IMT ARCHIVES loading calendar... USD Firms vs EU FX as US Jobs Blows out Forecasts February 3, 2012 12:48 ET : The strength of todays jobs report and services ISM attained the rare pattern of triggering a USD rally despite broad advances in US equities. The risk-on-risk-off rule of punishing the US currency during rallying equities does not apply when good news on the US labour front is supported by both a decline in the unemployment rate and a solid improvement in payrolls. Such patterns were rare but not impossible. We saw them in June and November 2009; in each case the USD prevailed. All Pemium shorts hit targets. The growth argument of the resulting USD rally is better grasped by the fact that USD is rising against non-commodity currencies (EUR, GBP, CHF and JPY), but weaker against the AUD, CAD and NZD. Todays US data is indisputably solid: 9-month highs in non-farm payrolls (243K), 23-month lows in the unemployment rate (8.3%), 12-month highs in manufacturing payrolls (50K), 9-month highs in private sector payrolls (257K), 11-month highs in services ISM (56.8), 7-month highs in manufacturing ISM (54.1). SEE OUR 5 CAD SHORTS in latest PREMIUM CHARTS after the latest disappointing Canada jobs report. DIRECT ACCESS: http://ashraflaidi.com/ products/ sub01/ access/ ?a=594 NONSUBSCRIBERS: http://ashraflaidi.com/ products/ sub01/ Tags: 2009, Ashraf, Australian Dollar, British Pound, Canadian Dollar, Commodities, Euro, New Zealand Dollar, Non-Farm Payroll, stocks, U.S. Dollar, unemployment, Yen

CAD Lower On Weak Jobs, US Jobs, ISM Services Next

February 3, 2012 07:48 ET : UK PMI services strong; Eurozone retail sales declined; employment in Canada lower than expected and unemployment rate rose; estimates for 2/29 LTRO. Key event for NY is NFP followed by ISM non manufacturing. There are 5 already CAD shorts in the latest Premium Intermarket Insights.

The USD is trading mixed in the ongoing session. It is weaker against EUR and GBP, unchanged against CHF and AUD and stronger against JPY and commodity dollars. Major European equities are higher by about 0.3%.

UK PMI services improved significantly in January to 56 from 54. This is the best result since 3/2011 and the rise in employment was the strongest in nearly four years. Improving PMI manufacturing and solid PMI services could imply that the expectations of an announcement of more QE next Thursday might be premature and that the MPC may instead choose the wait and see approach. GBPUSD is trading around 1.5840.

Eurozone retail sales declined in December -0.4% from -0.4% m/m (-1.6% from -1.5% y/y). This is the first December decline since 2008 as the end of the year is usually a busy time for retailers. Given the uncertainty and weak fundamentals (unemployment 10.4%) consumption is likely to stay subdued in the months ahead. EURUSD trades around 1.3175, below the key short term resistance at 1.32.

The number of employed Canadians rose in January by 2.3K significantly less than expected 23.3K and lower compared to December's 17.5K. Troubling is that full time employment actually decreased by 3.6K. Moreover, the unemployment rate picked up to 7.6% from previous 7.5%. The unemployment has been gradually increasing each month since 9/2011 and reached the highest level since 4/2011. USDCAD jumped on the news and trades firmly above parity.

In other news, MNI started to publish banks' estimates for 02/29 ECB's 3 year LTRO. The upper limit of the range is mostly EUR 300 to 400 bln. ECB deposits started to post marginal increases again with EUR 488.7 bln deposited on Thursday up from EUR 486.5 bln on Wednesday.

Eagerly awaited labor market data is due at 8:30 am ET. The NFP is expected to decline in January to 150K from December's 200K and the unemployment rate is seen steady at 8.5%. As a reminder, Wednesday's ADP came out below expectations and considerably lower at 170K from previous 292K. Hourly earnings should stay steady at 0.2% m/m but lower at 1.9% from 2.1% y/y.

ISM non-manufacturing is due at 10:00 am and it is anticipated higher in January at 53.2 from 52.6. December factory orders are due at the same time and expected lower at 1.5% from 1.8%.

SEE OUR 5 CAD SHORTS in latest PREMIUM CHARTS after the latest disappointing Canada jobs report. DIRECT ACCESS: http://ashraflaidi.com/ products/ sub01/access/?a=594 NONSUBSCRIBERS: http://ashraflaidi.com/ products/ sub01/

Patrik Urban

Eurozone Services PMIs Edge up, Awaiting UK, EU Sales

February 3, 2012 04:10 ET : The yen and dollar are higher as risk trades are pared heading into US employment data and the weekend. The Australian dollar is lagging. Chinas services PMI fell in January in a tentative, but premature, sign of a cooling economy. Eurozone-wide and individual Eurozone services PMIs all edged higher. Awaiting UK services PMI. Latest Premium Intermarket Insights ahead of Canada and US jobs report are out.

