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Intraday Market Thoughts
Febuary 8, 2010 17:13 ET: Unlike EUR net shorts vs. USD which have reached new record high of 43,741 contracts SEE CHART http://chart.ly/ 8ec4fx GBP net shorts remain well off their October highs of 62,106 contracts, reflecting less GBP pessimism in the currency against USD. But rising expectations that BoE will be forced into fresh asset purchases ahead of an uncertain election year, coupled with outright longs being built in USD, may prompt speculators into expanding their shorts near the October highs. The BoE may not be in a hurry to inject fresh QE, but markets will grow especially vigilant in viewing upcoming data with a QE lens, especially as the impact of the VAT hike and oil recovery recedes into the remaining of the quarter. Technically. Sterling's decline against USD and JPY is prompting traders to probe $1.5350 and 138.20 respectively as early as this week.
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Febuary 8, 2010 12:34 ET: Quiet trade in FX after the Thursday storm and Friday confusion of the US jobs report. The paring of long USD and JPY positions gives way to modest gains in EUR and GBP but that is not encouraging gold or oil traders to lift bids beyond 1070 or 72.50. GBPUSD's deteriorating technicals may allow for a recovery of no more than $1.57 before traders retrenchy ahead key UK data & BoE inflation report. EURGBP vulnerable to 0.8700.
Febuary 8, 2010 08:06 ET: The lack of key fundamental data has helped extend the pullback in the USD and JPY against major currencies, which remains no more than a corrective move w/in an impulsive rally in USD and JPY. Sterling is also among the underperformers of the day, dragged by expectations of renewed QE. Wednesdays BoE inflation report could show a GDP downgrade and reiterate the case for fresh asset purchases. Any rebound in GBP could see it capped at $1.5670. CADJPY is seen amid the few yen crosses likely to garner fresh gains ahead, eyeing resistance at 84.00, with USDCAD vulnerable to retesting 1.0550 CORRECTION (not 1.0650s)
Febuary 5, 2010 15:05 ET: NOT ONCE BUT TWICE did gold demonstrate a classic failure; Jan 11 (failure to break about the 38% retracement at 1168) and Feb 3 (failure to regain the 2-month trend line resistance at 1123), getting us near the 1040 target. Looking into next week, the key support now stands 1020. The possibility of $990 before month end stands at 50%. Any pullback in the USD in Asia Monday may lift boost gold to as high as 1075, but resistance wil need to hold at 1098, followed by 1123.
SEE ASHRAF AT THE THIS MONTHS TRADERS EXPO IN NYC (pictures from last year http://chart.ly/ 6wkr4m )
Febuary 5, 2010 11:01 ET: The 20k decline in Jan payrolls followed a decline of 150K in Dec (originally reported as -85K), which was positive for risk appetite at the expense of the USD and JPY. But markets quickly started losing ground as they wounds from Greece and Portugal are were too deep to heal. Do not forget the patterns of recurring spikes in Eurozone bond spreads (mentioned in this weeks article). EURUSD failed below $1.3750 and looks for prelim targets at 1.3620 and 1.3580. USDCAD fell on strong CAN payrolls but support held at 1.0640s as stocks and oil fell anew. Keep an eye on US 10 yr yields as further declines below 3.60% indicate deterioration in equity mkt confidence, which is usually USD-supportive.
Febuary 5, 2010 08:05 ET: As we move into the US jobs report (13:30 GMT exp +5K, prev -85K, unemp rate exp 10.1% from 10.0%), investors must be aware of the following; strong US data have led to strength in USD, equities and commodities, only for the stocks and commodities to retreat lower and the US currency to remain firm. As long as payrolls do NOT show a decline of more than 20K or 30K, markets will consider the report a strong one, assuming the prior decline of 86K was not revised. With such win-win situation for the US dollar, we would expect EURUSD bounce to be limited at $1.3750, with downward path towards $1.35 firmly in place. This could also be the day we see 1040 gold as USDX nears 80.80.
Febuary 4, 2010 19:27 ET: Hello, THANKS to YOUR TREMENDOUS SUPPORT, I qualified for the Top 5 finalists in this year's Twitter Awards, beating more than 370 candidates. FRIDAY is the DEADLINE for voting in the second round. If you have not voted, please do so while stating a reason. I am up against personal finance TV show hosts & websites w/ an army of PR staff and interns. But I can STILL DO IT WITH YOUR HELP !
