 1.5540 to above 1.56.
S&P head in France Carol Sirou said that the S&P will decide whether to downgrade Eurozone countries in coming days so it is reasonable to assume that as long as the rating downgrade looms the willingness to open long Euro positions will be slim.
Latest Premium piece on trading CHF Fundamentals & Technicals ahead of Thursdays SNB meeting is found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=56
The European economic calendar was light today. German November WPI printed 4.9% y/y, marginally lower from previous 5% and Swiss employment level rose to 4.05M in Q3 up from previous 4.02M.
Italian treasury was able to sell EUR 7 bln in 1 year bills with 5.952% yield, slightly lower compared to previous 6.087% with bid to cover at 1.925. Despite the lower yield, EURUSD continues to trade heavy bellow 1.33. French bond auction is scheduled for later today and given the downgrade threat, the risks of higher yields and/or low demand are high.
The US data is limited to the federal budget deficit due at 2:00 pm which is expected to widen in November rather substantially to USD -138.5 bln from previous USD -98.5 bln.
CAD traders should pay attention at 1:10 pm when BOC governor Mark Carney delivers a speech on Canadian economic developments in Toronto and also at 2:10 pm when he holds a press conference.
Patrik Urban
Friday, December 9, 2011
EUR Rebounds on Looming Treaty Deal
http://www.ashraflaidi.com/forex-news/?a=2966
December 9, 2011 08:06 ET: Eurozone members to sign a new treaty; ECB weekly bond purchases capped at EUR 20 bln; Bundesbank open to IMF loans; UK producer inflation slowing; UK trade deficit narrows at the fastest pace. Market turns to US and Canadian trade deficit and UoM consumer confidence.
USD weakens across the board as EU summit progresses and risk appetite returns to the market. The relative strength winners are GBP, EUR and NZD. Major European equity indices show about 0.5% to 1% gains.
All 17 members of the Eurozone and 23 out of 27 members of the European Union agreed to a new treaty that assures deeper integration and stricter fiscal rules. The UK did not sign the proposed amendments to the EU treaty while three other EU members are still considering participation. Chancellor Merkel said that this new treaty would become the foundation of a fiscal and stability union. EURUSD reached 1.3430 after it fell to 1.3282 earlier during the session.
One factor that significantly contributed to the improving sentiment was a report published by Dow Jones that said that the BundesBank was "fundamentally open" to bilateral loans to the IMF. The loans could not be marked for the Eurozone but as crisis loans.
Also noteworthy was a report that the ECB purchases of sovereign bonds would be capped at EUR 20 bln per week. Italian 10 year yield jumped back above 7% and the German-Italian spread widened to over 5%.
In the UK, PPI input prices rose 13.4% in November y/y which is lower from previous 14.3% while output prices rose 5.4% y/y down from October's 5.7% confirming that inflation pressure is easing. UK trade deficit narrowed at the fastest pace on record in October to GBP -7.6 bln from previous GBP -10.2 bln as exports soared which could help to at least partially offset declines in manufacturing, industrial and construction output in Q4 GDP calculation. October construction output declined sharply -2.5% m/m and +2.7 y/y. GBPUSD trades firmly above 1.57.
The NY session starts at 8:30 am ET with a trade deficit that is expected to widen slightly to USD -44 bln in October from previous USD -43.1 bln. Preliminary December UOM consumer confidence due at 9:55 am ET is seen higher at 65.8 from previous 64.1.
Canadian data will include trade balance due at 8:30 am that is anticipated to show a surplus of CAD 0.7 bln in October, somewhat lower compared to September's CAD 1.2 bln. Labor productivity which is due at the same time should grow 0.4% in Q3 after -0.9% contraction in Q2.
ES, Gold, US crude, USDCAD and silver shorts remain in progress. Oil shorts missed target by 5 cents, while all EURUSD shorts are done. Direct access here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=567 Non Subscribers can click here: http://ashraflaidi.com/ products/ sub01/
Patrik Urban
December 9, 2011 08:06 ET: Eurozone members to sign a new treaty; ECB weekly bond purchases capped at EUR 20 bln; Bundesbank open to IMF loans; UK producer inflation slowing; UK trade deficit narrows at the fastest pace. Market turns to US and Canadian trade deficit and UoM consumer confidence.
USD weakens across the board as EU summit progresses and risk appetite returns to the market. The relative strength winners are GBP, EUR and NZD. Major European equity indices show about 0.5% to 1% gains.
All 17 members of the Eurozone and 23 out of 27 members of the European Union agreed to a new treaty that assures deeper integration and stricter fiscal rules. The UK did not sign the proposed amendments to the EU treaty while three other EU members are still considering participation. Chancellor Merkel said that this new treaty would become the foundation of a fiscal and stability union. EURUSD reached 1.3430 after it fell to 1.3282 earlier during the session.
One factor that significantly contributed to the improving sentiment was a report published by Dow Jones that said that the BundesBank was "fundamentally open" to bilateral loans to the IMF. The loans could not be marked for the Eurozone but as crisis loans.
Also noteworthy was a report that the ECB purchases of sovereign bonds would be capped at EUR 20 bln per week. Italian 10 year yield jumped back above 7% and the German-Italian spread widened to over 5%.
In the UK, PPI input prices rose 13.4% in November y/y which is lower from previous 14.3% while output prices rose 5.4% y/y down from October's 5.7% confirming that inflation pressure is easing. UK trade deficit narrowed at the fastest pace on record in October to GBP -7.6 bln from previous GBP -10.2 bln as exports soared which could help to at least partially offset declines in manufacturing, industrial and construction output in Q4 GDP calculation. October construction output declined sharply -2.5% m/m and +2.7 y/y. GBPUSD trades firmly above 1.57.
The NY session starts at 8:30 am ET with a trade deficit that is expected to widen slightly to USD -44 bln in October from previous USD -43.1 bln. Preliminary December UOM consumer confidence due at 9:55 am ET is seen higher at 65.8 from previous 64.1.
Canadian data will include trade balance due at 8:30 am that is anticipated to show a surplus of CAD 0.7 bln in October, somewhat lower compared to September's CAD 1.2 bln. Labor productivity which is due at the same time should grow 0.4% in Q3 after -0.9% contraction in Q2.
ES, Gold, US crude, USDCAD and silver shorts remain in progress. Oil shorts missed target by 5 cents, while all EURUSD shorts are done. Direct access here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=567 Non Subscribers can click here: http://ashraflaidi.com/ products/ sub01/
Patrik Urban
Thursday, December 8, 2011
BOE Keeps Rates Steady; ECB Is Next
The BOE kept rates unchanged and did not increase QE; The ECB rate announcement is next followed by a press conference at 8:30 am. NY session will bring jobless claims, wholesale inventories and Canadian housing starts.
Markets have been trading within relatively tight ranges throughout the Asian and London sessions as traders positioned themselves for the BOE and especially the ECB rate announcements. Main European equities are in red but only marginally.
Despite worsening fundamentals, the BOE chose the wait and see approach and kept rates steady at 0.5% as expected and did not increase the Asset Purchase Facility that stands at GBP 275 bln. Two weeks ago, the OECD noted that further QE by the BOE is warranted and projects that the APF will be increased to GBP 400 bln. The next MPC meeting is on January 12th.
At 7:45 am ET the ECB will announce their rate decision. In a Bloomberg poll, 54 out of 58 economists expect the benchmark rate to be lowered by 25 bp to 1%. Other measures to stimulate bank lending and to cope with the ongoing crisis are also expected to be announced. On 11/30 MNI reported that sources within the ECB had claimed that the central bank is ready to be more flexible with respect to possible rate cuts, collateral framework and bond purchases. Reports also suggest that the ECB could offer 2 or even 3 year loans.
As usual, the ECB press conference which causes a significant volatility is scheduled to start 45 minutes after the announcement at 8:30 am ET. Keep in mind that the EU summit starts today and any remarks about the likelihood of an approval of reforms leading to a fiscal union might underpin the common currency.
The NY session data will include Canadian housing starts due at 8:15 am that are anticipated lower in November at 200K from 208K, US jobless claims are due at 8:30 am and are seen lower at 397K from previous 402K and wholesales inventories that are expected to rise 0.4% in October from previous -0.1%.
CAD traders should also note that the BOC will release its Financial System Review at 10:30 am so the volatility is likely to increase.
Patrik Urban
Markets have been trading within relatively tight ranges throughout the Asian and London sessions as traders positioned themselves for the BOE and especially the ECB rate announcements. Main European equities are in red but only marginally.
Despite worsening fundamentals, the BOE chose the wait and see approach and kept rates steady at 0.5% as expected and did not increase the Asset Purchase Facility that stands at GBP 275 bln. Two weeks ago, the OECD noted that further QE by the BOE is warranted and projects that the APF will be increased to GBP 400 bln. The next MPC meeting is on January 12th.
At 7:45 am ET the ECB will announce their rate decision. In a Bloomberg poll, 54 out of 58 economists expect the benchmark rate to be lowered by 25 bp to 1%. Other measures to stimulate bank lending and to cope with the ongoing crisis are also expected to be announced. On 11/30 MNI reported that sources within the ECB had claimed that the central bank is ready to be more flexible with respect to possible rate cuts, collateral framework and bond purchases. Reports also suggest that the ECB could offer 2 or even 3 year loans.
As usual, the ECB press conference which causes a significant volatility is scheduled to start 45 minutes after the announcement at 8:30 am ET. Keep in mind that the EU summit starts today and any remarks about the likelihood of an approval of reforms leading to a fiscal union might underpin the common currency.
The NY session data will include Canadian housing starts due at 8:15 am that are anticipated lower in November at 200K from 208K, US jobless claims are due at 8:30 am and are seen lower at 397K from previous 402K and wholesales inventories that are expected to rise 0.4% in October from previous -0.1%.
CAD traders should also note that the BOC will release its Financial System Review at 10:30 am so the volatility is likely to increase.
Patrik Urban
Wednesday, December 7, 2011
Euro Slips on German Comments; GBP Strong Despite Weak Data
http://ashraflaidi.com/t/?h2958
December 7, 2011 07:28 ET: German official pessimistic about EU summit; UK manufacturing and industrial production decline; German industrial production increased. Market turns to UK NIESR GDP estimate, crude oil inventories and later to RBNZ rate announcement. See status on last night's Premium trades below.
USD edges high as risk appetite wanes, with the biggest losers being EUR, NZD and CHF. CAD & AUD are holding steady. European equities are higher by 0.1% to 0.5%.
Market sentiment reversed and risk aversion increased after MNI reported that senior German official expressed more pessimism on a chance of a EU summit deal. EURUSD sold off from around 1.3440 to 1.3369.
In the UK, manufacturing production declined -0.7% in October from previous +0.1% (0.3% from previous 1.3% y/y). Industrial production fell -0.7% from unchanged print in September (-1.7% from -1.5% y/y). Manufacturing sector provides more than 10% of UK GDP (industrial production over 15%) so the probability that Q4 GDP will contract is high. GBPUSD trades slightly weaker around 1.56.
German data surprised to the upside second day in a row as industrial production rose in October 0.8%, significantly higher from previous -2.7%.
The NY session starts at 8:30 am ET when FED governor and FOMC member Sarah Bloom Raskin gives a speech in Baltimore.
GBP volatility could increase at 10:00 am EST when the NIESR GDP estimate is due and is expected at 0.5%, unchanged from a previous reading. Given the weak manufacturing result from earlier today, GBP will be more sensitive to a disappointment.
Crude oil inventories due at 10:30 am are expected to decline to -0.8M barrels from previous +3.9M which could underpin oil and consequently the CAD.
At 3:00 pm, the RBNZ announces its rate decision. In a Bloomberg survey, all 15 economists expect the official cash rate to remain at 2.5%. Nevertheless, the NZD could weaken as the policy statement is likely to express that rates are likely to stay at record low due to continued market distress and the ongoing crisis. The fundamentals also point to a slowdown which further suggesting no rate increases in the near future. The unemployment rate ticked up to 6.6% in Q3 from 6.5% seen in Q1 and Q2, the annual CPI declined to 4.6% from previous 5.3% and Q2 GDP fell to 0.1% from 0.9% in Q1.
Those holding our PREMIUM SHORTS in AUDNZD, bear in the RBA has cut rates yesterday. Both of last nights premium trades in EURUSD were done. USDCAD shorts are nearing their target, while our US crude longs were filled. EURJPY, EURGBP and GBPCAD remain in progress. And do not forget gold, which is charted on Daily & weekly charts in last nights Premium piece. For direct access to the latest Premium Intermarket Insights, click here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=565 Non-members can get a free 1-week trial here: http://ashraflaidi.com/ products/ sub01/ access
Patrik Urban
December 7, 2011 07:28 ET: German official pessimistic about EU summit; UK manufacturing and industrial production decline; German industrial production increased. Market turns to UK NIESR GDP estimate, crude oil inventories and later to RBNZ rate announcement. See status on last night's Premium trades below.
USD edges high as risk appetite wanes, with the biggest losers being EUR, NZD and CHF. CAD & AUD are holding steady. European equities are higher by 0.1% to 0.5%.
Market sentiment reversed and risk aversion increased after MNI reported that senior German official expressed more pessimism on a chance of a EU summit deal. EURUSD sold off from around 1.3440 to 1.3369.
In the UK, manufacturing production declined -0.7% in October from previous +0.1% (0.3% from previous 1.3% y/y). Industrial production fell -0.7% from unchanged print in September (-1.7% from -1.5% y/y). Manufacturing sector provides more than 10% of UK GDP (industrial production over 15%) so the probability that Q4 GDP will contract is high. GBPUSD trades slightly weaker around 1.56.
German data surprised to the upside second day in a row as industrial production rose in October 0.8%, significantly higher from previous -2.7%.
The NY session starts at 8:30 am ET when FED governor and FOMC member Sarah Bloom Raskin gives a speech in Baltimore.
GBP volatility could increase at 10:00 am EST when the NIESR GDP estimate is due and is expected at 0.5%, unchanged from a previous reading. Given the weak manufacturing result from earlier today, GBP will be more sensitive to a disappointment.
Crude oil inventories due at 10:30 am are expected to decline to -0.8M barrels from previous +3.9M which could underpin oil and consequently the CAD.
