Intraday Market Thoughts

Risk Turned on by Draghi, German Data & Italy Auctions

by Patrik Urban
Jul 26, 2012 12:19

Dow futures are up 137 pts as risk is boosted by Draghi's comments; German GfK rose; Italian auction reach full take-up; Spanish 10 year yield declines. Market turns to durable goods orders; jobless claims and pending home sales. Todays Premium Insights will be due out before the US session.

The USD is weaker in the ongoing session across the board. European equities are gaining nearly 1% and the relative strength winners are AUD and NZD while JPY lags.

The common currency pushed higher on the ECB president's comments that he will do whatever is needed to preserve the euro. He also said that the euro was irreversible. Draghi said: "firewalls will work much better than in the past". He was participating in a panel discussion at global investment conference in London. EURUSD trades near session highs around 1.2280.

German GfK consumer confidence rose slightly in August to 5.9 from previous 5.8. GfK noted that economic optimism is fading as consumers are fearful that Germany will be drawn deeper into the crises. Nevertheless, income expectations and willingness to buy remained at good levels.

Italy reached a full take up as it sold EUR 2.5 bln of 2014 bond. The average yield rose to 4.86% from 4.71% but cover improved to 1.78 from 1.65. According to MNI calculations, EZ sovereign issuance so far this year totals EUR 524.8 bln, about 65% of total funding needs. Spanish 10 year yield declined to 7.19%.

The US session begins at 8:30 am ET with durable goods orders that are seen lower in June at 0.4% from previous 1.3%. Core goods are anticipated to rise only 0.1% from 0.7%. Jobless claims should be lower at 381K from previous 386K.

Pending home sales are due at 10:00 am and are expected to grow mere 0.6% in June after jumping 5.9% in May. Markets could also respond to treasury secretary Tim Geithner whose testimony before the senate banking committee also starts at 10:00 am.

A new set of Premium Insights are due later today. USDCAD hit all targets. 1 of the 2 EURUSD Monday shorts hit targets, with the other stopped out. US crude stopped out and and USDJPY remain in progress . Gold, GBPUSD and AUDUSD hit all targets, DIRECT ACCESS click here: Non subscribers click here: A new set of trades will be issued later today.


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