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The inevitability of further asset purchases from the Fed, BoE, ECB and BoJ enhance the case for gold and silver. ...

STERLING's NEW BOE REALITY. The underlining negative of the British pound continues to be the Bank of Englands insistence that inflationary pressure remain temporary, as well as the emergence of BoEs new MP member, Martin Weale, whose double-dip forecasts for UK reduced expectations of a 2010 rate...

CANADA JUL CPI is the only data item of the day, further inflation softening could add to CAD selling especially in the event of prolonged declines in appetite. Watch the annual core CPI (exp at 1.8% from 1.7%). USDCAD 3-hr shows immediate TL resistance at 1.0420, a break of which seen extending...

YENs TRADE-WEIGHTED INDEX http://chart.ly/4dt85t the chart in the link is Deutsche Banks JPY Traded-Weighted Index, showing the currency testing the highs of January 2009. Despite the similarity of the price pattern with Jan 2009, there are differences. GLOBAL BOND YIELDS TODAY are dragged by a...

STERLING RALLIED immediately after the BoE minutes showed Andrew Sentence continued to call for a 25-bp rate hike. While this was no real surprise, some players thought that perhaps Sentence would not dissent considering the emerging slowdown in inflation across the G7. Considering yesterdays...

WATCH BoE MINUTES: Wednesdays release of the minutes from the August MPC meeting could add to GBP losses. The currency has been hit hard after Tuesdays unexpectedly weak July CPI (see earlier IMT for detail). The inflation story is a big deal. For the past 4 months, strong UK inflation was the...

GBPUSD RESTS RIGHT ON THE 2-month trend line support at $1.5565-70, following the all-important July inflation figures (see prev IMT). This is the GBPUSD equivalent of last weeks EURUSD trendline support, which held up at $1.3740s. GBPUSD does remain above its 200-day MA ($1.55), but has yet to...

THE BULLISH HAMMER CANDLE I referred to in yesterdays IMT 3 hrs before the NY close may be materializing in both the S&P500 and the Dow-30. Such a pattern is usually bullish, which means we can see brief run-up into the next 2-3 days, with the 1095 and 10400 objectives in S&P500 and Dow-30...

Despite todays inflation data for July showing CPI falling to its lowest level since November 2009, Bank of England governor Mervyn King will still be obliged to write his now somewhat customary letter to the Chancellor to explain the price overshoot. Even retail prices which has been the...

TOO SLOW FOR YOU? Many have complained about receiving the Intraday Market Thoughts emails relatively late. The increasing size of my recipient list has slowed down the process and many get stuck in the queue for quite a while. We've changed the software last year and consider doing so again....

HOW WILL USD FARE DURING DEFLATION? It depends on what is the reason to deflation and whether it is accompanied by substantial deleveraging in the markets as was the case in 2008-9. The last time we had GROWTH-DRIVEN deflationary fears (2002-3), the US dollar was under severe pressure. But that...

GBP & JPY are at opposite ends as sterling is the biggest loser in todays FX market flows following an unexpected decline in UK July RICS (House Price balance) to -8 from +9, the 1st negative index since July (and lowest since April 2009). JPY gains on slower than expected Chinese exports growth...

AUSSIE CROSSES AHEAD & AFTER RBA: The upcoming RBA decision (12:30 am EDT, 4:30 am GMT, 5:30 BST) is widely expected to keep rates unchanged, but the impact on the already rallying AUDUSD remains doubtful given the break above the all-important 0.9070 resistance. Although a rate hold is widely...

GBP NET SHORTS against USD fell to 17,940 contracts, the lowest level since August of last year. The chart http://chart.ly/7fxh7s shows GBPUSD is closely correlated with futures speculators interest in GBPUSD. This months BoE inflation report maybe the only viable barrier to further GBP gains in...

GBP GAINS across the board, completing the 7th rising week out of the last 8 weeks in a week when the Bank of Englands mixed messages regarding inflation became apparent to the public. Contrary to the rest of the G5, UKs inflation remains well above target, thereby fuelling expectations of a rate...