At 3:00 pm, the RBNZ announces its rate decision. In a Bloomberg survey, all 15 economists expect the official cash rate to remain at 2.5%. Nevertheless, the NZD could weaken as the policy statement is likely to express that rates are likely to stay at record low due to continued market distress and the ongoing crisis. The fundamentals also point to a slowdown which further suggesting no rate increases in the near future. The unemployment rate ticked up to 6.6% in Q3 from 6.5% seen in Q1 and Q2, the annual CPI declined to 4.6% from previous 5.3% and Q2 GDP fell to 0.1% from 0.9% in Q1.
Those holding our PREMIUM SHORTS in AUDNZD, bear in the RBA has cut rates yesterday. Both of last nights premium trades in EURUSD were done. USDCAD shorts are nearing their target, while our US crude longs were filled. EURJPY, EURGBP and GBPCAD remain in progress. And do not forget gold, which is charted on Daily & weekly charts in last nights Premium piece. For direct access to the latest Premium Intermarket Insights, click here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=565 Non-members can get a free 1-week trial here: http://ashraflaidi.com/ products/ sub01/ access
Patrik Urban
Tuesday, December 6, 2011
EURCHF Bounces on Swiss CPI, BoC Statement, Ivey Awaited
http://ashraflaidi.com/t/?h2954
December 6, 2011 08:08 ET : Expectations of EURCHF floor lifting likely to reemerge after Swiss CPI declined again; German factory orders surprise to the upside; Eurozone Q3 GDP confirmed at 0.2% q/q. Market turns to Canadian rate decision, building permits, Canadas Ivey PMI and US IBD TIPP economic optimism index.
Financial markets are recovering losses incurred after yesterday's surprising S&P mass downgrade warning. Riskier assets were first bought when London session started but started to give up their gains. Relative strength winners are EUR, NZD and AUD. Major European equities are higher by 0.3% to 1%.
Deflationary pressures in Switzerland are increasing as CPI declined -0.2% m/m in November and 0.5% y/y from previous -0.1%. The Franc weakened sharply to 1.2416 against the Euro but has since gained some losses back. Stronger deflation is likely to bring back calls from labor unions and other parties for a higher EURCHF floor. However, considering the ongoing Eurozone crisis, previous calls for EURCHF floor at 1.40 seem exaggerated as it would become expensive to defend. Next SNB meeting is on 15th of December.
German factory orders grew solid 5.2% in October, significantly above expectations of +0.9%. September orders were revised lower from -4.3% to -4.6%. Export oriented German economy could benefit in the months ahead from 8.9% growth in foreign orders within the Eurozone and 7.9% rise in orders from the rest of the world. Eurozone Q3 GDP was unrevised at +0.2% q/q and +1.4% y/y.
The NY session starts at 8:30 am ET with Canadian building permits that are seen higher at 2.3% in October from previous -4.9%. The reaction is likely to be muted as traders will wait for BoC rate announcement at 9:00 am ET. The overnight rate is likely to remain at 1%. A forecast compiled by Bloomberg shows that BOC is the only G10 central bank that is expected to raise rates during 2012. Nonetheless, traders will await the statement of the BoC and whether it revises down its economic forecast.
Also from Canada, is the 10:00 am release of the November PMI anticipated to rise to 55.2 in from previous 54.4.
December IBD TIPP economic optimism index is due also at 10:00 am and should improve to 42.5 from 40.6.
Patrik Urban
December 6, 2011 08:08 ET : Expectations of EURCHF floor lifting likely to reemerge after Swiss CPI declined again; German factory orders surprise to the upside; Eurozone Q3 GDP confirmed at 0.2% q/q. Market turns to Canadian rate decision, building permits, Canadas Ivey PMI and US IBD TIPP economic optimism index.
Financial markets are recovering losses incurred after yesterday's surprising S&P mass downgrade warning. Riskier assets were first bought when London session started but started to give up their gains. Relative strength winners are EUR, NZD and AUD. Major European equities are higher by 0.3% to 1%.
Deflationary pressures in Switzerland are increasing as CPI declined -0.2% m/m in November and 0.5% y/y from previous -0.1%. The Franc weakened sharply to 1.2416 against the Euro but has since gained some losses back. Stronger deflation is likely to bring back calls from labor unions and other parties for a higher EURCHF floor. However, considering the ongoing Eurozone crisis, previous calls for EURCHF floor at 1.40 seem exaggerated as it would become expensive to defend. Next SNB meeting is on 15th of December.
German factory orders grew solid 5.2% in October, significantly above expectations of +0.9%. September orders were revised lower from -4.3% to -4.6%. Export oriented German economy could benefit in the months ahead from 8.9% growth in foreign orders within the Eurozone and 7.9% rise in orders from the rest of the world. Eurozone Q3 GDP was unrevised at +0.2% q/q and +1.4% y/y.
The NY session starts at 8:30 am ET with Canadian building permits that are seen higher at 2.3% in October from previous -4.9%. The reaction is likely to be muted as traders will wait for BoC rate announcement at 9:00 am ET. The overnight rate is likely to remain at 1%. A forecast compiled by Bloomberg shows that BOC is the only G10 central bank that is expected to raise rates during 2012. Nonetheless, traders will await the statement of the BoC and whether it revises down its economic forecast.
Also from Canada, is the 10:00 am release of the November PMI anticipated to rise to 55.2 in from previous 54.4.
December IBD TIPP economic optimism index is due also at 10:00 am and should improve to 42.5 from 40.6.
Patrik Urban
Monday, December 5, 2011
US Services ISM Looking to Defy Eurozone After UK Bounce
http://ashraflaidi.com/t/?h2950
December 5, 2011 08:56 ET : UK PMI services rose but employment dropped; Eurozone retail sales rose m/m but fell y/y; Italy approved austerity and its 10 year yield declined.
Market turns to ISM non manufacturing and factory orders. Risk appetite back on the rise at the expense of broad weakness in USD and JPY. Dow futures +151 pts, ES + 18 at 1261. Premium Intermarket Insights due ahead of the US session.
Traders await Merkel-Sarkozy meeting in Paris where, among other topics, the possibility of a fiscal union will be discussed. A press conference is scheduled for later today but all details will likely be released only on Friday during the EU economic summit. There will likely be several bouts of rumour-driven market moves and retracements.
10 year Italian bond trades comfortably below the critical 7% around 6.43% after the Italian government approved austerity measures worth of EUR 30 bln. 10 year German-Italian spread is tighter at around 4.43%.
UK services PMI rose in November to 52.1 from previous 51.3. Analysts expected worsening towards 50.6 so GBPUSD jumped higher on the release. However, it quickly lost its gains and within minutes fell to pre-release levels as November saw the fastest pace of job losses in 15 months. A contraction in employment was recorded four times out of the last five months. Nevertheless, resilient service sector could imply that the MPC will not increase the Asset Purchase Facility after its Thursday meeting and will wait instead for additional data.
Eurozone data was mixed today. October retail sales increased +0.4% m/m after dropping -0.6% a month earlier but the annual result recorded a -0.4% decline after September's -1.4%. Eurozone Sentix investor confidence fell further in December to -24 from November's -21.2 which is a sixth back to back decline.
The New York session will bring ISM non-manufacturing that is expected to rise to 53.8 in November from 52.9 in October and October factory orders that are seen lower at -0.3% from previous +0.3%. Both releases are due at 10:00 am ET.
Market volatility could also increase at 12:10 pm when FED Chicago president and FOMC member Charles Evans delivers a speech in Indiana on the US economic outlook.
Patrik Urban
December 5, 2011 08:56 ET : UK PMI services rose but employment dropped; Eurozone retail sales rose m/m but fell y/y; Italy approved austerity and its 10 year yield declined.
Market turns to ISM non manufacturing and factory orders. Risk appetite back on the rise at the expense of broad weakness in USD and JPY. Dow futures +151 pts, ES + 18 at 1261. Premium Intermarket Insights due ahead of the US session.
Traders await Merkel-Sarkozy meeting in Paris where, among other topics, the possibility of a fiscal union will be discussed. A press conference is scheduled for later today but all details will likely be released only on Friday during the EU economic summit. There will likely be several bouts of rumour-driven market moves and retracements.
10 year Italian bond trades comfortably below the critical 7% around 6.43% after the Italian government approved austerity measures worth of EUR 30 bln. 10 year German-Italian spread is tighter at around 4.43%.
UK services PMI rose in November to 52.1 from previous 51.3. Analysts expected worsening towards 50.6 so GBPUSD jumped higher on the release. However, it quickly lost its gains and within minutes fell to pre-release levels as November saw the fastest pace of job losses in 15 months. A contraction in employment was recorded four times out of the last five months. Nevertheless, resilient service sector could imply that the MPC will not increase the Asset Purchase Facility after its Thursday meeting and will wait instead for additional data.
Eurozone data was mixed today. October retail sales increased +0.4% m/m after dropping -0.6% a month earlier but the annual result recorded a -0.4% decline after September's -1.4%. Eurozone Sentix investor confidence fell further in December to -24 from November's -21.2 which is a sixth back to back decline.
The New York session will bring ISM non-manufacturing that is expected to rise to 53.8 in November from 52.9 in October and October factory orders that are seen lower at -0.3% from previous +0.3%. Both releases are due at 10:00 am ET.
Market volatility could also increase at 12:10 pm when FED Chicago president and FOMC member Charles Evans delivers a speech in Indiana on the US economic outlook.
Patrik Urban
Friday, December 2, 2011
CAD Jobs Disappoint, Onto US, New Premium Trades
http://www.ashraflaidi.com/forex-news/?a=2946
December 2, 2011 07:46 ET: Merkel calls for a fiscal union; Swiss retail sales declined; UK construction PMI lower but still expanding; Eurozone PPI lower; Canadian labor market data disappointed. Focus turns to NFP and the unemployment rate. Pre-US Jobs Premium Trades are below.
The USD is mixed today but trades within narrow ranges. The relative strength winners are NZD and AUD while JPY is the biggest loser. European equity indices trade higher by about 1.5%.
German chancellor Angela Merkel who spoke to the German parliament today called for an enforceable fiscal union and again reiterated her dissenting stance towards the introduction of Euro bonds. She maintained her attitude that only budget discipline and lower government borrowing could solve the root of the crisis. France and Germany will propose changes for the EU on Monday.
Swiss fundamentals are firmly on the deterioration path as retail sales declined in October -0.2% y/y after dropping -1.4% in September. CHF is weaker against the Euro trading around 1.2350.
UK construction PMI declined in November to 52.3 from 53.9. Despite the slowdown it remained in the expansionary territory.
Eurozone PPI rose 0.1% in October, less than 0.3% seen a month earlier. On annual basis PPI rose 5.5% which is considerably lower compared to previous 5.8%. The ECB meets next Thursday and the probability that rates will be lowered is high.
FRIDAY PREMIUM TRADES ARE HERE: http://ashraflaidi.com/ products/ sub01/ access/ ?a=562 Nonmembers click here to join http://ashraflaidi.com/ products/
The loonie declined sharply after Canada lost 18.6K jobs in November after -54K in October. Market expected employers to add 18K jobs. The unemployment rate ticked up to 7.4% from previous 7.3%. USDCAD rose from 1.0096 to 1.0140 immediately after the release.
The NY session will bring the eagerly awaited labor market data at 8:30 am ET. November NFP is expected to rise to 126K from previous 80K and the unemployment rate is seen steady at 9.0%.
Wednesday's ADP figure exceeded expectations as it printed a solid 206K growth in private jobs which was the best result since 3/2011 and nearly double of the gain seen in the previous month. Positive surprise that would fuel risk appetite is therefore likely to a degree. However, keep in mind that jobless claims rose back above 400K and that the employment component of ISM manufacturing decreased to 51.8 from previous 53.5.
Patrik Urban
December 2, 2011 07:46 ET: Merkel calls for a fiscal union; Swiss retail sales declined; UK construction PMI lower but still expanding; Eurozone PPI lower; Canadian labor market data disappointed. Focus turns to NFP and the unemployment rate. Pre-US Jobs Premium Trades are below.
The USD is mixed today but trades within narrow ranges. The relative strength winners are NZD and AUD while JPY is the biggest loser. European equity indices trade higher by about 1.5%.
German chancellor Angela Merkel who spoke to the German parliament today called for an enforceable fiscal union and again reiterated her dissenting stance towards the introduction of Euro bonds. She maintained her attitude that only budget discipline and lower government borrowing could solve the root of the crisis. France and Germany will propose changes for the EU on Monday.
Swiss fundamentals are firmly on the deterioration path as retail sales declined in October -0.2% y/y after dropping -1.4% in September. CHF is weaker against the Euro trading around 1.2350.
UK construction PMI declined in November to 52.3 from 53.9. Despite the slowdown it remained in the expansionary territory.
Eurozone PPI rose 0.1% in October, less than 0.3% seen a month earlier. On annual basis PPI rose 5.5% which is considerably lower compared to previous 5.8%. The ECB meets next Thursday and the probability that rates will be lowered is high.
FRIDAY PREMIUM TRADES ARE HERE: http://ashraflaidi.com/ products/ sub01/ access/ ?a=562 Nonmembers click here to join http://ashraflaidi.com/ products/
The loonie declined sharply after Canada lost 18.6K jobs in November after -54K in October. Market expected employers to add 18K jobs. The unemployment rate ticked up to 7.4% from previous 7.3%. USDCAD rose from 1.0096 to 1.0140 immediately after the release.
The NY session will bring the eagerly awaited labor market data at 8:30 am ET. November NFP is expected to rise to 126K from previous 80K and the unemployment rate is seen steady at 9.0%.
Wednesday's ADP figure exceeded expectations as it printed a solid 206K growth in private jobs which was the best result since 3/2011 and nearly double of the gain seen in the previous month. Positive surprise that would fuel risk appetite is therefore likely to a degree. However, keep in mind that jobless claims rose back above 400K and that the employment component of ISM manufacturing decreased to 51.8 from previous 53.5.
Patrik Urban
Thursday, December 1, 2011
Euro Set for Another 1.35 Break
http://www.ashraflaidi.com/forex-news/?a=2942
December 1, 2011 07:37 ET: French and Spanish auctions well received; Swiss Q3 GDP disappointed; Swiss PMI declined; German and Eurozone PMIs as initially estimated; UK PMI declined. Focus turns to jobless claims, November ISM manufacturing and construction spending. 4of the 17 Premium Trades hit all targets. See details below.
