Intraday Market Thoughts

Awaiting Trichet; US Trade, Jobless Data

by Patrik Urban
Jun 9, 2011 13:05

After ECB and BoE announced their decisions to keep rates steady, main focus turns to the press conference at 8:30 am EDT, where J. C. Trichet will determine Euros fate for the short term. Traders should also pay attention to FOMC voter Plosser who speaks at 2:00pm. See how you can trade ahead/after the ECB conference.

The main focus today is clearly the press conference at 8:30 am where the head of ECB, J. C. Trichet could signal next month rate increase. Much has been written about the importance of the phrase strong vigilance. To recap: should Trichet use these words, euro is likely to gain on rate hike expectations, should he omit these words, the euro is likely to take a hit as inflation hawks would be disappointed.

As expected, the Bank of England kept rates steady at 0.5% and held its Asset Purchase Facility unchanged at 200B. UK trade balance for April came out slightly better at -7.4B vs. -7.5B expected.

The ECB also kept rates steady at 1.25% but today, the press conference is even more important than the actual rate decision. Because of the press conference today, traders will not pay much attention to other news. However, headlines coming from Europe continue to point out the internal struggle that EZ is experiencing. Gerhard Schick, a policy expert who represents German Green party, has told German newspaper that the ECB must accept the reality of a Greek debt restructuring. On any other day, Euro would be punished for such a headline. But not today.

New York session starts with busy schedule today. First and foremost, ECBs press conference starts at 8:30 am EDT. Today, all other news will be secondary: US trade deficit due at 8:30am EDT is expected to reach 48.8B from previous 48.2B and unemployment claims are expected at 424K compared to previous 422K.

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At 2:00 pm voting FOMC member Plosser speaks about the US economy at annual conference in London. Plosser has made many hawkish comments in the past and even last weeks disappointing NFP numbers did not alter his view that monetary policy could be tightened by the end of the year.

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