The Chinese services PMI fell to 52.9 from 56.0 in December. The indicator isnt as closely followed as the manufacturing data but it will grow in importance as it builds a track record and the Chinese consumer gains more clout.

The predominant theme in the session appeared to be positioning and flows ahead of non-farm payrolls, uncertainty about a Greek PSI deal and the weakened.

Japanese Fin Min Azumi may have taken a small step toward yen intervention, saying speculative JPY buying has been increasing over the past week due to falling US yields. The market did not reflect the comments as the yen rallies into the Japanese weekend.

The Feds resident hawk Fisher delivered comments saying QE3 is not needed. Fisher is near retirement but his constant anti-inflation rhetoric is interesting in light of revelations that he holds more than $20 million in assets.

Eurozone services PMI at 50.4 from 48.8. Germany Jan services PMI rose to 53.7 from 52.4 in Dec. France Jan services PMI at 52.3 from 50.3. Italys services PMI edged up to 44.8 from 44.5
The UK services PMI, at 0930 GMT, is expected to declined slightly to 53.5 from 54.0.

At 1000 GMT, European retail sales are expected up 0.4% in December after a 0.8% fall in November.

PREMIUM CHARTS posted on EURUSD and GOLD. Tactical trades on EURUSD, AUDUSD,
USDJPY, GBPJPY, USDCAD, gold, oil, with an outlook into early next week. DIRECT ACCESS: http://ashraflaidi.com/ products/ sub01/ access/ ?a=594 NONSUBSCRIBERS: http://ashraflaidi.com/ products/ sub01/

Adam Button

New Premium Trades Ahead of Canada & US Jobs Reports

February 2, 2012 22:07 ET : Speculating on the outcome of tomorrow's US jobs report (NFP and unemployment rate) and rationalizing the reaction to the outcome is an increasingly difficult endeavour especially considering the element of revisions, private sector jobs, manufacturing sector jobs, as well as the rumours and announcements regarding any Greece/PSI deal. The latest Premium Intermarket Insights attempt to capture the volatility ahead and following these key reports as well as the surrounding rumours on EU.But the latest technicals suggest signal, which will remain in consolidation and which will test the necessary downside before rebounding to 3-5% highs. PREMIUM CHARTS also posted on EURUSD and GOLD. Tactical trades on EURUSD, AUDUSD, USDJPY, GBPJPY, USDCAD, gold, oil, with an outlook into early next week. DIRECT ACCESS: http://ashraflaidi.com/ products/ sub01/ access/ ?a=594 NONSUBSCRIBERS: http://ashraflaidi.com/ products/ sub01/

No QE From Bernanke, China Services PMI Up Next

February 2, 2012 19:21 ET : Volatility ebbed in markets in the lead-up to Fridays non-farm payrolls report. NZD was the top performer and GBP lagged but overall changes were miniscule. Its growing likely that Greek PSI talks will drag into the weekend. Chinese non-manufacturing PMIs are the highlight of the upcoming session. Late Thursday nights Premium Intermarket Insights will look ahead of the US jobs report, focusing on EUR, gold and oil, coming up shortly.

EUR/USD recovered in US trading after falling to 1.3086 midway through the European session. As Europe closed, it pushed to 1.32, falling just short.

Bernankes testimony in the House was not notable for what he said but rather, for what he didnt say. The Fed Chair did not offer any hints at impending QE. He was downcast on the economy and focused on the uncertainty. On Europe, he was particularly negative.

The Feds Evans, a dove, may have helped to dim the outlook for further quantitative easing saying that additional action will probably be take only when conditions are somewhat different.

This differed from his dovish BOE counterpart, Adam Posen, who said he sees a case from more asset purchases. His comments weighed on the pound.

Greek and Troika leaders continue to grind on trader nerves, repeatedly saying a PSI deal is very close and that the differences are very minor but no deal has yet been announced, with official losses as the sticking point.

Hopes for a completion of the deal were dealt a setback by Greek coalition partners who said they will not Troika-mandated support austerity measures that included lowering the minimum wage and salary cutbacks. Papademos has scheduled meetings with them on Friday and Saturday. Greeces fin min has said Sunday is the deadline to complete a deal.

