Intraday Market Thoughts

Spain Sparks Euro Rebound, Latest on Premium Insights

by Adam Button
Aug 17, 2012 1:05

More signs that Europe is readying a plan to stabilize Spain led to a rally in risk assets. The euro was the best performer while the yen lagged. The Asia-Pacific weeks winds down with a quiet data-day. 1 EURUSD, AUDJPY and oil hit all their targets. See rest of Premium Insights below.

The euro climbed nearly a cent in US trading to 1.2373 on speculation that the ECB will unleash a substantial bond buying program as part of a package to be delivered when Spain calls on the EFSF for aid.

The gains came after Merkel indicated Germany is willing to do whatever it takes to preserve the euro and is on board with ECB conditions designed to encourage Spanish reforms. Hopes for ECB bond buying were reflected in a one-month low in Spanish 10-year yields and a 5.6% rally in Spanish stocks.

At the same time, the US dollar weakened on QE speculation after soft readings on the Philly Fed and jobless claims. The regional manufacturing indicator was at -7.1 compared to -5.0 expected and claims were fractionally higher than expected at 366K.

Data on housing was mixed with starts down 1.1% vs -0.5% but building permits at a 4-year high.

Oil was in focus as it rose to the highest since May, at $97.70/barrel. The White House leaked a story saying it was dusting off a plan to release strategic reserves but the market quickly judged such a move unlikely with the election looming.

The lone item of note in the Asia-Pacific session is a speech from the Feds Kocherlakota. He will deliver the same speech as yesterday but it taking questions. In his comments yesterday he did not reveal any tendency toward or away from QE3. In all likelihood, it will be more of the same today but there is always the chance he could offer a hint.

1 of 2 EURUSD Premium longs hit their final and so did oil and AUDJPY, while USDJPY. 1 GBPUSD, EURUSD, both gold and CADJPY are all in progress, while the other GBPUSD was stopped out Direct Access to these Insights is found here: Non subscribers can clikc here:



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