Risk assets are consolidating after yesterday's "central banks coordinated liquidity injection" rally. USD has a negative bias but is losing only slightly against other majors. Relative strength winners are CHF, EUR and NZD but not by a significant amount. Major European equities are mixed between -0.7% to and 0.4%.
Euro is underpinned by well received French and Spanish debt auctions of various maturities. Spain reached its full target of EUR 3.75 bln with yields only slightly higher and improved cover ratios. France sold EUR 4.35 bln out of EUR 4.5 bln target and saw some yields actually lower compared to the previous auction. Bid to cover for all French bonds that were offered today improved rather significantly. EURUSD continues to trade just under the 1.35 mark.
Final November manufacturing PMI's from Germany and the Eurozone were unchanged compared to their initial estimates at 47.9 and 46.4 respectively.
Swiss Q3 GDP disappointed when it printed 0.2% q/q from previous 0.5% which translates to a mere 1.3% growth y/y from 2.2%. This is the weakest quarterly print since Q2 2009 and reinforces fears of a Q4 recession. A significant decline in exports is blamed for the slowdown which could pressure the SNB to increase the EURCHF floor, perhaps on SNBs meeting on December 15th. Swiss SVME PMI declined in November to 44.8 from 46.9. CHF has ignored this news and trades at 1.2275 against the EUR.
In the UK, November PMI printed 47.6 which is the weakest result since June 2009 and slightly lower than October's 47.8. Outlook is bleak as export orders fell after the crisis curtailed demand which subsequently prompted additional job cuts. Continued contraction is likely to increase pressure on the BOE to enlarge the Asset Purchase Facility further.
BoE released its Financial Stability Report that stated that the current environment is exceptionally threatening for UK banks and Eurozone sovereign and banking risks pose the biggest threat to UK financial stability.
4 of our 17 Wednesday Premium Trades hit all targets, 1 remain unfilled, the rest are in progress. For Direct Access to these trades is found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=560 NonSubscribers can join here: http://ashraflaidi.com/ products/ sub01/
The New York session starts with jobless claims at 8:30 am that are expected to remain for the fourth week below the 400K mark and print 390K from previous 393K.
November ISM manufacturing is due at 10:00 am and is anticipated to rise to 51.5 from 50.8. Construction spending in October is seen higher at 0.4% from previous 0.2%.
Patrik Urban
December 1, 2011 07:37 ET: French and Spanish auctions well received; Swiss Q3 GDP disappointed; Swiss PMI declined; German and Eurozone PMIs as initially estimated; UK PMI declined. Focus turns to jobless claims, November ISM manufacturing and construction spending. 4of the 17 Premium Trades hit all targets. See details below.
Risk assets are consolidating after yesterday's "central banks coordinated liquidity injection" rally. USD has a negative bias but is losing only slightly against other majors. Relative strength winners are CHF, EUR and NZD but not by a significant amount. Major European equities are mixed between -0.7% to and 0.4%.
Euro is underpinned by well received French and Spanish debt auctions of various maturities. Spain reached its full target of EUR 3.75 bln with yields only slightly higher and improved cover ratios. France sold EUR 4.35 bln out of EUR 4.5 bln target and saw some yields actually lower compared to the previous auction. Bid to cover for all French bonds that were offered today improved rather significantly. EURUSD continues to trade just under the 1.35 mark.
Final November manufacturing PMI's from Germany and the Eurozone were unchanged compared to their initial estimates at 47.9 and 46.4 respectively.
Swiss Q3 GDP disappointed when it printed 0.2% q/q from previous 0.5% which translates to a mere 1.3% growth y/y from 2.2%. This is the weakest quarterly print since Q2 2009 and reinforces fears of a Q4 recession. A significant decline in exports is blamed for the slowdown which could pressure the SNB to increase the EURCHF floor, perhaps on SNBs meeting on December 15th. Swiss SVME PMI declined in November to 44.8 from 46.9. CHF has ignored this news and trades at 1.2275 against the EUR.
In the UK, November PMI printed 47.6 which is the weakest result since June 2009 and slightly lower than October's 47.8. Outlook is bleak as export orders fell after the crisis curtailed demand which subsequently prompted additional job cuts. Continued contraction is likely to increase pressure on the BOE to enlarge the Asset Purchase Facility further.
BoE released its Financial Stability Report that stated that the current environment is exceptionally threatening for UK banks and Eurozone sovereign and banking risks pose the biggest threat to UK financial stability.
4 of our 17 Wednesday Premium Trades hit all targets, 1 remain unfilled, the rest are in progress. For Direct Access to these trades is found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=560 NonSubscribers can join here: http://ashraflaidi.com/ products/ sub01/
The New York session starts with jobless claims at 8:30 am that are expected to remain for the fourth week below the 400K mark and print 390K from previous 393K.
November ISM manufacturing is due at 10:00 am and is anticipated to rise to 51.5 from 50.8. Construction spending in October is seen higher at 0.4% from previous 0.2%.
Patrik Urban
Wednesday, November 30, 2011
Risk on as China Cuts RRR, ECB Suggests More Flexibility
http://ashraflaidi.com/t/?h2937
November 30, 2011 07:34 ET: China cuts RRR by 50 bps; ECB to be more flexible (QE, rate cuts, lower quality collateral); Eurozone CPI remained at 3%, unemployment ticked up to 10.3%; Italian unemployment rose sharply to 8.7%; Swiss KOF hits 2-yr low. Market turns to ADP, Canadian GDP, Chicago PMI and pending home sales.
USD is down across the board as risk appetite returns to markets. NZD, CAD and GBP are the relative strength winners and major European indices are up by about 1%.
Risk appetite returned to markets after China cut its bank reserves ratio for the first time in three years. The RRR was cut by 50 bps to 21%. Risk trades are also supported by MNI report that quoted sources within the ECB that it is open to more rate cuts and that 1% is no longer seen as a rate floor. The ECB also wants to be more flexible, it may widen collateral framework and increase bond purchases.
On the data front, Eurozone CPI estimate remained at 3.0% in November and Eurozone unemployment rate ticked up to 10.3% in October from 10.2%.
Italian unemployment rate was declining throughout most of 2011 from 8.7% to Augusts' 7.9%. However, as conditions started to deteriorate it has risen sharply over the past two months and reached 8.5% in October from 8.3% in September.
Swiss KOF leading indicator index has been declining steadily over the past seven months and dropped again in November, this time to 0.35 from October's 0.75 (2-yr low) CHF first came under pressure but rose significantly as risk aversion disappeared.
Eurozone has also agreed to release the sixth tranche or financial aid to Greece and the funds should start arriving to Greece by the middle of December. EURUSD did not react much to this news as the attention has shifted away from Greece to Italy and other core Eurozone countries.
The New York session will start at 8:15 am ET with November ADP report that is expected to improve to 131K from previous 110K. Chicago PMI is due at 9:45 and is seen marginally higher in November at 58.5 from October's 58.4. October pending home sales are due 15 minutes later at 10:00 am and are anticipated to rise 1.4% after falling -4.6% in September.
Market volatility is likely to also increase at 2:00 pm when FED's Beige book is due.
CAD traders await September GDP due at 8:30 am which is expected to remain at 0.3% m/m and rise 2.7% from 2.4% y/y.
See how our Monday Premium trades aim at exploiting the improvement in risk appetite including the CAD longs (short GBPCAD & USDCAD) The combination of CAD impact and modest risk-on trades is implicated in today's trades. DIRECT ACCESS to today's trades is found here http://ashraflaidi.com/ products/ sub01/ access/ ?a=558 Nonsubscribers can get 1-week access here: http://ashraflaidi.com/ products/ sub01/
Patrik Urban
November 30, 2011 07:34 ET: China cuts RRR by 50 bps; ECB to be more flexible (QE, rate cuts, lower quality collateral); Eurozone CPI remained at 3%, unemployment ticked up to 10.3%; Italian unemployment rose sharply to 8.7%; Swiss KOF hits 2-yr low. Market turns to ADP, Canadian GDP, Chicago PMI and pending home sales.
USD is down across the board as risk appetite returns to markets. NZD, CAD and GBP are the relative strength winners and major European indices are up by about 1%.
Risk appetite returned to markets after China cut its bank reserves ratio for the first time in three years. The RRR was cut by 50 bps to 21%. Risk trades are also supported by MNI report that quoted sources within the ECB that it is open to more rate cuts and that 1% is no longer seen as a rate floor. The ECB also wants to be more flexible, it may widen collateral framework and increase bond purchases.
On the data front, Eurozone CPI estimate remained at 3.0% in November and Eurozone unemployment rate ticked up to 10.3% in October from 10.2%.
Italian unemployment rate was declining throughout most of 2011 from 8.7% to Augusts' 7.9%. However, as conditions started to deteriorate it has risen sharply over the past two months and reached 8.5% in October from 8.3% in September.
Swiss KOF leading indicator index has been declining steadily over the past seven months and dropped again in November, this time to 0.35 from October's 0.75 (2-yr low) CHF first came under pressure but rose significantly as risk aversion disappeared.
Eurozone has also agreed to release the sixth tranche or financial aid to Greece and the funds should start arriving to Greece by the middle of December. EURUSD did not react much to this news as the attention has shifted away from Greece to Italy and other core Eurozone countries.
The New York session will start at 8:15 am ET with November ADP report that is expected to improve to 131K from previous 110K. Chicago PMI is due at 9:45 and is seen marginally higher in November at 58.5 from October's 58.4. October pending home sales are due 15 minutes later at 10:00 am and are anticipated to rise 1.4% after falling -4.6% in September.
Market volatility is likely to also increase at 2:00 pm when FED's Beige book is due.
CAD traders await September GDP due at 8:30 am which is expected to remain at 0.3% m/m and rise 2.7% from 2.4% y/y.
See how our Monday Premium trades aim at exploiting the improvement in risk appetite including the CAD longs (short GBPCAD & USDCAD) The combination of CAD impact and modest risk-on trades is implicated in today's trades. DIRECT ACCESS to today's trades is found here http://ashraflaidi.com/ products/ sub01/ access/ ?a=558 Nonsubscribers can get 1-week access here: http://ashraflaidi.com/ products/ sub01/
Patrik Urban
Tuesday, November 29, 2011
Euro Struggles After Costly Italian Auctions
http://www.ashraflaidi.com/forex-news/?a=2932
November 29, 2011 08:14 ET: Euro struggles around 1.33 despite recovering risk appetite following higher than expected-yielding Italian bond auctions. UK nationwide house prices and mortgage applications both increased; Eurozone economic confidence fell. Market turns to Canadian trade balance data, housing data and consumer confidence. Tuesdays latest Intermarket Insights are due at approx. 10:00 EST, 15:00 GMT.
The greenback is weaker across the board again today as riskier assets continue to push higher. Relative strength winners are GBP, AUD and NZD. Major European equities are higher by about 0.5%.
Eagerly awaited Italian bond auction saw yields soar to the highest levels since the Euro inception but the bid to cover ratio improved slightly. Italy sold EUR 7.5 bln and the target was EUR 5-8 bln. The Italian treasury sold 2014 BTP with average yield 7.89% from 4.93%, 2020 BTP with avg. 7.28% from 5.47% and 2022 BTP with avg. 7.56% from 6.02%. The inverted yield curve not only implies higher risk of upcoming recession but also the fact that investors are concerned about the possibility of a haircut on their holdings. Considering the size of Italian debt, any additional yield increases would considerably worse Italian fiscal situation.
Italian 10 year yields 7.40% and the 10 year German-Italian spread sits firmly above 5% at 5.12%. At the opposite end of the bond spectrum one can find Switzerland with 10 year yielding less than 1% since the beginning of November. EURUSD fell sharply to 1.3335 after hitting 1.3440 earlier during the session.
Tuesdays latest Intermarket Insights are due at approx. 10:00 EST, 15:00 GMT. Click here to view Mondays trades http://ashraflaidi.com/ products/ sub01/ access/ ?a=557 Non subscribers can go here http://ashraflaidi.com/ products/ sub01/
In the UK, nationwide house prices rose 1.6% in November y/y from previous 0.8% and October mortgage approvals surprisingly rose to 52.7K from 51.2K reaching their highest print since 12/2009.
Eurozone economic confidence fell in November to 93.7 from previous 94.8 and final Eurozone consumer confidence was confirmed at -20.4, unchanged from the flash estimate.
The NY session will start at 8:30 am ET with Canadian Q3 current account deficit which is expected to narrow to CAD -11.1 bln from previous CAD -15.3 bln.
S&P Case-Shiller home price index due at 9:00 am ET is seen at -3% in September, slightly higher from previous -3.8%. November consumer confidence due at 10:00 am is expected to rise to 44 from 39.8 and September house price index that is also due at 10:00 am is anticipated at 0.1% from previous -0.1%.
Market volatility could also increase at 11:30 am and at 12:15 pm when FED governors and FOMC members Janet Yellen and Sarah Bloom Raskin speak at FED's Annual Asia Economic Policy Conference in San Francisco.
Patrik Urban
November 29, 2011 08:14 ET: Euro struggles around 1.33 despite recovering risk appetite following higher than expected-yielding Italian bond auctions. UK nationwide house prices and mortgage applications both increased; Eurozone economic confidence fell. Market turns to Canadian trade balance data, housing data and consumer confidence. Tuesdays latest Intermarket Insights are due at approx. 10:00 EST, 15:00 GMT.
The greenback is weaker across the board again today as riskier assets continue to push higher. Relative strength winners are GBP, AUD and NZD. Major European equities are higher by about 0.5%.
Eagerly awaited Italian bond auction saw yields soar to the highest levels since the Euro inception but the bid to cover ratio improved slightly. Italy sold EUR 7.5 bln and the target was EUR 5-8 bln. The Italian treasury sold 2014 BTP with average yield 7.89% from 4.93%, 2020 BTP with avg. 7.28% from 5.47% and 2022 BTP with avg. 7.56% from 6.02%. The inverted yield curve not only implies higher risk of upcoming recession but also the fact that investors are concerned about the possibility of a haircut on their holdings. Considering the size of Italian debt, any additional yield increases would considerably worse Italian fiscal situation.