Asia-Pacific Preview

The Chinese non-manufacturing PMI for January will be released at 0100 GMT. There is no consensus estimate but the prior was 56.0. At 0130 Chinese industrial profits for December are on the schedule. The prior was +24.4%. Comments from Merkels continued visit to China could also be market moving.

Adam Button

Ashraf's London Seminar this Saturday, Feb 4

February 2, 2012 11:03 ET : JOIN ASHRAF THIS SATURDAY IN LONDON for a 4-hour free seminar with Sandy Jadeja, detailing his thoughts on quantitative easing, the Eurozone sovereign debt crisis and how key financial events over the next six months could affect currencies, commodities and global indices. Ashraf will address the following key points.

1. How imminent Eurozone recession, escalating risk of a Greek default and more QE in the UK will affect the currencies, commodities and indices markets.
2. Will the US dollar accumulate fresh gains on Eurozone woes, or will it be capped by a third round of QE? 3.
3. Can euro drop below $1.20? Is it widely expected?
4. Gold has risen for 11 straight years. Will 2012 prove unlucky?
5. Will a China stimulus package save the day?

CLICK HERE TO REGISTER http://bit.ly/ wFDhDJ This event is FREE

EURUSD Muted to China EFSF&ESM Chatter, Bernanke Next

February 2, 2012 07:56 ET : Greek deal saga continues; China considering EFSF and ESM involvement; Spanish and French auctions; Swiss trade surplus declined; UK PMI fell and EZ PPI dropped; BOJ "immediate steps unlikely". Market turns to jobless claims, MPC Posen and chairman Bernanke's testimony. The 1.3220-1.3070s consolidation in EURUSD has triggered Tuesday's EURUSD trades in 3 occasions.

The USD is marginally higher in the ongoing session. Major European equities are mixed in the -0.15% to +0.3% range.

The Greek deal saga continues as the Greek government spokesperson said that a bulk of the deal is already completed. Meanwhile the IIF issued a statement that "constructive discussions continue". Interestingly, rumors started to make rounds that public sector will need to be involved in Greek haircut as well as the private haircut will not be enough.

EURUSD was boosted earlier in the session when Chinese PM Wen said that his country is considering a greater involvement in EFSF and ESM funds supporting efforts to stabilize the Euro. EURUSD soared about 80 points nearly to 1.32 but quickly lost its gains and returned towards 1.31.

Bond markets saw two important auctions today - Spanish auction ended with a full take up and lower yields. According to MNI, Spain has completed 24.6% of 2012 gross funding needs. France sold EUR 7.96 bln worth of bonds today (EUR 6.5 8 bln target). The largest auction was EUR 5.698 bln worth of 10 year OAT with average yield 3.13% and cover 1.71.

On the data front, Swiss trade surplus declined in December to CHF 2.07 bln from previous CHF 2.95 bln, UK construction PMI fell in January to 51.4 from 53.2 and Eurozone PPI contracted -0.2% in December from +0.2% m/m and despite elevated energy prices declined to 4.3% from 5.4% y/y.

BOJ's Yamaguchi said today that BOJ is ready to act but needs thorough analysis of currency trends before taking policy action. Even more interesting was a comment that "immediate steps on JPY are unlikely". USDJPY trades right above the 76 level, about 50 points above historical lows.

New York trading will turn to jobless claims that are due at 8:30 am ET and are seen lower at 373K from previous 377K.

GBP volatility could increase at 9:00 am EST when BOE MPC member Adam Posen delivers a speech in London.

The key event is FED chairman Bernanke's testimony on the economic outlook before the budget committee. It starts at 10:00 am EST but the Q&A session which often impacts volatility emerges after the speech.

EURUSD continues to struggle near the $1.32 and retest the limits cited in Tuesdays Premium Intermarket Insights. The 2nd AUDUSD short was stopped out. Find out about the ES & oil trade in here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=592 To become a subscriber, click here: http://ashraflaidi.com/ products/

Patrik Urban

EURUSD Awaits PSI Resolution Near $1.32

February 2, 2012 01:27 ET : The Australian touched 5-month high in early Asian trading but quickly gave back its gains in a lackluster session. Majors are essentially flat but EUR/CHF has made some headway to 1.2060. Scheduled news is light in Europe but a Greek deal is said to be close. Both of Tuesdays EURUSD Premium shorts are now in progress, while 1 of the AUDUSD short is also in play. Both gold longs hit targets. More below on US Crude and ES.