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Febuary 4, 2010 15:46 ET: Ashrafs interview on April 2007 http://bit.ly/ bar5xc telling an astonished Becky Quick (CNBC) that expected the Fed to begin cutting rates as early as June 2007. At the time (in April 07), about 50% of the market expected the Fed to RAISE rates or do nothing that year. The Fed ended up CUTTING rates in August 2007. And the interview tells it all.
Febuary 4, 2010 14:07 ET: Watch Ashraf's latest Video Market Analysis http://bit.ly/ 9fmBJl covering today's volatile day in forex, oil, why distinguishing the volatility btwn USD & JPY.
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Febuary 4, 2010 12:00 ET: Global Markets sell-off intensifies, sending USD and JPY soaring cross the board, but YEN gets the best of USD as the pair targets 88.30, 61.8% retracement of the 84.85-93.76 move. One of the main culprits was the Portuguese-German 10 year spreads hitting a fresh 11-month highs of 156 bps on reports that Portuguese PM had threatened to resign if Parliament passed a bill that would increase spending. EURJPY & GBPJPY are down +500 pips. EURUSD hits $1.37 less than 24 hours after we called the $1.32 target yesterday. Although markets are eyeing Fridays US jobs report, todays market moves are stealing the show w/ indices down 2%. Watch out for market whipsaws (retracements) during NY Lunch hour before renewed gains in JPY. GOLD still expected to hit that 1040 target after we called the failure at 1123-35 earlier this week. WE NEED YOUR VOTE (if you havent done so) http://www.ashraflaidi.com/ about/ twitter-awards.asp THANKS !
Febuary 4, 2010 07:34 ET: BoE announced no new QE but did leave the door open for new asset purchases down the road when it said "can make further purchases should the outlook warrant them". Although sterling rallied off its lows immediately after the revelation of no new QE, markets will likely offer limited upside near $1.5920s. Last night's IMT called $1.5820, which was hit earlier in Asia. A strong US NFP jobs report could open the door for $1.5770, especially if tomorrows UK PPI comes on the weak side. US jobless claims (exp 460K from 470K) and ECB press conference both due at 13:30 GMT should be in focus. It is very difficult to imagine anything positive for the euro released from the ECB. OIL FAILED yesterday at both its 55 and 100-day MAs of 77.70 and 77.30 and now looking for 75.30. 200-day MA rests at 74.10. http://bit.ly/ d8j9C1
Febuary 3, 2010 21:11 ET: The upcoming BoE decision (12:00 GMT) is expected leave rates unchanged at 0.5%, but the announcement regarding quantitative easing could be a more complex. The probability of renewing QE (which was concluded last week) at this months meeting is under 20%. Inflation is clearly surpassing the BoEs 2% target but slowing bank lending reflects sluggish capital formation despite the 200 bln in asset purchases. Watch out for a statement on whether the Monetary Policy Committee leaves the door open for future QE easing, in which case broad GBP losses may ensue. Yes, inflation is above target, but thats what the BoE warned to be a short-term phenomenon 2 months ago. Dont expect GBPUSD to reverse its downtrend (capped at 1.6050) before Fridays jobs report. Post-BoE risks remain slated to the downside, $1.5820 in focus.
Febuary 3, 2010 09:21 ET: The 22k decline in Jan ADP is the smallest loss since February 2008, serving to bolster the US data-driven argument for prolonged USD gains, muting criticism that recent USD advances had predominantly emerged on bad news outside the US. USD has another chance to regain composure after a 2-day retreat ahead of the Jan services ISM (15:00 GMT) which is expected to hit as high as 51 from 49.8 in Dec. Especially pertinent for FX, bond & equities will be the EMPLOYMENT COMPONENT of the services ISM, which improved to 43.6 in Dec from 41.7 in Nov and faces improved chances of further nearing the 50 figure. A break above 45.0 would be the highest since Jul 2008, thereby triggering upward revisions in the forecasts for Fridays NFP (exp +50). Watch 10 yr yield nearing 3.70% resistance which helps USDJPY above 91. Gold still fails to break above 1123-25 resistance, which will be needed to prevent retreat below 1070.
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Febuary 3, 2010 08:02 ET: Jan ADP survey on private payrolls(13:15 GMT) is expected to show a loss of 40K jobs in January following a loss of 84K jobs in December. This would be the best figure (smallest job loss) since January 2008. USDJPY is USD pair most susceptible to US figures, gaining on strong US figures and falling on weak figures. USDJPY remains largely in the 90.10-90.80 range, with only predominantly negative US data seen as the catalyst for a break below 89.90. As long as US figures show the expected improvement, USDJPY could hold above 90.40s and attempts to retest 90.90-91.10.