GBPAUD reflects contrasting expectations . . . for the RBA and BoE, with the former expected to keep rates on hold due to softer than expected inflation and the latter seeing better reasons to listen...

The market continues to become quicker and fiercer as it move up and down 2+% on a regular basis This week we have seen some wild price swings due to earnings, events and the Feds which just makes trading that much more intense. I have pointed out yesterday that this market only gives you a...

USD STRESSED OUT BY BERNANKE? Since markets are widely expecting Bernankes testimony to highlight the Feds downgrade for US growth and inflation, most FX players see it as an opportunity to sell USD into the end of the US session. Yet, it is relatively common for markets to bid up currencies 2-3...

Yen strength is here to stay especially as the US dollar's safe-haven lustre is eroded by the worsening US data. ...

JPY IS STRONGEST OF THE DAY FOLLOWED BY GBP in early Thursday European trade as Chinas Q2 GDP growth slows to 10.3% from 11.9% in Q1. 13 hours after the Federal Reserve downgraded its 2010 and 2011 forecasts for US growth and inflation, Beijing publishes evidence of slowing growth and inflation....

FOMC MINUTES INDICATE A FED DOWNGRADE of the the US econ outlook for 2010 and 2011, weighing on yields and stocks, while keeping USD mixed. FOMC revised down its 2010 and 2011 projections for GDP growth and inflation while pushing up its unemployment outlook from the April forecasts; GDP down to...

OIL UNABLE TO BREACH ITS 200-day MA of 77.40,which coincides with the trend line resistance extending from the Mar 5 high thru the June 28 high. This also helps explain USDCADs support at the 1.0270 floor and subsequent recovery to 1.0370. Sticking with prior IMTs bearish call on EURGBP eyeing...

US JUNE RETAIL SALES -0.5% (vs exp -0.2% and prev -1.1%), ex autos -0.1% from prev -1.2%. Better but not good enough is one way to sum up these figures. Youd have to remove autos, gas and building material to obtain a positive retail sales figure. The 1.3% DECLINE IN JUNE IMPORT PRICES was the...

It was important for yesterdays emergency budget to be positively accepted by the market, being that it was being held against a backdrop of concern about fiscal and sovereign debt woes globally, but especially in Europe. The budget presents the government with a great opportunity, more than...

RBNZ RATE HIKE? Markets price a 81% chance of a 25-bt rate hike by the RBNZ to 2.75% (21:00 GMT today) A spike in inflation expectations to an annual 2.9% in Q2 from 2.1% and unemployment dropped to 6.0% from above 7.1%, could prompt a rate hike alongside a hawkish policy statement. NZDUSD eyes...

GBP drops across the board despite the highest annual CPI since Nov 2008 (3.7%). The bulk of sterlings climb occurred ahead of the figures before Cable dropped a full cent to $1.4430. Traders are not only confident in the Bank of Englands repetitive calls that rising UK inflation will be...

Last weeks EURUSD break below the 1.2700 area, if confirmed on a monthly close could have potentially bearish consequences for the single currency from a technical standpoint. Given the unprecedented size of the bailout from an EU perspective, as well as an IMF point of view, the market...

GBP vs. EUR. While last weeks losses in EUR and GBP against the USD were largely straightforward, GBP losses against USD and JPY had exceeded those in EUR on Wed and Thur of last week due to deteriorating UK trade balance and a negative inflation report from the Bank of England. But as the rumours...

STERLING LOSES all of yesterdays gains after the Bank of Englands inflation report reinforced expectations that any positive sterling impact from deficit-reduction plans may not survive the growth implications of these measures. The BoE reiterated that inflation will drop below the 2% target in...

Sterling's Tuesday rally was the first daily gain after 7 days of losses, as financial markets applaud the combination of a market-friendly Conservatives victory and the LibDems contribution to achieving a majority government. Considering LibDems opposition to stringent spending cuts, this will...