Australia posted a record trade balance in 2011 with December numbers beating the consensus ($1.7B vs $1.2B exp). That headline and optimism about China easing credit pushed AUD/USD marginally about the double top from Aug and Oct to 1.0756. In a sign of perhaps just how heavy long interest is in AUD, there was almost no short squeeze on the break and the pair quickly fell back to 1.0710.
A similar trade unfolded in gold as it touched above yesterdays highs to $1751 before slipping back to $1745.

EUR/USD traded in a narrow range with 1.32 capping rallies before the pair slipped back to 1.3166 as European traders began to arrive at their desks.

The calendar is a bit lighter in Europe today as Merkel travels to China and European parliament debates Eurobonds. At 0930 GMT, the January UK construction PMI is expected to slip to 52.5 from 53.2. Otherwise, there are no potentially market moving data points.
The focus will be on Greek PSI talks. Negotiations with private debt holders appear to have winded down and now the snags are with official accounts. The IMF wants to bring down Greek debt levels further and a number of ways to do that are being debated, with Germany offering strong resistance. According to the WSJ, options include ECB writedowns, losses at other central banks or a lower interest rate on official loans to Greece. The good news is that the Journal reports that the issues are minor and a deal could be reached within hours. We will believe it when we see it.

Both of Tuesdays EURUSD Premium shorts are now in progress, while 1 of the AUDUSD short is also in play. Both gold longs hit their targets. Find out about the ES & oil trade in here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=592 To become a subscriber, click here: http://ashraflaidi.com/ products/

Adam Button

ISM Sparks Risk Rally, Asia Quiet

February 1, 2012 19:21 ET : ISM manufacturing numbers showing the US is on a solid footing were all that was required to spark rallies in risk trades Wednesday. AUD and NZD were tops while USD and JPY lagged. Australian trade balance is the lone Asia-Pacific event of note.

US economic data was near expectations. The ISM manufacturing sentiment survey rose to 54.1 from 53.9 but fell short of the 54.5 expected. New orders were slightly better while employment slipped. One line that may get the Feds attention was prices paid, which rose to 55.5 from 47.5 the highest since September.

The ADP employment report forecast a rise of 170K non-farm private jobs in January, slightly below the 182K consensus. An often overlooked data point that showed the US in a more positive light was January auto sales at 11m compared to 10.5m expected. It was the highest reading in 3.5 years.

The risk rally on Wednesday was probably less about news and more about the start of the month with money managers re-allocating capital into riskier assets in light of a strong January.

Short squeezes appear to be working in full force in FX as EUR/USD touched above 1.32 once again. A more clear demonstration is cable, which has rallied 12 of the past 13 sessions with the market positioned aggressively short. A 100 pip spike early in US trading had all the hallmarks of exhausted shorts rushing to the exits.

The focus will be on Australia in the upcoming session with building approval and trade balance data at 0030 GMT. Approvals are expected up 2.0% in December and the trade surplus at A$1.2B.
Those who were unfilled on Tuesdays various Premium USDX longs (vs EUR and AUD) had a chance to re-enter the 2 shorts in EURUSD, AUDUSD and long in USDCAD. All the details are found directly in this link : http://ashraflaidi.com/ products/ sub01/ access/ ?a=592 To become a subscriber, click here: http://ashraflaidi.com/ products/

Another Greek Deal Rumor Sends USD Lower

February 1, 2012 07:38 ET : German and Portuguese solid auctions; Swiss retail sales and PMI declined; intervention threat EURCHF and USDJPY; UK manufacturing PMI surprised to the upside; Eurozone CPI eased. Focus turns to ADP and ISM manufacturing. Tuesday's trades are partly in progress.

Rumors that the Greek swap deal could be announced today reversed USD strength that started yesterday and the buck has returned to its recent lows. Major European equities gained about 1.5% and the relative strength winners are NZD and AUD, followed by CHF.

Germany sold EUR 4.09 bln worth of 10 year bund today (target EUR 5 bln). The average yield declined to 1.82% from 1.93% and bid to cover also improved to 1.4 from 1.3. Portuguese 3 month and 6 month bill auction also went well as it reached a full take up at EUR 1.5 bln with lower average yields. However, bid to cover declined slightly.

Swiss retail sales grew only 0.6% December from previous 1.8% y/y and January SVME PMI fell to 47.3 from 49.1. CHF is nevertheless among the best performers and EURCHF continues to trade right above the 1.20 floor. The threat of an intervention is also high on the USDJPY pair that fell to levels not seen since the unilateral October intervention. USDJPY trades at the 76 figure and dealers report plentiful sellers on rallies.

