Intraday Market Thoughts

EURUSD Regains 1.24; UK Public Borrowing Rose

by Patrik Urban
Aug 21, 2012 12:18

AUD rose after RBA minutes; UK public sector borrowing rose; Spanish auction. Markets await the FOMC member Lockhart's speech and Canadian wholesale sales. Last weeks 1.2420 EURUSD target got hit today. See last nights Premium Insights on equities, VIX, FX & yen pairs below.

The common currency rose to a two week high today along with most other majors that also gained against the buck. European equities are gaining over 0.5%.

The Aussie pushed slightly higher after the minutes from the latest RBA meeting were released. Nothing surprising was revealed but remarks about stabilizing China, inflation within a target and domestic growth that outweighs global slump helped to underpin the currency. When AUDUSD broke above 1.0500 rumors of the possibility of RBA intervention circulated but the fact that the minutes did not mention disadvantages associated with strong currency make chances of an intervention smaller. AUDUSD trades around 1.0510.

UK public sector net borrowing excluding financial interventions was GBP 0.557 bln which is about GBP 3.4 bln more than in July 2011 when borrowing was -2.2837 bln. The treasury blamed lower tax receipts which are usually good in July. The surprised deficit had minimal impact and GBPUSD trades higher around 1.5760.

Spain sold EUR 4.51 bln of 12 and 18 month bills today. Both average yields declined and bid to cover rose in case of the 18 month bill but declined on the 12 month bill. 10 year yield continues to decline, currently at 6.24%.

The NY session will start a bit earlier today at 8:00 am ET when the Atlanta FED president and the FOMC member Dennis Lockhart delivers a speech on economic outlook in Atlanta.

Reports are limited to Canadian wholesale sales at 8:30 am and they are anticipated to slow to 0.3% in June from previous 0.9%.

Last nights Premium Insights have the tactical implications on our latest take for risk appetite regarding for EURUSD, USDJPY, GBPUSD, CADJPY, AUDJPY gold and oil in our latest Premium Insights with new charts on DAX-W & EURUSD-W. Direct access to the latest Premium Insights is found here: New Subscribers can click here:


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