Italian 10 year yields 7.40% and the 10 year German-Italian spread sits firmly above 5% at 5.12%. At the opposite end of the bond spectrum one can find Switzerland with 10 year yielding less than 1% since the beginning of November. EURUSD fell sharply to 1.3335 after hitting 1.3440 earlier during the session.
Tuesdays latest Intermarket Insights are due at approx. 10:00 EST, 15:00 GMT. Click here to view Mondays trades http://ashraflaidi.com/ products/ sub01/ access/ ?a=557 Non subscribers can go here http://ashraflaidi.com/ products/ sub01/
In the UK, nationwide house prices rose 1.6% in November y/y from previous 0.8% and October mortgage approvals surprisingly rose to 52.7K from 51.2K reaching their highest print since 12/2009.
Eurozone economic confidence fell in November to 93.7 from previous 94.8 and final Eurozone consumer confidence was confirmed at -20.4, unchanged from the flash estimate.
The NY session will start at 8:30 am ET with Canadian Q3 current account deficit which is expected to narrow to CAD -11.1 bln from previous CAD -15.3 bln.
S&P Case-Shiller home price index due at 9:00 am ET is seen at -3% in September, slightly higher from previous -3.8%. November consumer confidence due at 10:00 am is expected to rise to 44 from 39.8 and September house price index that is also due at 10:00 am is anticipated at 0.1% from previous -0.1%.
Market volatility could also increase at 11:30 am and at 12:15 pm when FED governors and FOMC members Janet Yellen and Sarah Bloom Raskin speak at FED's Annual Asia Economic Policy Conference in San Francisco.
Patrik Urban
Monday, November 28, 2011
IMF Rumour Denied, Rebound Remains
http://ashraflaidi.com/t/?h2929
November 28, 2011 07:38 ET: EUR 600 bln IMF loan rumor denied; Italian business confidence higher; German GfK consumer confidence rose; UK CBI sales decline; OECD calls for action and expects further QE by BOE. Market turns to October new home sales and Dallas FED manufacturing. Added charts & commentary to Intermarket Insights.
Markets saw a complete reversal of sentiment since Friday. The greenback was sold across the board and riskier assets show significant gains. NZD, CHF and GBP are the relative strength winners. Major European equity indices rose 2-2.5%.
Risk rally was sparked by earlier reports that the IMF is preparing a EUR 600 bln loan for Italy. This news was later denied by the IMF spokesperson that confirmed that the IMF is not in discussions with Italian authorities. Despite the denial, EURUSD holds most of the gains and trades near 1.3370 after reaching 1.3398.
On the European data front, Italian business confidence improved slightly in November from 94.2 to 94.4 and German GfK consumer confidence rose to 5.6 from previous 5.3.
We Added 2 charts on EURUSD, identifying the ley level to watch for today & tomorrow in order to preserve the 4-week trendline. Latest Premium Trades for today include on EURUSD (2), EURJPY (2), USDCAD (2) ES (2), US crude (2) and ongoing trades in GBPCAD and silver. Direct Access to today's trades is found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=557 To get a 1-week trial, click here: http://ashraflaidi.com/ products/ sub01/
Even though the common currency is strengthening, the Italian 2 year yield continues to rise and for the first time crossed above the 8% level. The high so far has been 8.12% but reports of ECB buying have helped to push yield back below 8% towards 7.2%.
The OECD called for an action to boost global economy after it lowered world growth projection for 2012 to 3.4% from 4.6%. The US growth estimate was lowered to 2% from 3.1% and Eurozone GDP is seen to grow only 0.2% in 2012. The OECD has also noted that further QE by the BOE is warranted and estimates that the BOE will buy GBP 400 bln of debt.
CBI reported sales declined to -19 in November from -11 in September which is the weakest result since 3/2009. Reported orders dropped -25% and expected sales for December are seen at -6%. The GBP is holding onto its gains and trades around 1.5575
The economic calendar for the NY session is short today as it includes October new home sales due at 10:00 am ET that are expected to remain at 313K and November Dallas FED manufacturing due at 10:30 am seen higher at 5.0 from previous 2.3.
Patrik Urban
November 28, 2011 07:38 ET: EUR 600 bln IMF loan rumor denied; Italian business confidence higher; German GfK consumer confidence rose; UK CBI sales decline; OECD calls for action and expects further QE by BOE. Market turns to October new home sales and Dallas FED manufacturing. Added charts & commentary to Intermarket Insights.
Markets saw a complete reversal of sentiment since Friday. The greenback was sold across the board and riskier assets show significant gains. NZD, CHF and GBP are the relative strength winners. Major European equity indices rose 2-2.5%.
Risk rally was sparked by earlier reports that the IMF is preparing a EUR 600 bln loan for Italy. This news was later denied by the IMF spokesperson that confirmed that the IMF is not in discussions with Italian authorities. Despite the denial, EURUSD holds most of the gains and trades near 1.3370 after reaching 1.3398.
On the European data front, Italian business confidence improved slightly in November from 94.2 to 94.4 and German GfK consumer confidence rose to 5.6 from previous 5.3.
We Added 2 charts on EURUSD, identifying the ley level to watch for today & tomorrow in order to preserve the 4-week trendline. Latest Premium Trades for today include on EURUSD (2), EURJPY (2), USDCAD (2) ES (2), US crude (2) and ongoing trades in GBPCAD and silver. Direct Access to today's trades is found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=557 To get a 1-week trial, click here: http://ashraflaidi.com/ products/ sub01/
Even though the common currency is strengthening, the Italian 2 year yield continues to rise and for the first time crossed above the 8% level. The high so far has been 8.12% but reports of ECB buying have helped to push yield back below 8% towards 7.2%.
The OECD called for an action to boost global economy after it lowered world growth projection for 2012 to 3.4% from 4.6%. The US growth estimate was lowered to 2% from 3.1% and Eurozone GDP is seen to grow only 0.2% in 2012. The OECD has also noted that further QE by the BOE is warranted and estimates that the BOE will buy GBP 400 bln of debt.
CBI reported sales declined to -19 in November from -11 in September which is the weakest result since 3/2009. Reported orders dropped -25% and expected sales for December are seen at -6%. The GBP is holding onto its gains and trades around 1.5575
The economic calendar for the NY session is short today as it includes October new home sales due at 10:00 am ET that are expected to remain at 313K and November Dallas FED manufacturing due at 10:30 am seen higher at 5.0 from previous 2.3.
Patrik Urban
Friday, November 25, 2011
USDX Boosted by Weak EUR, Fading JPY
http://www.ashraflaidi.com/forex-news/?a=2925
November 25, 2011 08:22 ET: French consumer confidence fell and Italian retail sales dropped; Italian short and long term yields rise; Italian Bill auction results in higher yield; USDX at 7 week high, breaking out of the 100 & 200 week moving averages. Poor liquidity and erratic movements likely during the NY session. LATEST PREMIUM TRADES include an important development in the MONTHLY EURUSD chart, with 3 new trades in EURUSD.
USD is soaring today as risk aversion heightens further due to sharp rise in European yields. GBP is also relatively strong while EUR and NZD are the biggest losers. Major European equities are losing about 0.5%.
Long series of disappointing European data continued today as French consumer confidence declined in November to 79 from 82 and September Italian retail sales fell -1.6% from -0.3% on annual basis. Eagerly awaited Italian short term debt auction did not provide a reason for optimism either as Italy sold EUR 8 bln of six months Bills with average yield of 6.5%, significantly higher from previous 3.53% with bid to cover at 1.47, lower from previous 1.57. EURUSD fell to 1.3236, the lowest level since the beginning of October.
LATEST PREMIUM INTERMARKET INSIGHTS include an important development in the MONTHLY EURUSD chart, with 2 new charts on USD INDEX and 3 new trades in EURUSD, 2 in USDCAD & 2 in EURJPY. ========== Click here for direct access todays trades http://ashraflaidi.com/ products/ sub01/ access/ ?a=556 Nonsubscribers can join here: http://ashraflaidi.com/ products/ sub01/
Despite ECB buying, the 10 year Italian yield is firmly above the critical 7% level at 7.27% and another reason for concern is sharp rise in 2 year yield which jumped nearly to 8%. Spanish 10 year yields 6.74% but the German-Spanish remains below 5% as even German yields rise.
USD index reached 7 week high today, eyeing the psychologically important 80 level which roughly coincided with October high at 79.84. Should the resistance be broken, next target is January high at 81.31 followed by 8/2010 high at 83.56. USDX is currently trading around 79.54.
US stock markets close at 1 pm EST, while US bond markets are all closed, liquidity will be poor and erratic movements are likely. There are no fundamental data releases due today.
Patrik Urban
November 25, 2011 08:22 ET: French consumer confidence fell and Italian retail sales dropped; Italian short and long term yields rise; Italian Bill auction results in higher yield; USDX at 7 week high, breaking out of the 100 & 200 week moving averages. Poor liquidity and erratic movements likely during the NY session. LATEST PREMIUM TRADES include an important development in the MONTHLY EURUSD chart, with 3 new trades in EURUSD.
USD is soaring today as risk aversion heightens further due to sharp rise in European yields. GBP is also relatively strong while EUR and NZD are the biggest losers. Major European equities are losing about 0.5%.
Long series of disappointing European data continued today as French consumer confidence declined in November to 79 from 82 and September Italian retail sales fell -1.6% from -0.3% on annual basis. Eagerly awaited Italian short term debt auction did not provide a reason for optimism either as Italy sold EUR 8 bln of six months Bills with average yield of 6.5%, significantly higher from previous 3.53% with bid to cover at 1.47, lower from previous 1.57. EURUSD fell to 1.3236, the lowest level since the beginning of October.
LATEST PREMIUM INTERMARKET INSIGHTS include an important development in the MONTHLY EURUSD chart, with 2 new charts on USD INDEX and 3 new trades in EURUSD, 2 in USDCAD & 2 in EURJPY. ========== Click here for direct access todays trades http://ashraflaidi.com/ products/ sub01/ access/ ?a=556 Nonsubscribers can join here: http://ashraflaidi.com/ products/ sub01/
Despite ECB buying, the 10 year Italian yield is firmly above the critical 7% level at 7.27% and another reason for concern is sharp rise in 2 year yield which jumped nearly to 8%. Spanish 10 year yields 6.74% but the German-Spanish remains below 5% as even German yields rise.
USD index reached 7 week high today, eyeing the psychologically important 80 level which roughly coincided with October high at 79.84. Should the resistance be broken, next target is January high at 81.31 followed by 8/2010 high at 83.56. USDX is currently trading around 79.54.
US stock markets close at 1 pm EST, while US bond markets are all closed, liquidity will be poor and erratic movements are likely. There are no fundamental data releases due today.
Patrik Urban
Wednesday, November 23, 2011
Poor German Auction & Weak Data Send EUR Below 1.34
http://www.ashraflaidi.com/forex-news/?a=2919
November 23, 2011 07:33 ET : Weak demand resulted in a poor German bond auction; Eurozone industrial new orders plunged; MPM minutes show no votes for more QE. Market turns to durable goods orders, jobless claims, core PCE price index and UoM consumer confidence.
The greenback is the relative strength winner in the ongoing session as risk aversion heightens. EUR and NZD are the biggest losers. Major European equities recovered most of their losses but remain in negative territory.
A combination of disappointing German bond auction with weak data sent Euro lower today. Germany sold only EUR 3.64 bln worth of 10 year bund today while it targeted EUR 6 bln. The Bundesbank retained EUR 2.35 bln that it will attempt to sell over the next few days. The average yield was 1.98% compared to previous 2.09% with weak bid to cover of 1.07.
September Eurozone industrial new orders were significantly below expectations as they plunged -6.4% from previous +1.4% which translates to a mere 1.6% growth y/y (down from Augusts' 5.9%). This is the biggest decline in three years and confirms bleak outlook for Eurozone manufacturing sector. EURUSD fell on the news from 1.3450 to 1.3374.
The Minutes from November MPC meeting showed that all members voted to keep rates steady and there were no votes for more QE. However, some members noted that more bond purchases may be needed in the future. Current QE will continue for additional three months.
Trading during the NY session will be influenced by a large number of data releases. At 8:30 am ET October durable goods orders are due and are seen lower at -1.1% from -0.6% (core orders are expected to grow only 0.1% from previous 1.8%)
Due to tomorrow's Thanksgiving holidays, jobless claims are due today and are seen at 389K from 388K. For the past three weeks, claims have been below the 400k mark.
FED's preferred inflation gauge, the core PCE price index is seen higher in October at 0.1% from previous 0.0%.
Final revision of November UoM consumer confidence is due at 9:55 am and is anticipated to increase to 64.5 from initial estimate of 64.2.
Patrik Urban
November 23, 2011 07:33 ET : Weak demand resulted in a poor German bond auction; Eurozone industrial new orders plunged; MPM minutes show no votes for more QE. Market turns to durable goods orders, jobless claims, core PCE price index and UoM consumer confidence.
The greenback is the relative strength winner in the ongoing session as risk aversion heightens. EUR and NZD are the biggest losers. Major European equities recovered most of their losses but remain in negative territory.
A combination of disappointing German bond auction with weak data sent Euro lower today. Germany sold only EUR 3.64 bln worth of 10 year bund today while it targeted EUR 6 bln. The Bundesbank retained EUR 2.35 bln that it will attempt to sell over the next few days. The average yield was 1.98% compared to previous 2.09% with weak bid to cover of 1.07.
September Eurozone industrial new orders were significantly below expectations as they plunged -6.4% from previous +1.4% which translates to a mere 1.6% growth y/y (down from Augusts' 5.9%). This is the biggest decline in three years and confirms bleak outlook for Eurozone manufacturing sector. EURUSD fell on the news from 1.3450 to 1.3374.
The Minutes from November MPC meeting showed that all members voted to keep rates steady and there were no votes for more QE. However, some members noted that more bond purchases may be needed in the future. Current QE will continue for additional three months.
Trading during the NY session will be influenced by a large number of data releases. At 8:30 am ET October durable goods orders are due and are seen lower at -1.1% from -0.6% (core orders are expected to grow only 0.1% from previous 1.8%)
Due to tomorrow's Thanksgiving holidays, jobless claims are due today and are seen at 389K from 388K. For the past three weeks, claims have been below the 400k mark.
FED's preferred inflation gauge, the core PCE price index is seen higher in October at 0.1% from previous 0.0%.