In the UK, manufacturing PMI grew solid 52.1 in January from 49.7 in December. After three months of contractions, the manufacturing sector expanded again and printed the best result since June 2011. Also noteworthy is the fact that over the past three months each print was revised higher.

In other news, Eurozone CPI eased to 2.7% from 2.8% y/y and manufacturing PMI was revised higher to 48.8 from initial estimate 48.7. The ECB deposits continue to be elevated as they reached EUR 472.45 bln on Tuesday.

The New York session will start at 8:15 am ET with January ADP report that is expected to decline to 189K from December's strong 325K.

ISM manufacturing is due at 10:00 am and is seen higher at 54.6 from previous 53.9

Tuesday's trades are partly in progress. Key charts on EURUSD Volatility and EURUSD Daily. Trades in EURUSD, AUDUSD, CADJPY and US crude oil http://ashraflaidi.com/ products/ sub01/ access/ ?a=592

Patrik Urban

China PMI Beats Expectations, UK PMI Next, Portugal to Borrow

February 1, 2012 04:11 ET : The Australian dollar fell on soft housing data but rebounded on slightly strong China PMI. The yen is the top performer while NZD lags. Eurozone PMI egdes up but remains in contraction territory. Awaiting UK Manuf PMI. European traders will continue to focus on Greece and debt auctions. Latest Premium Trades are out.

The official Chinese PMI rose to 50.5 from 50.3, beating the 49.6 consensus. The stronger number is a double-edged sword because it made a near-term cut in Chinese reserve ratios less likely. Chinas finance minister was quoted in the local press saying that although the economy faces headwinds, inflation pressure remains strong.
In Australia, the housing market is a growing concern. The Q4 house price index fell 4.8% y/y compared to the -3.8% expected. A separate survey from HIA on new home sales was also disappointing.

USD/JPY continues to crave out fresh post-intervention lows but fin min Azumi said his stance on intervention is unchanged. The MOF will take decisive action if there is excess volatility. With USD/JPY roughly 130 pips from all-time lows, that could come sooner rather than later.

Even closer to intervention is the SNB as EUR/CHF slipped as low as 1.2032 in Asia-Pacific.

Eurozone manuf PMI came in at 48.8 from 46.9. French manuf PMI slipped to 48.5 in Jan from 48.9. Italy manuf PMI rose to 46.8 from 44.3.

Markets await Portuguese 3 and 6-month bill auctions. It would be a shock if the yields were remotely tolerable.

As always, headlines about Greek PSI and bailout talks will be a chief risk. Look for some clarity about the ECBs Greek holdings and a willingness to take further austerity measures from Greek politicians.
Our latest Premium Intermarket Insights for Tuesday are out with key charts on EURUSD Volatility and EURUSD Daily. New trades in EURUSD, AUDUSD, CADJPY and US crude oil http://ashraflaidi.com/ products/ sub01/ access/ ?a=592

Adam Button

Greek Turmoil Continues, China PMI Up Next

January 31, 2012 20:19 ET : Conflicting reports about the likelihood of a Greek PSI deal continue to whipsaw traders. NZD was the best performer on Tuesday while EUR lagged. China releases its official PMI in the upcoming session. Latest Premium Trades are out Buy the Euro Dip of Sell the Euro Bounce? See below.

The optimism in early in Europe dissipated by the close as the combination of weak US economic data and fresh problems in Greece knocked down risk trades.

Signs the US may lose the momentum from Q4 are mounting. The Chicago PMI fell to 60.2 compared to the 63.0 expected. Consumer confidence dropped to 60.2 compared to the 68.0 consensus. Especially troubling were comments about the difficulty of finding work in the sentiment survey. Housing remains deeply in the doldrums with the Case-Shiller house price index down 3.67% in Nov versus -3.3% expected.

The US news took the focus off Greece, but only briefly. Signs have been mounting that Greece is close to a PSI deal but approval from the Troika for the next round of bailout funds has become a necessary condition. On that front, there is trouble. The Guardian reported that Greek lawmakers are balking at further wage cuts and lowering the minimum wage.

At the same time, the ECB continues to haggle over how/whether to accept losses on its 50 billion euros of Greek debt.

The focus of Asia-Pacific trading is the release of Chinas official PMI at 0100 GMT. The consensus is for a fall to 49.6 from 50.3 but yesterday there were whispers in Chinese stock markets of 52. Last weeks HSBC flash estimate would indicate a downside bias to the consensus.

