Intraday Market Thoughts

Euro Ignores Disappointing Data; Focus Turns to US Housing

by Patrik Urban
Jun 21, 2011 14:07

EUR ignores both disappointing German and EZ Data, BoEs Fisher dovish remarks, UK data slightly better then expected. Canadian Retail Sales Mixed, US housing data next.

USD continues to trade with a weak tone this morning not too far from yesterdays NY close. Euro moved lower after the German ZEW index for June dropped sharply to -9.0 (-1.7 expected) from previous 3.1. The economic sentiment has been declining for four straight months and turned negative after seven months of positive results. The severity of the decline is highlighted by the fact that this is the worst reading since January 2009. Ashraf's analysis told Twitter followers to FADE THE POOR ZEW DATA & stick with EURUSD longs at 1.4320-30s to target 1.44. We are now at 1.4390.

The Ezone Economic Sentiment showed similar results. The index printed -5.9 from previous 13.6 which is the first negative reading since March 2009. Despite these disappointing releases, the common currency has recovered its losses and trades at pre announcement levels.

As warned yesterday, the BOEs MPC member Paul Fisher pushed GBPUSD lower with his dovish remarks after London open. Mr. Fisher sees UK outlook as uncertain; sees risks from both inflation and weak growth and most importantly would consider more QE should CPI sink into deflation mid term.

Slightly better UK data helped GBP to recover its earlier losses after Public Sector Net Borrowing in May reached GBP 15.2B vs. GBP 16.1B expected and CBI Industrial Order Expectations reached 1 vs. -5 expected. Todays print is only second positive print since July 2008 and prints over 0 should indicate expectation of an increasing order volume.

New York session kicked off at 8:30 am ET with Canadian April Retail Sales +0.3% from -0.1%,with ex autos flat from -0.2% vs exp +0.3. expect the weakest print in six months that would show a decrease to 4.82M units from previous 5.05M.

US Existing Home Sales for May are due at 10:00 am ET. Analysts expect the weakest print in six months that would show a decrease to 4.82M units from previous 5.05M.

The important Greek confidence vote is expected to shake markets at 21:00 GMT. Media report that positive vote is likely which should underpin riskier assets.

If you are SUBSCRIBER to our PREMIUM INTERMARKET INSIGHTS, you would have heeded our long EURUSD calls from Thursday past 1.4380s as well as our latest upside targets in S&P500 and oil.

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