Final revision of November UoM consumer confidence is due at 9:55 am and is anticipated to increase to 64.5 from initial estimate of 64.2.
Patrik Urban
Tuesday, November 22, 2011
Euro Rebounds Despite Soaring Spanish Yields, US GDP Rev Next
http://www.ashraflaidi.com/forex-news/?a=2915
November 22, 2011 08:04 ET: Spanish short term auction sees soaring yields; IMF&EU confirmed Hungarian request for financial assistance; UK public sector borrowing lower. Market turns to Q3 GDP revision, Canadian retail sales and FOMC minutes are due. EURUSD & EURGBP longs hit targets.
USD is slightly weaker in the ongoing session as EURUSD trades above 1.3550. CHF and EUR are the relative strength winners today. Major European equities are higher by about 0.5%.
Despite the new Spanish government that promised to cut deficit and promote growth, Spanish treasury had to pay higher yield today to sell almost EUR 3 bln in short term bills. The average yield on 3 month bill was 5.11% up from previous 2.29% and on 6 month bills the average yield was 5.22% from 3.3% both thus reached the highest points since euro inception. However, 10 year yields (IT, SP, FR) have declined today slightly.
A confirmation that the current crisis is not confined to the Eurozone came as IMF and the European commission confirmed that they had received a request for "precautionary" financial assistance from Hungary which is a member of the European Union. This assistance is meant to secure Hungarian ability to obtain funding in the markets. Hungarian Forint belonged to the worst performing currencies over the past three months but surprisingly, it has been strengthening since Thursday last week.
UK public sector net borrowing was lower than expected when it printed GBP 3.4 bln in October from GBP 10.2 bln in September. Public borrowing continues to be on target for this fiscal year but additional deficit reduction might be more difficult given the weak growth projections. GBPUSD has been on a rollercoaster today as it first dropped from 1.5691 to 1.5622 only to quickly recover back to 1.5680.
The NY session will kick off at 8:30 am with the second estimate for the annualized Q3 GDP that is seen at 2.5%, unchanged from the initial estimate. As this is the second estimate, the impact is likely to be limited.
Canadian September retail sales are also due at 8:30 am and are expected to keep the same pace of growth and print 0.5%. Core retail sales are seen at 0.4%.
Eurozone consumer confidence is due at 10:00 am and should remain unchanged at -20 in November. Readings below 0 continue to express pessimism among consumers.
EURUSD hits our intermediate long target, EURGBP hits all targets, 2 gold trades are triggered, while EURJPY finally gets filled. See the rest of our trades EURUSD. Click here for direct access http://ashraflaidi.com/ products/ sub01/ access/ ?a=554 Click here to subscribe http://ashraflaidi.com/ products/ sub01/
Minutes from November FOMC meeting are due at 2:00 pm but considering the press conference after the actual FOMC decision, the chance of any surprising insights that could notably impact the markets is slim.
Patrik Urban
November 22, 2011 08:04 ET: Spanish short term auction sees soaring yields; IMF&EU confirmed Hungarian request for financial assistance; UK public sector borrowing lower. Market turns to Q3 GDP revision, Canadian retail sales and FOMC minutes are due. EURUSD & EURGBP longs hit targets.
USD is slightly weaker in the ongoing session as EURUSD trades above 1.3550. CHF and EUR are the relative strength winners today. Major European equities are higher by about 0.5%.
Despite the new Spanish government that promised to cut deficit and promote growth, Spanish treasury had to pay higher yield today to sell almost EUR 3 bln in short term bills. The average yield on 3 month bill was 5.11% up from previous 2.29% and on 6 month bills the average yield was 5.22% from 3.3% both thus reached the highest points since euro inception. However, 10 year yields (IT, SP, FR) have declined today slightly.
A confirmation that the current crisis is not confined to the Eurozone came as IMF and the European commission confirmed that they had received a request for "precautionary" financial assistance from Hungary which is a member of the European Union. This assistance is meant to secure Hungarian ability to obtain funding in the markets. Hungarian Forint belonged to the worst performing currencies over the past three months but surprisingly, it has been strengthening since Thursday last week.
UK public sector net borrowing was lower than expected when it printed GBP 3.4 bln in October from GBP 10.2 bln in September. Public borrowing continues to be on target for this fiscal year but additional deficit reduction might be more difficult given the weak growth projections. GBPUSD has been on a rollercoaster today as it first dropped from 1.5691 to 1.5622 only to quickly recover back to 1.5680.
The NY session will kick off at 8:30 am with the second estimate for the annualized Q3 GDP that is seen at 2.5%, unchanged from the initial estimate. As this is the second estimate, the impact is likely to be limited.
Canadian September retail sales are also due at 8:30 am and are expected to keep the same pace of growth and print 0.5%. Core retail sales are seen at 0.4%.
Eurozone consumer confidence is due at 10:00 am and should remain unchanged at -20 in November. Readings below 0 continue to express pessimism among consumers.
EURUSD hits our intermediate long target, EURGBP hits all targets, 2 gold trades are triggered, while EURJPY finally gets filled. See the rest of our trades EURUSD. Click here for direct access http://ashraflaidi.com/ products/ sub01/ access/ ?a=554 Click here to subscribe http://ashraflaidi.com/ products/ sub01/
Minutes from November FOMC meeting are due at 2:00 pm but considering the press conference after the actual FOMC decision, the chance of any surprising insights that could notably impact the markets is slim.
Patrik Urban
Turning to Existing Home Sales, USDX at 6-Week Highs
November 21, 2011 09:46 ET : Gold fell below 1700, Conservative party in Spain wins election but Spanish yields continue to rise; Eurozone current account shows surplus; BoE calls for more QE; Moody's warns France. Market turns to existing home sales and Canadian wholesale sales.6 trades hit all targets, 6 unfilled, 5 in progress, 2 stopped out.
Euro fell fails to gain traction after Mariano Rajoy's Conservative People's party won in a landslide in Spanish election. The People's party promises to cut the budget deficit while reducing the unemployment and stimulating growth. Despite these pledges, the 10 year yield continues to rise and trades around 6.54%.
USD Index at 6-week highs, nearing both 100 and 200 WEEK moving averages. Gold, touches below both the 55 & 100 DAY MAs
2 of 3 EURUSD Intermarket Indights hit all targets, none of the 2 EURJPY were filled, EURGBP & GBPCAD trades are in progress, 1 USDCAD stopped out, 1 ES stopped out, 1 ES unfilled, 1 Gold short all done, 1 other unfilled, both silver shorts all done, 1 oil short all done, 1 unfilled. See here for more detail: http://ashraflaidi.com/ products/ sub01/ access/ ?a=553, For a 1-week Subscription, click here: http://ashraflaidi.com/ products/ sub01/
Even solid fundamental data was not enough to change the bearish market sentiment as the Eurozone current account balance positively surprised when it showed a EUR 0.5 bln surplus in September after EUR -5.9 bln deficit in August. The market expected a EUR -3.2 bln deficit.
BoE Adam Posen reiterated today his view that the ECB and the FED should engage in "large scale bond purchases" in order to stimulate their economies by lowering interest rates and encouraging investment. Mr. Posen is known for his fear that monetary stimulus would be removed too early before recovery is secured.
French 10 year yield rose today after Moody's warned that French higher yields would cause fiscal challenges and lead to deteriorating growth outlook with negative credit implications. The German-French 10 year spread widened and reached a high of 1.72%.
The US session starts with Canadian wholesale sales at 8:30 am ET that are expected to grow 0.6% in September from 0.2% in August.
Existing home sales are due at 10:00 am and are seen lower at 4.8M in October from previous 4.91M.
Patrik Urban
Euro fell fails to gain traction after Mariano Rajoy's Conservative People's party won in a landslide in Spanish election. The People's party promises to cut the budget deficit while reducing the unemployment and stimulating growth. Despite these pledges, the 10 year yield continues to rise and trades around 6.54%.
USD Index at 6-week highs, nearing both 100 and 200 WEEK moving averages. Gold, touches below both the 55 & 100 DAY MAs
2 of 3 EURUSD Intermarket Indights hit all targets, none of the 2 EURJPY were filled, EURGBP & GBPCAD trades are in progress, 1 USDCAD stopped out, 1 ES stopped out, 1 ES unfilled, 1 Gold short all done, 1 other unfilled, both silver shorts all done, 1 oil short all done, 1 unfilled. See here for more detail: http://ashraflaidi.com/ products/ sub01/ access/ ?a=553, For a 1-week Subscription, click here: http://ashraflaidi.com/ products/ sub01/
Even solid fundamental data was not enough to change the bearish market sentiment as the Eurozone current account balance positively surprised when it showed a EUR 0.5 bln surplus in September after EUR -5.9 bln deficit in August. The market expected a EUR -3.2 bln deficit.
BoE Adam Posen reiterated today his view that the ECB and the FED should engage in "large scale bond purchases" in order to stimulate their economies by lowering interest rates and encouraging investment. Mr. Posen is known for his fear that monetary stimulus would be removed too early before recovery is secured.
French 10 year yield rose today after Moody's warned that French higher yields would cause fiscal challenges and lead to deteriorating growth outlook with negative credit implications. The German-French 10 year spread widened and reached a high of 1.72%.
The US session starts with Canadian wholesale sales at 8:30 am ET that are expected to grow 0.6% in September from 0.2% in August.
Existing home sales are due at 10:00 am and are seen lower at 4.8M in October from previous 4.91M.
Patrik Urban
Friday, November 18, 2011
Euro Supported By Lower Yields, Draghi Mum on ECB Purchases
http://www.ashraflaidi.com/forex-news/?a=2908
November 18, 2011 08:45 ET :
German annual PPI lower; Italian industrial orders drop; 10 year periphery bonds yields decline slightly; Canadian annual CPI declines. Market turns to US and Canadian leading indicators. As market retraces & EURUSD rebounds, those who were not filled in yesterdays trades will get a chance to do so now.
The USD is slightly weaker today as market participants take profit and square positions after large moves seen this week. GBP and CHF are the relative strength winners today as they strengthened against most other majors. European equity markets are losing between 0.5% and 1%.
On the European data front, German annual PPI printed 5.3% in October down from previous 5.5% and Italian industrial orders dropped -8.3% in September after growing 4.2% in August which is the largest decline since mid 2009.
ECB president Mario Draghi reiterated during his speech that economic activity is expected to weaken in most advanced economies and noted increased downside risks in the Eurozone. However, he did not provide any insights as to what additional steps can the ECB take in order to cope with the crisis. Not surprisingly, France would like the ECB to implement mechanisms that would prevent additional yield increases while Germany believes that the ECB is not authorized for a more significant market intervention. Draghi did hint the ECB could consider further steps to relieve banks of liquidity strains, saying We are aware of the current difficulties for banks due to the stress on sovereign bonds, the tightness of funding markets and the scarcity of eligible collateral.
As market retraces & EURUSD rebounds, those who were not filled in yesterdays trades will get a chance to do so now. Click here for those trades http://ashraflaidi.com/ products/ sub01/ access/ ?a=552 Click here to get a 1-week trial http://ashraflaidi.com/ products/ sub01/ Premium Subscribers wishing to get SMS alerts of ONLY the Premium Intermarket Insights can send their mobile phone number to Subscription AT Ashraf Laidi Com
The ECB is said to be aggressively buying Italian and Spanish bonds today which helped to push the Italian 10 year yield back below the critical 7% to 6.80%. French 10 year yields 3.60% and Spanish 6.44%. Spanish-German 10 year yield spread narrowed to 4.51% after it exceeded 5% earlier today.
Canadian October CPI printed 2.9% from previous 3.2% on annual basis while the core annual CPI showed 2.1% from 2.2%.
Canadas leading indicators rose 0.2% in October from Septembers rise of 0.1%. Market had expected +0.1%
US leading indicator index is due at 10:00 am ET and is seen higher in October at 0.6% from previous 0.2%.
USD to watch Dallas Fed president Fisher speech at 1:15 pm.
Patrik Urban
November 18, 2011 08:45 ET :
German annual PPI lower; Italian industrial orders drop; 10 year periphery bonds yields decline slightly; Canadian annual CPI declines. Market turns to US and Canadian leading indicators. As market retraces & EURUSD rebounds, those who were not filled in yesterdays trades will get a chance to do so now.
The USD is slightly weaker today as market participants take profit and square positions after large moves seen this week. GBP and CHF are the relative strength winners today as they strengthened against most other majors. European equity markets are losing between 0.5% and 1%.
On the European data front, German annual PPI printed 5.3% in October down from previous 5.5% and Italian industrial orders dropped -8.3% in September after growing 4.2% in August which is the largest decline since mid 2009.
ECB president Mario Draghi reiterated during his speech that economic activity is expected to weaken in most advanced economies and noted increased downside risks in the Eurozone. However, he did not provide any insights as to what additional steps can the ECB take in order to cope with the crisis. Not surprisingly, France would like the ECB to implement mechanisms that would prevent additional yield increases while Germany believes that the ECB is not authorized for a more significant market intervention. Draghi did hint the ECB could consider further steps to relieve banks of liquidity strains, saying We are aware of the current difficulties for banks due to the stress on sovereign bonds, the tightness of funding markets and the scarcity of eligible collateral.
As market retraces & EURUSD rebounds, those who were not filled in yesterdays trades will get a chance to do so now. Click here for those trades http://ashraflaidi.com/ products/ sub01/ access/ ?a=552 Click here to get a 1-week trial http://ashraflaidi.com/ products/ sub01/ Premium Subscribers wishing to get SMS alerts of ONLY the Premium Intermarket Insights can send their mobile phone number to Subscription AT Ashraf Laidi Com
The ECB is said to be aggressively buying Italian and Spanish bonds today which helped to push the Italian 10 year yield back below the critical 7% to 6.80%. French 10 year yields 3.60% and Spanish 6.44%. Spanish-German 10 year yield spread narrowed to 4.51% after it exceeded 5% earlier today.
Canadian October CPI printed 2.9% from previous 3.2% on annual basis while the core annual CPI showed 2.1% from 2.2%.
Canadas leading indicators rose 0.2% in October from Septembers rise of 0.1%. Market had expected +0.1%
US leading indicator index is due at 10:00 am ET and is seen higher in October at 0.6% from previous 0.2%.
USD to watch Dallas Fed president Fisher speech at 1:15 pm.