Our latest Premium Intermarket Insights for Tuesday are out Buy the Euro Dip of Sell the Euro Bounce, with new trades in EURUSD, AUDUSD, CADJPY and US crude oil http://ashraflaidi.com/ products/ sub01/ access/ ?a=592

EURCHF Approaching Floor; New Premium Trades are out

January 31, 2012 09:32 ET : Progress on swap negotiations; German retail sales fell but unemployment change declined; UK mortgage approvals rose but net consumer credit fell; the ECB is buying Portuguese bonds via SMP; EURCHF near 1.20 floor. Canada GDP disappointed. US Chicago PMI and consumer confidence due next. Latest Premium Trades are out Buy the Euro Dip of Sell the Euro Bounce? See below.

USD is broadly weaker today as the risk rally continues. Major European equities are gaining 1% and relative strength winners are NZD followed by CAD.

The risk rally continues, fuelled by Eurogroup's Juncker and Greek PM Papademos comments of significant progress towards a Greek swap agreement.

German data was mixed today as monthly retail sales fell -1.4% in December after -1% contraction seen in November (-0.9% from +0.9% y/y) but the number of unemployed people fell -34K in January after December's improvement by -22K.

The UK also had mixed reports today. Mortgage approvals rose in December to 52.9K from previous 52.6K which is the highest print since the end of 2009 but net consumer credit declined by GBP 377M, the largest monthly fall on record. In the Eurozone, the unemployment rate remained steady at 10.4% in December.

Portugal yields soared yesterday (5 year to 23% and 10 year to 18%) but pulled back today a bit. Traders noted ECB buying via the SMP.

Noteworthy is also that EURCHF trades just a few dozen points above the SNB determined floor 1.20. Whether the SNB decides to flush out the reported large stop losses right below the level remains to be seen but from a credibility point of view it is hard to imagine that the SNB would give up defending the 1.20 floor.

Canadian GDP fell 0.1% in Nov vs expectations of a rise of 0.2%, following an unchanged reading in October.

January Chicago PMI is due at 9:45 am and should show a slight increase to 63.1 from 62.5. Consumer confidence which comes 15 minutes later is seen higher at 68.2 from 64.5.

Our latest Premium Intermarket Insights for Tuesday are out Buy the Euro Dip of Sell the Euro Bounce, with new trades in EURUSD, AUDUSD, CADJPY and US crude oil http://ashraflaidi.com/ products/ sub01/ access/ ?a=592
.
Adam Button

Papademos Boosts Risk Trades Despite Sluggish Ezone Data

January 31, 2012 05:16 ET : Signs that Greece is nearing a debt-swap deal spurred risk taking in early trading Tuesday. NZD and EUR are leading while the US dollar lags. German unemployment rose and retail sales fell. UK consumer credit hits a fresh record low.

Comments from Greek PM Papademos sparked rallies in the euro and commodity currencies including assurances that he is strongly committed to reaching a PSI deal. He also said major progress has been made.

Market participants clearly do not want to be short euros when the headlines cross that sides have reached a PSI agreement. Once that news is out of the way, it is likely the euro will resume its decline as issues in other periphery countries and slow growth throughout the continent come to the forefront.

Economic data was mixed in Asia but showed some negative signs. In Japan, industrial production leaped 4.0% in December compared to the 3.0% expected. On the downside, output remains 5% below where it was a year earlier. Unemployment also ticked to 4.6% from 4.5%.
Perhaps most telling was a forecast from Honda, which said it expects to earn 215B yen in revenue in the year ending March 31 compared to the 250B yen analyst estimate. Executives are confident about a rebound the following year but USD/JPY at 76.20 is a massive headwind.

The news was better in the UK as the GfK consumer confidence survey improved to -29 from -33, beating the -32 consensus. It was the best reading since June.

In Australian, the NAB business confidence index improved to 3 in December a seven-month high. The OIS market shows a slightly better than 60% chance of an RBA cut next week.
Eurozone Dec unemployment rose to 10.4% from an upward revised 10.4% in Nov.

German Jan unemployment fell 34Km/m vs forecasts of a decline of 12.5K. Jan unemployment 6.7% from 6.8% in Dec.

German Dec retail sales -1.4% m/m, -0.9% Y/Y, well below forecasts
UK net consumer credit fell by GBP 377 million in Dec, its largest monthly fall on record, so did broad money supply data also showed record monthly falls. December mortgage approvals rose to 52,939 from 52,628 in November, the biggest rise since Dec 2009.
The FT says more European banks will tap the ECB for emergency funds nearly twice as much or more than in December's first round of funding. As much as EUR 1 trillion could be tapped at the next 3-year ECB auction

Adam Button

Bonds Sending Negative Messages, Japanese Jobless Rise

January 30, 2012 21:47 ET : Record lows in US yields and record highs in Portugal are flashing warning signals. JPY and USD were the leaders with EUR and NZD lagging. Japanese unemployment rises and so does industrial production and household spending. Status of Thursday nights trades is below.

