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
Wednesday, November 30, 2011
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
Wednesday, November 2, 2011
Euro Shrugs Weak PMIs, Awaiting ADP, FOMC
http://www.ashraflaidi.com/forex-news/?a=2859
November 2, 2011 07:50 ET :
Euro Stronger Despite Weak European PMI; ADP And Fed decision are due for today.
German labor market weak; European manufacturing PMI disappointed; UK construction PMI rose. Market turns to ADP and later during the NY session to interest rate announcement and the FED press conference.
The USD is mixed today. It is weaker against the EUR, CHF and JPY and slightly stronger against the other majors. European equities are in red by about 0.25%.
European data was disappointing today. The number of unemployed people in Germany increased by 10K in October after registering a 22K decline in September. The unemployment rate increased to 7% from 6.9%.
PMI data provided no reason for optimism either. Italian manufacturing PMI plunged to 43.3 from 48.3, French PMI increased slightly to 48.5 from 48.2 but stayed firmly in the contraction territory. German manufacturing sector contracted as PMI printed 49.1 from 50.3 and finally Eurozone PMI declined further to 47.1 from 48.5.
The outlook for Europe continues to worsen as even Germany, Eurozone's engine, faces serious fundamental deterioration. Contracting manufacturing sectors, weak labor market and poor confidence imply stagnation at best and the risk of a double dip recession increases with each disappointing data release.
New Premium Intermarket Insights are found here in the following; For DIRECT ACCESS, click here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=539 NONsubscribers can join here: http://ashraflaidi.com/ products/ sub01/
Meanwhile, the German-Italian 10 year spread reached the highest level since Euro inception as Italian 10 year yield continues to rise and trades at 6.17% which is by many analysts considered unsustainable. As has become the norm, the ECB continues to buy Italian and Spanish bonds.
In the UK, construction PMI surprised to the upside when October figure printed solid 53.9 from previous 50.1. GBPUSD briefly jumped higher from 1.6020 to 1.6050 but has since retraced all gains and trades below the pre-announcement levels.
The New York session starts at 8:15 am ET with October ADP report that is expected to increase to 102K from previous 91K.
TAKE NOTE: Bear in mind the interest rate announcement of the FOMC statement is due at 12:30 pm ET (16:30 GMT/London), followed by the Bernanke press conference at 14:15 (18:15 GMT/London). Traders will shift their concentration from Greece to the FED to search for QE3 clues. Any mention of QE3 remains unlikely and should the FED decide to bring up additional easing, it will probably emphasize that is will be contingent upon future developments. The fed funds rate will stay below 0.25%.
Patrik Urban
November 2, 2011 07:50 ET :
Euro Stronger Despite Weak European PMI; ADP And Fed decision are due for today.
German labor market weak; European manufacturing PMI disappointed; UK construction PMI rose. Market turns to ADP and later during the NY session to interest rate announcement and the FED press conference.
The USD is mixed today. It is weaker against the EUR, CHF and JPY and slightly stronger against the other majors. European equities are in red by about 0.25%.
European data was disappointing today. The number of unemployed people in Germany increased by 10K in October after registering a 22K decline in September. The unemployment rate increased to 7% from 6.9%.
PMI data provided no reason for optimism either. Italian manufacturing PMI plunged to 43.3 from 48.3, French PMI increased slightly to 48.5 from 48.2 but stayed firmly in the contraction territory. German manufacturing sector contracted as PMI printed 49.1 from 50.3 and finally Eurozone PMI declined further to 47.1 from 48.5.
The outlook for Europe continues to worsen as even Germany, Eurozone's engine, faces serious fundamental deterioration. Contracting manufacturing sectors, weak labor market and poor confidence imply stagnation at best and the risk of a double dip recession increases with each disappointing data release.
New Premium Intermarket Insights are found here in the following; For DIRECT ACCESS, click here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=539 NONsubscribers can join here: http://ashraflaidi.com/ products/ sub01/
Meanwhile, the German-Italian 10 year spread reached the highest level since Euro inception as Italian 10 year yield continues to rise and trades at 6.17% which is by many analysts considered unsustainable. As has become the norm, the ECB continues to buy Italian and Spanish bonds.
In the UK, construction PMI surprised to the upside when October figure printed solid 53.9 from previous 50.1. GBPUSD briefly jumped higher from 1.6020 to 1.6050 but has since retraced all gains and trades below the pre-announcement levels.
The New York session starts at 8:15 am ET with October ADP report that is expected to increase to 102K from previous 91K.