Patrik Urban
Thursday, November 17, 2011
Spanish, French Yields Rise, Rumours of Margin Hike
http://ashraflaidi.com/t/?h2904
November 17, 2011 08:03 ET :
UK retail sales higher than expected; Swiss ZEW declined; Spain and France auctions pay higher yields; Spain-Germ 10- yr hits 4.99%, Italian 10 year yield firmly above 7%, Chatter of Margin hike in Spanish requirements, Market turns to building permits, housing starts, jobless claims and Philly Fed index. Intermarket Insights due ahead of NY opening bell.
USD stronger against most majors in the ongoing session. Major European stock markets are losing about 1.5%.
UK Retail sales rose 0.6% in October from previous 0.5%, significantly better than expected -0.2%. Annually, retail sales grew 0.9% from 0.3%. This is a second solid print in a row as consumers took advantage of early Christmas discounts. The improvement is not likely to last long though as the unemployment rate remains high and consumer confidence is declining. GBPUSD jumped on the release towards 1.58 but lost most of its gains.
Swiss ZEW economic expectations index fell to -64.3 in November from -54.4 which remains close to two years low seen in September at -75.7.
Spain sold EUR 3.5 bln in 10 year bonds with average yield 6.975%, up from previous 5.43%. Bid to cover was lower at 1.54 compared to previous 1.76. Spain 10-yr yield hit a new high of 6.78%, pushing the spread over Germany to 5%. This is the highest borrowing cost since 1997 and dangerously close to the 7% rate which is by many considered to be unsustainable for longer term funding. A rumor that Clearnet will increase margin requirements for Spanish bonds is pushing yields higher.
France also had to pay higher cost as it sold EUR 6.94 bln in various durations today. The largest auction was for July 2016 BTAN that reached EUR 3.33 bln with average yield 2.82%, higher than previous 2.31%.
Investors have been paying more attention to the fixed income market as 10 year yields have rising not only for the periphery states but also for many Eurozone core countries. Italian 10 year yields around 7.09% and Spanish 6.69% despite ECB buying.
The NY session starts at 8:30 am ET with building permits that are seen higher in October at 0.6M from previous 0.59M and housing starts that are anticipated lower at 0.61M from 0.66M. Jobless claims are seen at 396K from 390K.
Canadian International securities transactions should rise to CAD 9.24 bln in September from CAD 7.92 bln.
Philly Fed index is due at 10:00 am and is anticipated unchanged in November at 8.7.
Patrik Urban
November 17, 2011 08:03 ET :
UK retail sales higher than expected; Swiss ZEW declined; Spain and France auctions pay higher yields; Spain-Germ 10- yr hits 4.99%, Italian 10 year yield firmly above 7%, Chatter of Margin hike in Spanish requirements, Market turns to building permits, housing starts, jobless claims and Philly Fed index. Intermarket Insights due ahead of NY opening bell.
USD stronger against most majors in the ongoing session. Major European stock markets are losing about 1.5%.
UK Retail sales rose 0.6% in October from previous 0.5%, significantly better than expected -0.2%. Annually, retail sales grew 0.9% from 0.3%. This is a second solid print in a row as consumers took advantage of early Christmas discounts. The improvement is not likely to last long though as the unemployment rate remains high and consumer confidence is declining. GBPUSD jumped on the release towards 1.58 but lost most of its gains.
Swiss ZEW economic expectations index fell to -64.3 in November from -54.4 which remains close to two years low seen in September at -75.7.
Spain sold EUR 3.5 bln in 10 year bonds with average yield 6.975%, up from previous 5.43%. Bid to cover was lower at 1.54 compared to previous 1.76. Spain 10-yr yield hit a new high of 6.78%, pushing the spread over Germany to 5%. This is the highest borrowing cost since 1997 and dangerously close to the 7% rate which is by many considered to be unsustainable for longer term funding. A rumor that Clearnet will increase margin requirements for Spanish bonds is pushing yields higher.
France also had to pay higher cost as it sold EUR 6.94 bln in various durations today. The largest auction was for July 2016 BTAN that reached EUR 3.33 bln with average yield 2.82%, higher than previous 2.31%.
Investors have been paying more attention to the fixed income market as 10 year yields have rising not only for the periphery states but also for many Eurozone core countries. Italian 10 year yields around 7.09% and Spanish 6.69% despite ECB buying.
The NY session starts at 8:30 am ET with building permits that are seen higher in October at 0.6M from previous 0.59M and housing starts that are anticipated lower at 0.61M from 0.66M. Jobless claims are seen at 396K from 390K.
Canadian International securities transactions should rise to CAD 9.24 bln in September from CAD 7.92 bln.
Philly Fed index is due at 10:00 am and is anticipated unchanged in November at 8.7.
Patrik Urban
Wednesday, November 16, 2011
BoE Projects 1.3% CPI In 2 Years; US CPI, IndusProd Is Next
http://ashraflaidi.com/t/?h2901
November 16, 2011 08:00 ET : Periphery yields continue to rise; UK labor market data mixed; BOE projects inflation to drop to 1.3% in 2 years; Eurozone CPI remains elevated. Market turns to CPI, TIC flows, capacity utilization and industrial production. Both EURUSD Premium trades hit all targets, pattern seen repeating as range remains intact.
EURUSD was declining throughout the Asian session and reached a 1.3430 low right before London traders got to their desks. Profit taking sent EURUSD 130+ points higher but the common currency was not able to hold onto the gains and quickly gave them up. EURUSD is trading around 1.3470. Major European equity indices are losing between 0.5% and 1%.
The closely watched Italian 10 year yield reached 7.13% today but has since declined to current 6.85 with German-Italian 10 year spread around 5%. A reason for concern comes from soaring Spanish 10 year yield that reached 6.34% today which is above the high seen in August. At the beginning of October, Spanish 10 year yielded only 4.98%.
In the UK, the labor market data was mixed. The unemployment rate ticked up in September to 8.3% from 8.1% but the claimant count decreased in October to 5.3K from previous 13.4K. The claimant rate held steady at 5%.
The long awaited quarterly inflation report predicts CPI to fall to 1.3% in two years and GDP growth to reach 3.1% in the same timeframe. However, the BOE notes unusually uncertain outlook and high sensitivity to developments in the Eurozone.
BOE governor King in his speech reiterated that the forecasts are based on the assumption that there is no change in QE which could imply further QE is possible as the projection is below BOE's 2% inflation target.
Eurozone annual consumer inflation remained elevated at 3% in October mainly due to persistently high energy costs. Core CPI was unchanged at 1.6%.
Both EURUSD trades hit all targets. One of our AMENDED GBPUSD TRADES hit all targets. following the markets rapid decline in Asia (as we were not filled in Tuesdays trades) More on GBPCAD, EURJPY, US crude and gold as well as FOUR CHARTS on GBP, CAD & EURUSD, click here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=550 Non-subscribers click here: http://ashraflaidi.com/ products/ sub01/
The NY session will start at 8:30 am with October CPI that is seen lower at 3.7% from 3.9% on annual basis while core CPI should increase to 2.1% from 2.0%.
Long term TIC flows due at 9:00 am should show an increase to USD 63.4 bln in September from USD 57.9 bln in August and Capacity utilization and industrial production both due at 9:15 am are seen slightly higher at 77.6% and 0.4% respectively.
Patrik Urban
November 16, 2011 08:00 ET : Periphery yields continue to rise; UK labor market data mixed; BOE projects inflation to drop to 1.3% in 2 years; Eurozone CPI remains elevated. Market turns to CPI, TIC flows, capacity utilization and industrial production. Both EURUSD Premium trades hit all targets, pattern seen repeating as range remains intact.
EURUSD was declining throughout the Asian session and reached a 1.3430 low right before London traders got to their desks. Profit taking sent EURUSD 130+ points higher but the common currency was not able to hold onto the gains and quickly gave them up. EURUSD is trading around 1.3470. Major European equity indices are losing between 0.5% and 1%.
The closely watched Italian 10 year yield reached 7.13% today but has since declined to current 6.85 with German-Italian 10 year spread around 5%. A reason for concern comes from soaring Spanish 10 year yield that reached 6.34% today which is above the high seen in August. At the beginning of October, Spanish 10 year yielded only 4.98%.
In the UK, the labor market data was mixed. The unemployment rate ticked up in September to 8.3% from 8.1% but the claimant count decreased in October to 5.3K from previous 13.4K. The claimant rate held steady at 5%.
The long awaited quarterly inflation report predicts CPI to fall to 1.3% in two years and GDP growth to reach 3.1% in the same timeframe. However, the BOE notes unusually uncertain outlook and high sensitivity to developments in the Eurozone.
BOE governor King in his speech reiterated that the forecasts are based on the assumption that there is no change in QE which could imply further QE is possible as the projection is below BOE's 2% inflation target.
Eurozone annual consumer inflation remained elevated at 3% in October mainly due to persistently high energy costs. Core CPI was unchanged at 1.6%.
Both EURUSD trades hit all targets. One of our AMENDED GBPUSD TRADES hit all targets. following the markets rapid decline in Asia (as we were not filled in Tuesdays trades) More on GBPCAD, EURJPY, US crude and gold as well as FOUR CHARTS on GBP, CAD & EURUSD, click here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=550 Non-subscribers click here: http://ashraflaidi.com/ products/ sub01/
The NY session will start at 8:30 am with October CPI that is seen lower at 3.7% from 3.9% on annual basis while core CPI should increase to 2.1% from 2.0%.
Long term TIC flows due at 9:00 am should show an increase to USD 63.4 bln in September from USD 57.9 bln in August and Capacity utilization and industrial production both due at 9:15 am are seen slightly higher at 77.6% and 0.4% respectively.
Patrik Urban
Tuesday, November 15, 2011
Italian 10 Yr Yield Above 7%; US Retail Sales Next
http://ashraflaidi.com/t/?h2897
November 15, 2011 07:30 ET: Eurozone Q3 GDP growth same as Q2 while German and French GDP grew faster; ZEW economic sentiment fell further in Eurozone as well as in Germany; UK inflation slips. Italian 10 year yield rose back above 7%. Market turns to US PPI, retail sales and Empire state manufacturing. Today's Premium Intermarket Insights due at the US open.
The greenback is the relative strength winner again as it rises across the board with the exception of JPY. Major European equity indices are losing about 1%.
Eurozone's GDP grew 0.2% in Q3 the same pace as in Q2. However, the annual print declined from 1.6% to 1.4%. Two largest Eurozone's economies, Germany and France, maintained GDP growth, albeit a slow one. German Q3 GDP rose 0.5% up from 0.3% while French Q3 GDP grew 0.4% up from previous -0.1%. However, German economy minister Philipp Roesler warned today that economic growth will slow down in coming months which corresponds to ZEW's projection that Germany will contract in Q1 2012.
German ZEW economic sentiment index fell for the 10th time in a row in November to -55.2 from -48.3 and its Eurozone's counterpart declined further to -59.1 from -51.2. Greek and Italian government crises contributed to the worsening the Center for European Economic Research noted.
EUR is being pressured again as Italian 10 year yield moved back above the critical 7% mark and the German-Italian 10 year spread widened to 5.24% (last week's Eurozone-era high was 5.54%)
EURUSD trades have near session lows slightly above 1.35.
It seems that the long standing BOE projection about peaking inflation is finally becoming a reality. UK consumer inflation declined to 5% y/y from previous 5.2% which is below market expectations of 5.1%. BOE governor Mervyn King reiterated today that MPC sees CPI falling sharply in the next six months and should reach 2% target by the end of 2012. GBPUSD fell after the release to 1.5828 and currently trades around 1.5860.
The New York session will start at 8:30 am with October PPI that is seen lower at 6.3% from 6.9% on annual basis (core PPI is expected higher at 2.9% from 2.5%). Advance October retail sales are seen lower at 0.3% from previous 1.1% (core sales are expected lower at 0.2% from 0.5%).
November Empire state manufacturing is seen at -2.0 from previous -8.5 and Canadian manufacturing sales are anticipated lower at 1.3% in September from 1.4% in August.
Patrik Urban
November 15, 2011 07:30 ET: Eurozone Q3 GDP growth same as Q2 while German and French GDP grew faster; ZEW economic sentiment fell further in Eurozone as well as in Germany; UK inflation slips. Italian 10 year yield rose back above 7%. Market turns to US PPI, retail sales and Empire state manufacturing. Today's Premium Intermarket Insights due at the US open.
The greenback is the relative strength winner again as it rises across the board with the exception of JPY. Major European equity indices are losing about 1%.
Eurozone's GDP grew 0.2% in Q3 the same pace as in Q2. However, the annual print declined from 1.6% to 1.4%. Two largest Eurozone's economies, Germany and France, maintained GDP growth, albeit a slow one. German Q3 GDP rose 0.5% up from 0.3% while French Q3 GDP grew 0.4% up from previous -0.1%. However, German economy minister Philipp Roesler warned today that economic growth will slow down in coming months which corresponds to ZEW's projection that Germany will contract in Q1 2012.
German ZEW economic sentiment index fell for the 10th time in a row in November to -55.2 from -48.3 and its Eurozone's counterpart declined further to -59.1 from -51.2. Greek and Italian government crises contributed to the worsening the Center for European Economic Research noted.
EUR is being pressured again as Italian 10 year yield moved back above the critical 7% mark and the German-Italian 10 year spread widened to 5.24% (last week's Eurozone-era high was 5.54%)
EURUSD trades have near session lows slightly above 1.35.
It seems that the long standing BOE projection about peaking inflation is finally becoming a reality. UK consumer inflation declined to 5% y/y from previous 5.2% which is below market expectations of 5.1%. BOE governor Mervyn King reiterated today that MPC sees CPI falling sharply in the next six months and should reach 2% target by the end of 2012. GBPUSD fell after the release to 1.5828 and currently trades around 1.5860.
The New York session will start at 8:30 am with October PPI that is seen lower at 6.3% from 6.9% on annual basis (core PPI is expected higher at 2.9% from 2.5%). Advance October retail sales are seen lower at 0.3% from previous 1.1% (core sales are expected lower at 0.2% from 0.5%).
November Empire state manufacturing is seen at -2.0 from previous -8.5 and Canadian manufacturing sales are anticipated lower at 1.3% in September from 1.4% in August.
