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
Monday, November 14, 2011
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.
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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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