TAKE NOTE: Bear in mind the interest rate announcement of the FOMC statement is due at 12:30 pm ET (16:30 GMT/London), followed by the Bernanke press conference at 14:15 (18:15 GMT/London). Traders will shift their concentration from Greece to the FED to search for QE3 clues. Any mention of QE3 remains unlikely and should the FED decide to bring up additional easing, it will probably emphasize that is will be contingent upon future developments. The fed funds rate will stay below 0.25%.
Patrik Urban
Tuesday, November 1, 2011
UK PMI Deepens Contraction; Euro Below 1.37, ISM Manuf Next
http://ashraflaidi.com/t/?h2855
November 1, 2011 08:18 ET: Risk aversion and Greek politics send Euro lower; Swiss PMI disappoints, UK PMI plunged and GDP data was mixed. EURUSD dropped below 1.37 testing its 100 WMA. ISM manufacturing and construction spending is next. Intermarket Insights will be due at 9 EST, 13:00 GMT.
The greenback soars across the board as heightened risk aversion that started yesterday continues. European equities are deeply in red, losing over 2%.
USD strengthening that started yesterday after BOJ intervention continued as MF Global filed for bankruptcy and Greek PM Papandreou announced a referendum to approve the EU bail out deal. The political damage that this step caused is likely to cause problems in future EU negotiations as Eurozone leaders must be troubled by the PM's decision. Strong a stable political situation in Greece, necessary for the implementation of the unpopular austerity measures, might come under pressure as confidence motion is scheduled to begin on Wednesday. EURUSD has lost nearly 500 points since Monday and fell to 1.3673.
Swiss data continues to deteriorate as SVME PMI declined further to 46.9 in October from 48.2 which is a second back to back contraction and the lowest print since mid 2009. The CHF was weakening even before the announcement and rumors were circulating that the SNB was checking rates. Any SNB involvement has been unconfirmed.
In the UK, manufacturing PMI plunged to 47.4 in October from 50.8. This is the weakest print since 6/2009 and it implies that the expansion, albeit a small one, we witnessed in September was only a temporary improvement amid deteriorating trend.
Today's GDP data was mixed: Q3 GDP grew 0.5% q/q stronger than previous 0.1% but annualized figure declined to 0.5% from 0.6%. Despite the q/q improvement, the outlook for the UK economy continues to be gloomy. GBPUSD fell on the news from 1.60 to 1.5930. Sterling continues to trade heavy near session lows.
The NY session will bring ISM manufacturing at 10:00 am ET that is expected stronger in October at 52.1 from 51.6 a month earlier. September construction spending is seen lower at 0.3% from 1.4%.
Patrik Urban
November 1, 2011 08:18 ET: Risk aversion and Greek politics send Euro lower; Swiss PMI disappoints, UK PMI plunged and GDP data was mixed. EURUSD dropped below 1.37 testing its 100 WMA. ISM manufacturing and construction spending is next. Intermarket Insights will be due at 9 EST, 13:00 GMT.
The greenback soars across the board as heightened risk aversion that started yesterday continues. European equities are deeply in red, losing over 2%.
USD strengthening that started yesterday after BOJ intervention continued as MF Global filed for bankruptcy and Greek PM Papandreou announced a referendum to approve the EU bail out deal. The political damage that this step caused is likely to cause problems in future EU negotiations as Eurozone leaders must be troubled by the PM's decision. Strong a stable political situation in Greece, necessary for the implementation of the unpopular austerity measures, might come under pressure as confidence motion is scheduled to begin on Wednesday. EURUSD has lost nearly 500 points since Monday and fell to 1.3673.
Swiss data continues to deteriorate as SVME PMI declined further to 46.9 in October from 48.2 which is a second back to back contraction and the lowest print since mid 2009. The CHF was weakening even before the announcement and rumors were circulating that the SNB was checking rates. Any SNB involvement has been unconfirmed.
In the UK, manufacturing PMI plunged to 47.4 in October from 50.8. This is the weakest print since 6/2009 and it implies that the expansion, albeit a small one, we witnessed in September was only a temporary improvement amid deteriorating trend.
Today's GDP data was mixed: Q3 GDP grew 0.5% q/q stronger than previous 0.1% but annualized figure declined to 0.5% from 0.6%. Despite the q/q improvement, the outlook for the UK economy continues to be gloomy. GBPUSD fell on the news from 1.60 to 1.5930. Sterling continues to trade heavy near session lows.
The NY session will bring ISM manufacturing at 10:00 am ET that is expected stronger in October at 52.1 from 51.6 a month earlier. September construction spending is seen lower at 0.3% from 1.4%.
Patrik Urban
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