Patrik Urban
Monday, November 14, 2011
Mixed Italian Auction, EURUSD Below 1.37
http://www.ashraflaidi.com/forex-news/?a=2893
November 14, 2011 07:37 ET : Italian auction ends with improved bid to cover ratio but higher yields; Eurozone industrial production declines; Swiss deflationary worries persists as Swiss producer and import prices fall. The day's Premium Intermarket Insights will be issued prior to the NY open.
Italy was able to reach the full target by selling EUR 3.0 bln in 5 year bonds. Bid to cover ratio improved to 1.469 from 1.34 but the gross yield was 6.29% compared to previous 5.32%. 10 year yields around 6.38% with the Italian-German 10 year spread at 4.52%. Italy has now raised 4/5th of its total planned bond issuance for the year. Over EUR 45 bln in new bonds must be raised before year-end.
Investors optimism proves short lived as risk aversion returns to markets. USD is higher across the board with the exception of JPY in the ongoing session. European equities are in red by about 0.5%.
EURUSD opened higher and traded above 1.38 during the Asian session on the back of a smooth transition of power in Italy. PM Berlusconi resigned on Saturday as planned after the parliament approved 2012 budget. Former EU commissioner Mario Monti was selected to form a new government and could be sworn into office as early as Wednesday. However, EURUSD has not been able to hold onto the gains and pulled back to 1.3670 where it continues to trade.
Eurozone industrial production fell -2.0% in September after growing 1.4% in August (+2.2% y/y down significantly from 6% y/y). This is the worst result since mid 2009 and most concerning is that production was notably weak in Germany, France and Italy which are the three Eurozone's most important economies. The probability of a recession has increased dramatically over the past few weeks.
Swiss producer and import prices declined in October -0.2% from -0.1% in September which translates to -1.8% y/y from previous -2.0% y/y. Fears that deflationary pressures will continue could reignite SNB's comments about further measures to weaken the Franc.
There is no data due during the NY session.
CAD traders should pay attention at 1:00 pm when BOC governor Mark Carney speaks in Toronto.
Patrik Urban
November 14, 2011 07:37 ET : Italian auction ends with improved bid to cover ratio but higher yields; Eurozone industrial production declines; Swiss deflationary worries persists as Swiss producer and import prices fall. The day's Premium Intermarket Insights will be issued prior to the NY open.
Italy was able to reach the full target by selling EUR 3.0 bln in 5 year bonds. Bid to cover ratio improved to 1.469 from 1.34 but the gross yield was 6.29% compared to previous 5.32%. 10 year yields around 6.38% with the Italian-German 10 year spread at 4.52%. Italy has now raised 4/5th of its total planned bond issuance for the year. Over EUR 45 bln in new bonds must be raised before year-end.
Investors optimism proves short lived as risk aversion returns to markets. USD is higher across the board with the exception of JPY in the ongoing session. European equities are in red by about 0.5%.
EURUSD opened higher and traded above 1.38 during the Asian session on the back of a smooth transition of power in Italy. PM Berlusconi resigned on Saturday as planned after the parliament approved 2012 budget. Former EU commissioner Mario Monti was selected to form a new government and could be sworn into office as early as Wednesday. However, EURUSD has not been able to hold onto the gains and pulled back to 1.3670 where it continues to trade.
Eurozone industrial production fell -2.0% in September after growing 1.4% in August (+2.2% y/y down significantly from 6% y/y). This is the worst result since mid 2009 and most concerning is that production was notably weak in Germany, France and Italy which are the three Eurozone's most important economies. The probability of a recession has increased dramatically over the past few weeks.
Swiss producer and import prices declined in October -0.2% from -0.1% in September which translates to -1.8% y/y from previous -2.0% y/y. Fears that deflationary pressures will continue could reignite SNB's comments about further measures to weaken the Franc.
There is no data due during the NY session.
CAD traders should pay attention at 1:00 pm when BOC governor Mark Carney speaks in Toronto.
Patrik Urban
Friday, November 11, 2011
Risk Aversion Lower As Italian 10 Year Yield Declines
French rating confirmed at AAA; Papademos new Greek PM; Italian 10 year yield declines and UK price pressures started to ease. Market turns to UoM consumer confidence.
Risk aversion is somewhat lower in the ongoing session with most currencies trading within relatively tight range against the USD. Major European equity indices are higher by about 0.5%.
World financial markets calmed down after French rating was affirmed at AAA and former ECB vice president Lucas Papademos was selected as a new Greek PM. German chancellor Merkel's confirmation that there are no plans to create a two level Eurozone as was speculated over the past few turbulent days also helped.
Italian senate will vote on the austerity measures today and the government announced that it will meet on Saturday. PM Berlusconi said that he would resign after the budget bill was approved and the speed of changes imply that the probability that the new government could be installed over the weekend is high. Italian 10 year yield trades around 6.66% and German-Italian 10 year spread declined to 4.86%.
In the UK, annual PPI input prices declined -0.8% in October from previous +1.8% (14.1% y/y from 17.7% y/y). Output prices stayed unchanged m/m and declined to 5.7% from 6.3% y/y. Both annual input and output readings showed declines and were lower than expectations indicating that inflationary pressures could indeed start to disappear which could consequently increase the chances of more QE. GBPUSD trades near session lows around 1.5910.
The liquidity during the US session could be low and movements erratic as the US celebrates Veterans Day and Canadian banks are closed due to Remembrance Day.
Despite the holidays, 9:55 am ET will bring November UoM consumer confidence that is seen higher at 61.5 from previous 60.9.
The volatility could increase at 1:15 pm when FED governor Janet Yellen speaks about financial stability in Chicago.
Patrik Urban
Risk aversion is somewhat lower in the ongoing session with most currencies trading within relatively tight range against the USD. Major European equity indices are higher by about 0.5%.
World financial markets calmed down after French rating was affirmed at AAA and former ECB vice president Lucas Papademos was selected as a new Greek PM. German chancellor Merkel's confirmation that there are no plans to create a two level Eurozone as was speculated over the past few turbulent days also helped.
Italian senate will vote on the austerity measures today and the government announced that it will meet on Saturday. PM Berlusconi said that he would resign after the budget bill was approved and the speed of changes imply that the probability that the new government could be installed over the weekend is high. Italian 10 year yield trades around 6.66% and German-Italian 10 year spread declined to 4.86%.
In the UK, annual PPI input prices declined -0.8% in October from previous +1.8% (14.1% y/y from 17.7% y/y). Output prices stayed unchanged m/m and declined to 5.7% from 6.3% y/y. Both annual input and output readings showed declines and were lower than expectations indicating that inflationary pressures could indeed start to disappear which could consequently increase the chances of more QE. GBPUSD trades near session lows around 1.5910.
The liquidity during the US session could be low and movements erratic as the US celebrates Veterans Day and Canadian banks are closed due to Remembrance Day.
Despite the holidays, 9:55 am ET will bring November UoM consumer confidence that is seen higher at 61.5 from previous 60.9.
The volatility could increase at 1:15 pm when FED governor Janet Yellen speaks about financial stability in Chicago.
Patrik Urban
Thursday, November 10, 2011
Another Rare 2% Daily Decline in EURUSD
http://www.ashraflaidi.com/forex-news/?a=2881
November 9, 2011 10:16 ET: Greek PM to meet President at 16:00 GMT EURUSD on its way of posting a rare 2% daily decline. There have been only 5 of such days over the past 3 years, 2 of which occurred last month; (-2% decline Oct 31 after referendum announcement and +2% on Oct 27 after the EFSF/Troika/recap deal). EURUSD 1 month volatility surges 10%, promising more of such days to come. EURUSD vulnerable to 1.3180 before month-end.
day as willingness to risk disappears from the market. European equity markets are deep in red and EURUSD is 200 points off today's highs.
Reports that PM Berlusconi would resign after austerity measures are approved did not help to bring down Italian soaring cost of borrowing. 10 year yield broke above 7% today and BTP futures trading had to be interrupted due to high volatility as real money accounts have been liquidating their BTP holdings. News that the margin on Italian debt has been increased on all durations by Clearnet clearing house as part of their regular risk management led to additional sales. Italy-Germany 10 year spread and Italian CDS have also reached record highs. The ECB has been buying Italian debt via the SMP as has become the norm.
The 7% threshold is closely watched as other troubled countries (Ireland, Greece, Portugal) needed financial aid after their debt reached similar levels. With the EFSF too small to bail out Italy, the situation in the Eurozone is getting dangerously close to being beyond control.
September UK trade deficit widened to GBP -9.8 bln from GBP -8.6 bln which is the worst result since data started to be collected in 1998. Record imports are blamed for such a poor print and GDP growth is likely to be negatively impacted. GBPUSD trades below 1.60 after touching 1.6114 just a few hours earlier.
Fed chairman Bernanke will speak at the Fed conference in Washington at 9:30 am and September wholesale inventories are seen higher at 0.6% from 0.4%.
NZD traders should pay attention to RBNZ financial stability report that will be released at 3:00 pm.
Patrik Urban & A Laidi
November 9, 2011 10:16 ET: Greek PM to meet President at 16:00 GMT EURUSD on its way of posting a rare 2% daily decline. There have been only 5 of such days over the past 3 years, 2 of which occurred last month; (-2% decline Oct 31 after referendum announcement and +2% on Oct 27 after the EFSF/Troika/recap deal). EURUSD 1 month volatility surges 10%, promising more of such days to come. EURUSD vulnerable to 1.3180 before month-end.
day as willingness to risk disappears from the market. European equity markets are deep in red and EURUSD is 200 points off today's highs.
Reports that PM Berlusconi would resign after austerity measures are approved did not help to bring down Italian soaring cost of borrowing. 10 year yield broke above 7% today and BTP futures trading had to be interrupted due to high volatility as real money accounts have been liquidating their BTP holdings. News that the margin on Italian debt has been increased on all durations by Clearnet clearing house as part of their regular risk management led to additional sales. Italy-Germany 10 year spread and Italian CDS have also reached record highs. The ECB has been buying Italian debt via the SMP as has become the norm.
The 7% threshold is closely watched as other troubled countries (Ireland, Greece, Portugal) needed financial aid after their debt reached similar levels. With the EFSF too small to bail out Italy, the situation in the Eurozone is getting dangerously close to being beyond control.
September UK trade deficit widened to GBP -9.8 bln from GBP -8.6 bln which is the worst result since data started to be collected in 1998. Record imports are blamed for such a poor print and GDP growth is likely to be negatively impacted. GBPUSD trades below 1.60 after touching 1.6114 just a few hours earlier.
Fed chairman Bernanke will speak at the Fed conference in Washington at 9:30 am and September wholesale inventories are seen higher at 0.6% from 0.4%.
NZD traders should pay attention to RBNZ financial stability report that will be released at 3:00 pm.
Patrik Urban & A Laidi
Tuesday, November 8, 2011
Awaiting Berlusconi & SNB's Hildebrand
http://ashraflaidi.com/t/?h2878
November 8, 2011 08:20 ET :
Italian 10 year yield continues to surge; German data surprised with exports at record highs; Swiss consumer sentiment declined further; UK manufacturing production increased. Market turns to Canadian housing starts, SNB Chairman Hildebrand is due to speak and probably further push up EURCHF.
In Italy, PM Berlusconi will make a decision whether to resign or not after today's confidence vote due at 14:30 GMT as the pressure on Italian bonds increases. If Berlusconi fails to get 316 votes, he would have to face a confidence vote that will decide his future.
Italian 10 year reached a new high at 6.74% but has eased a bit to current 6.65%. Italian-German spread is currently 4.82%. In Greece, senior officials said that new PM will be announced tomorrow.
After a long series of disappointing data, German economy showed a sign of resiliency. German trade surplus increased to EUR 17.4 bln in September from EUR 11.8 bln in August and current account surplus increased to EUR 15.7 bln from EUR 6.5 bln. Exports grew 0.9% m/m which is the highest print since data started to be collected in 1990. However, as many markets that import German goods experience considerable slowdown, it is likely that even exports will decline in coming months.
Six of the latest trades in the Premium Intermarket Insights are near hitting all of their targets. AUDNZD and silver are confirming our positions from last week, while US crude oil, gold and silver remain in progress. EURGBP continues to respect its 200 WMA, while EURUSD extends its right shoulder consolidation, nearing our final target. For direct Access pls click here http://ashraflaidi.com/ products/ sub01/ access/ ?a=545, non subscribers, click here: http://ashraflaidi.com/ products/ sub01/
More news supporting CHF bearish bias came in the form of October consumer sentiment that declined to -24 from previous -17. Quarterly confidence survey has been declining gradually since the beginning of the year. Consumers expressed fears of future higher unemployment that has been unchanged at 3% for six months.
In the UK, industrial production was unchanged in September but declined -0.7% on annual basis while manufacturing production increased 0.2% m/m and rose 2% y/y. Overall the news is slightly positive as industrial production has a lower impact on GDP growth. GBP is also benefits as traders have been focusing on Greece and Italy.
Canada housing starts due at 8:15 am that are seen slightly lower in October at 198K from 208K.
SNB chairman Hildebrand participates in a discussion at the European finance forum at 8:30 am. Considering the 200+ pip weakening of the CHF since Friday's close as a result of SNB chairman's comments, the market seems to anticipate further steps, possibly in a form of higher EURCHF floor. Any comments regarding the Franc strength could send the Swiss currency lower.
November IBD/TIPP economic optimism index is due at 10:00 and is expected higher at 42.5 from 40.3 and GBP volatility could increase further as NIESR releases its GDP estimate at the same time.
Patrik Urban
November 8, 2011 08:20 ET :
Italian 10 year yield continues to surge; German data surprised with exports at record highs; Swiss consumer sentiment declined further; UK manufacturing production increased. Market turns to Canadian housing starts, SNB Chairman Hildebrand is due to speak and probably further push up EURCHF.
In Italy, PM Berlusconi will make a decision whether to resign or not after today's confidence vote due at 14:30 GMT as the pressure on Italian bonds increases. If Berlusconi fails to get 316 votes, he would have to face a confidence vote that will decide his future.
Italian 10 year reached a new high at 6.74% but has eased a bit to current 6.65%. Italian-German spread is currently 4.82%. In Greece, senior officials said that new PM will be announced tomorrow.
