Intraday Market Thoughts

GBP sees a lift after much improved Retail Sales, CHF slides as Zew index disappoints

by Ashraf Laidi
May 19, 2011 13:17

Risk appetite is improving and higher yielding currencies are trading near their highs of the session. GBP is retracing a portion of yesterdays losses after May retail sales showed a solid reading of 1.1%, much improved from Aprils 0.3%. Retail sales often show volatile results and at least a portion of todays reading can be attributed to sales related to the Royal Wedding.

Relative strength loser is CHF after May Zew Economic Expectations index came out significantly weaker at -11.5 from last 8.8. CHF is weaker across the board. Last months print of 8.8 was the only positive reading since September 2010.

Upcoming US session will bring unemployment claims at 8:30 am EDT, expected to improve slightly to 421K from last weeks 434K. For the past five weeks market saw readings over 400K which shows labor market deterioration after 7 weeks of sub 400K readings seen during late February to early April.

At 10:00 am May Existing Home Sales will be released expected to improve to 5.21M from last 5.10M. Housing market is critically important for US consumers and while there are some encouraging signs, weakness persists. Existing home sales have been improving since August 2010 but are still far below pre-crisis levels. New home sales are still at decades lows.

Philly Fed manufacturing index will also be released at 10:00 am EDT. After a significant improvement seen at the end of 2010 and early 2011 Philly Fed index dropped in April from 43.4 to 18.5. May reading is expected to show slight improvement to 20.2.

Recent trend towards USD strength seems to be getting tired and the greenback has closed at weak levels over the past two days. From this point of view, the close of todays NY session is extremely important. Additional USD weakness and a close below yesterdays low would point to change in bias and USD could become a sell on rallies.

For the latest trading ideas on OIL, EURUSD, GOLD, SILVER & CADJPY, see our Premium Intermarket Insights here:

by P.U, Staff


Latest IMTs