The flight on JPY continued Monday as US yields plunged across the curve with 5-year notes trading at a record 0.73%. In Portugal, the crisis continues to intensify with 10-year notes above 17%.
The outlook for the US is diminishing and some economists have downgraded Q1 forecasts. More signs of mixed growth emerged Monday as December personal spending was flat compared to the +0.2% expected. Personal income pointed to an improvement of balance sheets as it rose 0.5% versus the 0.4% consensus.
QE3 hopes were dealt a minor blow with core PCE up 0.2% m/m compared to the +0.1% expected.

Asia-Pacific Preview

In Japan, December industrial output rose 4.0% y/y vs fcsts of +2.7%. Japan Dec employment fell 100K y/y vs +80K in Nov as employment posted the 1st y/y Rise in 2 months. Dec unemployemnt rate 4.6% vs expectations of 4.5%. Dec spending rose 0.5% y/y vs expectations of -0.1%, the first y/y rise in 10 mnths.

Australia's National Bank's Monthly Business Survey showed business conditions index was unchanged at +1 in Dec, while Business confidence rose to +3 from +2 in Nov.

Thursday nights trades: One EURUSD long hit all targets, the other was unfilled. Both dual trades in ESH (S&P500 March contract) hit all targets, while 1 gold long nears the final targetthe other remained unfilled. One oil long was stopped out, while the other nearing its target. One AUDNZD short hit all targets, while the other is in progress. Fresh set of Tuesday trades is due after the London Tuesday open.

Full access to the Premium piece is found here: http://ashraflaidi.com/ products/ sub01/ access/ ?a=590

Adam Button

Ashraf's London Seminar this Saturday, Feb 4th

January 30, 2012 12:44 ET : JOIN ASHRAF THIS SATURDAY IN LONDON for a 4-hour free seminar , detailing his thoughts on quantitative easing, the Eurozone sovereign debt crisis and how key financial events over the next six months could affect currencies, commodities and global indices. Ashraf will address the following key points.

1. How imminent Eurozone recession, escalating risk of a Greek default and more QE in the UK will affect the currencies, commodities and indices markets.
2. Will the US dollar accumulate fresh gains on Eurozone woes, or will it be capped by a third round of QE? 3.
3. Can euro drop below $1.20? Is it widely expected?
4. Gold has risen for 11 straight years. Will 2012 prove unlucky?
5. Will a China stimulus package save the day?

CLICK HERE TO REGISTER http://bit.ly/ wFDhDJ This event is FREE

Onto Another EU Summit, US Inflation in Focus

January 30, 2012 07:37 ET : Greece rejects German plan for Greek budget oversight; EU summit starts in Brussels; Italian auction results in decent take up; EZ economic confidence rose but consumer confidence was revised lower. Market turns to core US PCE, personal income and spending.

USD is slightly stronger since London open. Major European equities are lower by about 1%.

Even though the WSJ suggested that Greek swap negotiations were close to an agreement, the common currency came under pressure as soon as the Asian session started. USD buying continued through the beginning of the London session primarily on news that Greece rejected German plan of EU oversight over Greek budget indicating an existing level of distrust.

Noteworthy comment was made yesterday by Greek PM Papademos who said that unless a new bailout is agreed on, Greece would not be able to pay off its debt and it would be forced out of the Eurozone.

The first 2012 EU summit starts today in Brussels with two key aims. Progress on creation of the fiscal union and approval of changes necessary for the ESM introduction.

Italy sold EUR 7.475 bln worth of various BTPs maturing between 2016 and 2022 (target EUR 5.5 to 8 bln). The average yields were lower but continue to be elevated and bid to cover ranged between 1.29 and 1.87. Italian spreads widened ahead of the auction but paired back on unconfirmed reports that the ECB was checking Italian 5 year and 7 year rates. Other news from Italy include business confidence that fell to 92.1 in January from 92.5. This is the weakest result since end of 2009.

On the data front, Eurozone economic confidence rose in January to 93.4 from 92.8 and Eurozone consumer confidence was revised lower to -20.7 from -20.6. German CPI is still being collected with results due later today. January CPI is seen higher at 2.4% from 2.3% y/y.