After a long series of disappointing data, German economy showed a sign of resiliency. German trade surplus increased to EUR 17.4 bln in September from EUR 11.8 bln in August and current account surplus increased to EUR 15.7 bln from EUR 6.5 bln. Exports grew 0.9% m/m which is the highest print since data started to be collected in 1990. However, as many markets that import German goods experience considerable slowdown, it is likely that even exports will decline in coming months.
Six of the latest trades in the Premium Intermarket Insights are near hitting all of their targets. AUDNZD and silver are confirming our positions from last week, while US crude oil, gold and silver remain in progress. EURGBP continues to respect its 200 WMA, while EURUSD extends its right shoulder consolidation, nearing our final target. For direct Access pls click here http://ashraflaidi.com/ products/ sub01/ access/ ?a=545, non subscribers, click here: http://ashraflaidi.com/ products/ sub01/
More news supporting CHF bearish bias came in the form of October consumer sentiment that declined to -24 from previous -17. Quarterly confidence survey has been declining gradually since the beginning of the year. Consumers expressed fears of future higher unemployment that has been unchanged at 3% for six months.
In the UK, industrial production was unchanged in September but declined -0.7% on annual basis while manufacturing production increased 0.2% m/m and rose 2% y/y. Overall the news is slightly positive as industrial production has a lower impact on GDP growth. GBP is also benefits as traders have been focusing on Greece and Italy.
Canada housing starts due at 8:15 am that are seen slightly lower in October at 198K from 208K.
SNB chairman Hildebrand participates in a discussion at the European finance forum at 8:30 am. Considering the 200+ pip weakening of the CHF since Friday's close as a result of SNB chairman's comments, the market seems to anticipate further steps, possibly in a form of higher EURCHF floor. Any comments regarding the Franc strength could send the Swiss currency lower.
November IBD/TIPP economic optimism index is due at 10:00 and is expected higher at 42.5 from 40.3 and GBP volatility could increase further as NIESR releases its GDP estimate at the same time.
Patrik Urban
Monday, November 7, 2011
Fresh ECB SMP Cap Italian Yields, EUR Consolidates
November 7, 2011 10:06 ET : Deflationary pressure continue in Switzerland; Papademos likely new Greek PM; PM Berlusconi rumored to resign today; European data disappoints again. The ECB's securities markets program is back in play as the bank buys more Italian bonds, dragging down 10 yr yields to 6.48% from the day's high of 6.64%.
Risk aversion kept USD bid at the beginning of the London session sending it higher across the board. Over the past two hours, the greenback gave back a portion of its gains. EURUSD trades around 1.3770 after touching 1.3680 earlier. European equity markets are losing about 1%.
Deflationary pressures continue to emerge in Switzerland as CPI declined four times out of last five months. In October consumer prices declined -0.1% which pushed the yearly figure to -0.1% from previous +0.5%. Unemployment rate has stayed unchanged since May at robust 3%. CHF has been under pressure as the SNB's chairman Hildebrand reiterated over the weekend that the SNB could act further to negate the impact of the strong Franc. Rumors that EURCHF floor could be lifted higher have been circulating over the past few weeks and deteriorating data with negative inflation increase the likelihood of such a step. EURCHF trades 140+ points above Friday's close around 1.2345.
In Greece, new national unity government will be formed and PM Papandreou will step down so new leader that will implement the bailout plan austerity measures can be voted in. Former ECB vice president Papademos is eyed as a new PM Dow Jones reports.
Premium clients take a look at Thursdays double chart on EURUSD & silver, highlighting the return to consolidation in the latter and the ongoing trendline resistance in the latter. AUDNZD shorts still in progress, nearing the preliminary target of 1.2950. Direct Access here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=543
News headlines regarding developments in Greece have been impacting market sentiment for months. As the Italian 10 year yield moved above 6% by the end of October, traders' attention has been slowly but surely shifting to Italy. The situation could become more complex as the political situation is getting more unstable. PM Berlusconi asserted that he still has parliamentary majority but the increasing number of defectors could bring the government down. Even two Berlusconi's ministers questioned if the government could continue. Rumors that PM Berlusconi could step down today appeared earlier. Italian 10 yr bond yield are now dropping to 6.48% from the day's high of 6.64% as ECB buys more Italian paper. The spread between Italy& German 10 yr bond yields slips to 4.66% from the day's high of 4.86%.
Patrik Urban
Risk aversion kept USD bid at the beginning of the London session sending it higher across the board. Over the past two hours, the greenback gave back a portion of its gains. EURUSD trades around 1.3770 after touching 1.3680 earlier. European equity markets are losing about 1%.
Deflationary pressures continue to emerge in Switzerland as CPI declined four times out of last five months. In October consumer prices declined -0.1% which pushed the yearly figure to -0.1% from previous +0.5%. Unemployment rate has stayed unchanged since May at robust 3%. CHF has been under pressure as the SNB's chairman Hildebrand reiterated over the weekend that the SNB could act further to negate the impact of the strong Franc. Rumors that EURCHF floor could be lifted higher have been circulating over the past few weeks and deteriorating data with negative inflation increase the likelihood of such a step. EURCHF trades 140+ points above Friday's close around 1.2345.
In Greece, new national unity government will be formed and PM Papandreou will step down so new leader that will implement the bailout plan austerity measures can be voted in. Former ECB vice president Papademos is eyed as a new PM Dow Jones reports.
Premium clients take a look at Thursdays double chart on EURUSD & silver, highlighting the return to consolidation in the latter and the ongoing trendline resistance in the latter. AUDNZD shorts still in progress, nearing the preliminary target of 1.2950. Direct Access here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=543
News headlines regarding developments in Greece have been impacting market sentiment for months. As the Italian 10 year yield moved above 6% by the end of October, traders' attention has been slowly but surely shifting to Italy. The situation could become more complex as the political situation is getting more unstable. PM Berlusconi asserted that he still has parliamentary majority but the increasing number of defectors could bring the government down. Even two Berlusconi's ministers questioned if the government could continue. Rumors that PM Berlusconi could step down today appeared earlier. Italian 10 yr bond yield are now dropping to 6.48% from the day's high of 6.64% as ECB buys more Italian paper. The spread between Italy& German 10 yr bond yields slips to 4.66% from the day's high of 4.86%.
Patrik Urban
Friday, November 4, 2011
Canadian Employment Plunged, US NFP Is Next
http://www.ashraflaidi.com/forex-news/?a=2868
November 4, 2011 08:16 ET :
Greek confidence vote could change sentiment that improved after referendum plan was scraped; Italy agreed to reforms monitoring, EU final services PMI worse than estimates; Canadian labor market weakened. Market turns to NFP, unemployment rate and Canadian Ivey PMI.
The USD trades weaker against most majors. The exception is CHF that is weakening across the board as EURCHF rallies and CAD that dropped on weak labor market data. Major European equities are up nearly 1%.
G20 meeting continues today and investors can only hope that today will be less confusing than yesterday. A list of reports and headlines that were later denied or proven to be inaccurate is likely to keep major players on the edge of their seat willing to change their bias in a second. Market sentiment improved after Greek referendum plan was scraped but that could all change as the confidence vote takes place later today.
Italy has agreed to allow the IMF and the EU to monitor its progress on privatization and pension reform. Even though this step by itself is not significant, it could help to bring down the surging 10 year yield as the reforms become more credible. Italian 10 year continues to yield around 6.2%
One does not need many words to describe today's revisions to October services PMI: they all disappointed. To be more precise, German services PMI stayed above the 50 level but was revised considerably lower to 50.5 from flash 52.1. Italian and French service sector is deeply in the contraction territory at 43.9 and 44.6. Eurozone's final services PMI was revised lower to 46.4 from flash estimate of 47.2 and the composite PMI fell to 46.5 which is the lowest print in more than two years. The probability that the Eurozone will be able to avoid a recession seems minuscule.
The number of employed Canadians in October plunged -54K from +60.9K a month earlier. The unemployment rate ticked up to 7.3% from 7.2%. USDCAD jumped upon the announcement from 1.0110 to 1.0185. Even if equity markets continue to rise, return below parity seems unlikely for now.
The New York session kicks off at 8:30 am ET with eagerly awaited labor market data. October NFP is expected slightly lower at 97K from previous 103K while the unemployment rate is seen unchanged at 9.1%. Wednesday's ADP report bested expectations when it printed 110K so a positive surprise could materialize.
Canadian data include September building permits due at 8:30 am anticipated to grow 2.7% after plunging -10.4% in August. October Ivey PMI due at 10:00 am is seen unchanged at 55.7.
Patrik Urban
November 4, 2011 08:16 ET :
Greek confidence vote could change sentiment that improved after referendum plan was scraped; Italy agreed to reforms monitoring, EU final services PMI worse than estimates; Canadian labor market weakened. Market turns to NFP, unemployment rate and Canadian Ivey PMI.
The USD trades weaker against most majors. The exception is CHF that is weakening across the board as EURCHF rallies and CAD that dropped on weak labor market data. Major European equities are up nearly 1%.
G20 meeting continues today and investors can only hope that today will be less confusing than yesterday. A list of reports and headlines that were later denied or proven to be inaccurate is likely to keep major players on the edge of their seat willing to change their bias in a second. Market sentiment improved after Greek referendum plan was scraped but that could all change as the confidence vote takes place later today.
Italy has agreed to allow the IMF and the EU to monitor its progress on privatization and pension reform. Even though this step by itself is not significant, it could help to bring down the surging 10 year yield as the reforms become more credible. Italian 10 year continues to yield around 6.2%
One does not need many words to describe today's revisions to October services PMI: they all disappointed. To be more precise, German services PMI stayed above the 50 level but was revised considerably lower to 50.5 from flash 52.1. Italian and French service sector is deeply in the contraction territory at 43.9 and 44.6. Eurozone's final services PMI was revised lower to 46.4 from flash estimate of 47.2 and the composite PMI fell to 46.5 which is the lowest print in more than two years. The probability that the Eurozone will be able to avoid a recession seems minuscule.
The number of employed Canadians in October plunged -54K from +60.9K a month earlier. The unemployment rate ticked up to 7.3% from 7.2%. USDCAD jumped upon the announcement from 1.0110 to 1.0185. Even if equity markets continue to rise, return below parity seems unlikely for now.
The New York session kicks off at 8:30 am ET with eagerly awaited labor market data. October NFP is expected slightly lower at 97K from previous 103K while the unemployment rate is seen unchanged at 9.1%. Wednesday's ADP report bested expectations when it printed 110K so a positive surprise could materialize.
Canadian data include September building permits due at 8:30 am anticipated to grow 2.7% after plunging -10.4% in August. October Ivey PMI due at 10:00 am is seen unchanged at 55.7.
Patrik Urban
Thursday, November 3, 2011
Awaiting ECB Decision & Draghis First Conference
http://ashraflaidi.com/t/?h2864
November 3, 2011 07:58 ET :
G20 started today in France; Greek government closer to losing the confidence vote; UK PMI services rose but less than anticipated. Market turns to ECB's rate announcement and press conference and later to US ISM non manufacturing and factory orders.
The first day of the G20 summit started today in France with Greece as the main topic of negotiations yet again. It is remarkable how quickly the idea that Greece could leave the Eurozone became a real possibility. Markets are likely to respond to the latest headlines regarding possible investments into the EFSF.
The political situation in Greece is getting more serious as Eva Kaili, Greek socialist party lawmaker, announced she will not back the government in the upcoming confidence vote. Without her support, the governing majority shrank to a single seat. However, falling government could imply that the referendum could be cancelled which is currently contributing to the common currency strength.
In the UK, services PMI declined in October to 51.3 from 52.9. Even though the service sector did not contract, the expansion was weak which supports BOE view of growth risks and peaking inflation. Lower output and smaller new orders contributed to the decline. GBPUSD trades near session highs round 1.60.
The New York session is likely to be busy and volatile today. It starts at 8:30 am ET with jobless claims that are expected at 401K from last week's 402K. The reaction will be muted though as traders will wait for Eurozone rate announcement due 15 minutes later at 8:45 am and especially for new ECB's president Mario Draghi's first press conference that is scheduled to start at 9:30 am. Rates are generally expected to remain unchanged at 1.5% but there is a growing number of analysts who expect 25 bps cut. Few even anticipate 50 bps cut.
Considering how quickly and significantly fundamentals have deteriorated over the past few weeks, the probability of a rate cut is somewhat higher. Whether will Mario Draghi begin his eight year presidency with policy easing will the market learn shortly.
10:00 am will bring October ISM non-manufacturing that is seen slightly higher at 53.7 from 53.0 and factory orders that are expected unchanged in September from a -0.2% in August.
Patrik Urban
November 3, 2011 07:58 ET :
G20 started today in France; Greek government closer to losing the confidence vote; UK PMI services rose but less than anticipated. Market turns to ECB's rate announcement and press conference and later to US ISM non manufacturing and factory orders.
The first day of the G20 summit started today in France with Greece as the main topic of negotiations yet again. It is remarkable how quickly the idea that Greece could leave the Eurozone became a real possibility. Markets are likely to respond to the latest headlines regarding possible investments into the EFSF.
The political situation in Greece is getting more serious as Eva Kaili, Greek socialist party lawmaker, announced she will not back the government in the upcoming confidence vote. Without her support, the governing majority shrank to a single seat. However, falling government could imply that the referendum could be cancelled which is currently contributing to the common currency strength.
In the UK, services PMI declined in October to 51.3 from 52.9. Even though the service sector did not contract, the expansion was weak which supports BOE view of growth risks and peaking inflation. Lower output and smaller new orders contributed to the decline. GBPUSD trades near session highs round 1.60.
The New York session is likely to be busy and volatile today. It starts at 8:30 am ET with jobless claims that are expected at 401K from last week's 402K. The reaction will be muted though as traders will wait for Eurozone rate announcement due 15 minutes later at 8:45 am and especially for new ECB's president Mario Draghi's first press conference that is scheduled to start at 9:30 am. Rates are generally expected to remain unchanged at 1.5% but there is a growing number of analysts who expect 25 bps cut. Few even anticipate 50 bps cut.
Considering how quickly and significantly fundamentals have deteriorated over the past few weeks, the probability of a rate cut is somewhat higher. Whether will Mario Draghi begin his eight year presidency with policy easing will the market learn shortly.
10:00 am will bring October ISM non-manufacturing that is seen slightly higher at 53.7 from 53.0 and factory orders that are expected unchanged in September from a -0.2% in August.
Patrik Urban
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