Febuary 2, 2010 11:10 ET: Oil posts its 1st back-to-back daily gain in 6 weeks as rising stocks dampen the USDs ascent. Interim resistance stands at 76.30, followed by 77.00-20 confluence of 100-day MA + 38% retracement, deemed as a key resistance. Traders are cautious ahead of Wednesday's US ADP (13:15 GMT) & services ISM report (15:00), which could give clues on Fridays job report, therefore making any USD retreat rather limited. GBPUSD looks to extend its corrective move towards 1.6020, but a close above 1.6070 is unlikely ahead of potentially USD-positive figures. USD uptrend remains intact as long as USDX supported above 78.35-40.
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Febuary 2, 2010 03:30 ET: Aussie falls across the board after the RBA shocked markets by leaving interest rates unchanged at 3.75% unchanged for the first time after 3 consecutive rate hikes last year. Most notably, the RBA cited Chinas tightening moves to cool the economy as a potential risk for the region and the world economy. Asian markets pushed higher on the news, but market players may start raising questions about the possibility that the RBA is worried about excessive tightening from Beijing and its impact on the global demand. AUDJPY tumbled about 80 pips from 81.15 and is at risk of retesting 79.10, while AUDUSD is off by half a cent to 0.8770s. In such situations, a high yielding currency such as the Aussie is most vulnerable to risk aversion especially when a negative news event is released such todays RBA decision. GBP traders await UK Jan construction PMI (9:30 GMT). Upside surprise will be needed to lift cable towards 1.6030s, otherwise the risls remain for a retest of 1.5955-60. Watch gold's resistance at 1123.
Febuary 1, 2010 14:25 ET: The upcoming RBA decision (due 3:30 am GMT) is expected to produce a 25-bp rate hike to 4.00%, but we allow for as much as a 40% chance of no hike at all (60% chance of a 25-bp tightening). The upside impact on AUD shall depend upon the risk appetite prevailing in the Tuesday Asian equity session. New home sales fell in 4 of the last 5 months, but prices of homes and general indices remain worryingly aggressive for the central bank.
We have seen in December for instance how a much anticipated rate hike failed to prop the Aussie higher due to the prevailing risks with Greece & Dubai weighing on appetite. While a 25-bp hike could be expected to lift AUDUSD and AUDJPY towards the 89.80 and 81.30s resistances levels respectively, these gains will largely depend upon the equity sessions prevailing in Asia.
Febuary 1, 2010 13:11 ET: Watch Ashrafs latest Video Market Analysis http://bit.ly/ a5UiqZ previewing the latest intermarket dynamics & explaining the implications to the decline in USD-equities correlation.
Febuary 1, 2010 09:40 ET: Generally positive US data on consumption and income lifts US equities and commodities, slowing down the rally in the US dollar index from its 79.53 high. The USDX had risen for 5 straight sessions and could well make one of its typical Monday pullbacks that usually emerge after strong Thurs and Fri sessions. US Dec ISM due at 15:00 GMT exp 55.2 from 54.9. Watch the individual components of the survey; employment (prev 50.2), new orders (prev 64.8) and prices indices (61.5). Strong figures could weigh modestly on USD but resistance levels remain holding at 1.5970 & 1.6030 in cable. USDCAD support at 1.0623. Gold rebound to remain limited at last weeks successful resistance of 1115. Interim resistance stands at 1097.
Febuary 1, 2010 05:21 ET: GBP selloff deepens in Asia & Europe after Asian equities hit 3-month lows. UK Dec money supply fell 1.1% m/m, biggest monthly decline since records began. GBPUSD eyes interim support at 1.5870, but the major support remains at 1.5750. FSA Chief said carry trades were economically valueless, suggesting a crackdown might be needed. The remarks made JPY second worst performing currency (after GBP) today. USDJPY only vulnerable to break below 89.70 in event of disappointing US data, or else, upside targetting 90.70. CADJPY remain capped at 85.20 and biased towards 84.20 and 83.70. US Dec personal spending and Jan manufacturing ISM both due today See calendar for more detail http://bit.ly/ 5pdFAN
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CADJPY Redux
CADJPY had been unable to break that . more..