The NY session starts at 8:30 am ET with core PCE price index which is expected to hold steady in December at 0.1% m/m and 1.7% y/y. Given the FED's decision to target inflation using the PCE index, the market impact of the release may become greater.

Personal income which is due at the same time is seen higher at 0.4% from November's 0.1% and personal spending is anticipated to rise 0.2% after previous 0.1% growth.

Thursday night's Premium euro longs were not filled (missed by 3 pips), bu keep an eye on the USDCAD longs. The rest of those Premium trades are accompanied by 4 charts on Gold, EUR, US crude and Eurozone spreads. http://ashraflaidi.com/ products/ sub01/ access/ ?a=590 Non subscribers click here: http://ashraflaidi.com/ products/ sub01/

Patrik Urban

Italian Auctions in Focus, Greece Nears PSI Deal

January 30, 2012 04:09 ET : China returned from a week of holidays with no cut in reserve ratios. JPY and USD are the early leaders with AUD trailing badly. Italian auctions and developments in Greece are highlights of the upcoming session. Greece is one step away from PSI deal. More info on those Premium trades below.

The euro has slumped in early trading, sliding to 1.3180 from 1.3220 at the close on Friday. Many economists had predicted China would lower reserve ratios before the end of holidays. Others note that a $55.7B central bank fund injection had a similar effect to a reserve ratio cut.

Weekend news focused on Greece where PSI negotiations appear to be winding toward a solution. The WSJ reported that bondholders have compromised again and will accept a lower interest rate. An interesting development in the ongoing Greek crisis suggests German leaders are asking that Athens cedes control of its budget, a move that will give ammunition to euroskeptics.

Economic data has been light at the outset of trading. The New Zealand performance of services index fell to the lowest since 2009, hurting NZD. The RBNZ also reported at Governor Bollard will step down in September. The UK January Hometrack housing survey was flat after a 0.2% last month.

At 1000 GMT, Italian is holding 4 bonds sales with maturities ranging from 5-10 years and a target of 8 billion euros. Given the recent success at Italian auctions these events are becoming less-anticipated and are less likely to jar the market.

Regional German CPI figures will also be trickling out throughout the session culminating with the national numbers early in the German afternoon.

Thursday night's Premium euro longs were not filled (missed by 3 pips), bu keep an eye on the USDCAD longs. The rest of those Premium trades are accompanied by 4 charts on Gold, EUR, US crude and Eurozone spreads. http://ashraflaidi.com/ products/ sub01/ access/ ?a=590 Non subscribers click here: http://ashraflaidi.com/ products/ sub01/


Adam Button

Euro Cracks 1.32, Despite Downgrades, Specs Add Shorts

January 29, 2012 18:15 ET : The euro squeeze continued on Friday but speculative positioning data suggests plenty more traders will be forced to the exits as shorts reached a fresh record. The top performers were JPY and CHF while USD and CAD lagged. On the week, NZD and CHF led while USD and JPY lagged.

The Fed surely recognized the accelerating talk of QE3 after the FOMC. NY Fed President Dudley had a chance to manage those expectations in a speech Friday. Instead, he fuelled them further, saying unemployment is unacceptably high and that inflation is decelerating. Much work remains for the Fed to achieve its mandate, he said.

Those comments and below-consensus GDP data sparked a sell off in the US dollar. EUR/USD climbed more than 100 pips on the day to 1.32 for the first time since Dec. 13. US GDP grew at 2.8% in Q1 compared to 3.0% expected. One particularly soft spot in the report was business investment. Even with extremely lenient borrowing rates, companies are choosing to hoard cash.

Greek debt talk continued with negotiators saying they made important progress on legal and technical issues. Fin Min Venizelos said a deal was one step away.

Cable climbed for the 10th consecutive day in spite of a 100 pip drop into the London fix, the pair recovered and finished comfortably higher.

CFTC Commitments of Traders

Euro shorts increased 11.3K to 171.3K, as of the close on Tuesday. That timeframe includes the rally to 1.3025 from 1.2625 and suggests traders were continuing to press shorts in spite of gains. Its clear that a short squeeze is ongoing in EUR but the takeaway here is that it may still have plenty of room to run.

Unlike EUR, short positions in GBP cleared out quickly. Shorts decreased to 31K from 41.5K. Similarly, CAD shorts were trimmed to 19K from 29K.

Yen longs aggressively exited positions, confirming that a shift in speculative thinking was largely behind the early-week rally in USD/JPY. The net long fell to 44K from 60K.

Australian dollar longs continue to mount, climbing 31% to 69.5K. Similarly, NZD longs climbed to 13K from 9.5K.

Ashraf Laidi