Intraday Market Thoughts

JPYTakes over from USD as Equities Look Down

by Patrik Urban
Oct 8, 2012 12:50

JPY strengthens; Chinese HSBC services PMI higher; Eurogroup meeting; Swiss deflation eases marginally; Eurozone investor confidence improves and German industrial production rose. US and Canadian banks are closed today. Equities seen at risk of etering a losing week, with S&P500 and Dow-30 vulnerable to 1420 and 13300 respectively. Both EURUSD & cable stopped out, with CADJPY it all targets and metals in progress. See more detail below.

More bad news on the UK austerity front as the independent Office for Budget Responsibility concludes the government will likely miss its target of reducing public by 2016/17. As much as 15 bn per year in savings will have to be made.

USD mixed in the ongoing session. It is weaker against JPY, unchanged against commodity dollars and stronger against EUR, GBP and CHF. European equities are losing about 1.25%.

Despite the fact that Japanese banks were closed in observance of Health-Sports day, the JPY has been gaining across the board throughout the Asian and London sessions. USDJPY declined about 50 points to 78.12 while EURJPY fell 100+ points to 101.12.

The AUD stopped sliding and trades slightly higher after Chinese HSBC services PMI rose in September to 54.3 from previous 52. AUDUSD oscillates around 1.0175. A break below would cause a technical damage as the zone around 1.0150 is a key support on the weekly chart.

Reports that suggested that Spain would not ask for a bailout over the weekend proved to be accurate so the focus is on the Eurogroup meeting in Luxembourg. Markets will also watch for headlines regarding the decision on the next tranche of bailout funds for Greece.

In other news, Swiss annual CPI printed -0.4% in September from previous -0.5% while the unemployment rate remained unchanged in September at 2.9%. Eurozone sentix investor confidence improved marginally in October to -22.2 from previous -23.2 and German industrial production rose 0.5% in August after 1.3% growth seen in July.

There are no reports due during the NY session as the US observes Columbus Day Holiday while Canadian banks are closed in observance of Thanksgiving day. The sole risk event comes at 5:00 pm ET when New Zealand releases its Q3 business confidence survey.

Our Pre-NFP Premium Insights remain in progress, EURUSD missed the 1.3080 final target before being stopped out. Metals and oil longs remain in progress, while EURJPY were stopped out. CADJPY hit all targets. Direct access is found here: Nonsubscribers can join here:


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