Intraday Market Thoughts

ECB Yield Cap Redux, USD Longs Cut

by Adam Button
Aug 24, 2012 23:25

The week began the same way it ended with a report that the ECB is considering capping peripheral yields. On Friday, the Canadian dollar was the best performer and the EUR lagged, reversing the trend from earlier in the week. The latest CFTC data showed growing negative USD sentiment. Thursday's Premium Intermarket Insights include EURUSD, AUDUSD, silver and oil.

The euro fell as low as 1.2481 early in US trading but began to trend higher after a weak durable goods orders report. Excluding volatile aviation and defense components, orders fell 3.4% compared to a rise of 0.7% expected. Orders have fallen to the lowest levels of the year and point to weak growth later in the year. The euro began to slip following the data, boosting the euro.

Larger euro gains came after a Reuters source reported that the ECB is still considering a cap on periphery yields. The story first surfaced in a German report at the start of the week but soft denials lowered expectations. The renewed chatter, and Reuters credibility, boosted the euro back to 1.2562. Late in the day, it drifted down to 1.2512.

The S&P 500 gained 0.6% but posted its first losing week in nearly two months.

Weekly data from the CFTC showed a strong preference for commodity currencies. The USD lost ground against all currencies except the yen.

EUR -124K vs -138K prior

JPY +11K vs +31K prior

CAD +51K vs +29K prior

AUD +87K vs +67K prior

GBP +8K vs 0K prior

NZD +16K vs +15K prior

Thuradays Premium Intermarket Insights on EURUSD, USDJPY, GBPUSD, AUDUSD, silver and oil Direct Access to these Insights are found here: Nonsubscribers can have a 1-week trial here:



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