Intraday Market Thoughts

Markets Consolidate Gains; US Chicago PMI

by Patrik Urban
Jun 30, 2011 14:12

Markets trade within a narrow range ahead of second round of Greek voting. German data comes on the weaker side, Trichet provides hawkish comments and GBP is the relative strength loser. Market turns to Canadian GDP and US Chicago PMI.

After the calm Asian session, the FX market is consolidating yesterdays gains. Equities, commodities and high yielding currencies trade near session highs.

German Retail Sales for May dropped to -2.8% from previous unchanged reading and German jobless reading came at -8K, slightly short of expected fall of -17K. Unemployment stayed at 7% as expected.

J. C. Trichet that spoke in Brussels earlier today reiterated that strong vigilance on inflation is warranted and ECB is ready to act in timely manner on inflation. Next ECB meeting is July 7th and rate increase is likely. This notion is supported by the Euro zone CPI figure for June estimated at 2.7% y/y which is above the ECBs 2% inflation target.

UK Nationwide HPI index for June came out flat and -1.1 y/y. Traders have been selling GBP against virtually everything. The Sterling is falling even against the weak USD and reached the psychologically important 1.60 level again. GBP is at decade lows against number of currencies (AUD, NZD, CHF).

Canada releases its GDP figures at 8:30 am ET. On a monthly basis GDP is expected to drop to -0.1% from previous reading of 0.3%. Year over year print is expected to decrease to 2.7% from previous 2.8%. Slowing US economy is likely to worsen Canadian growth figures as the US is a major Canadian trading partner.

US jobless claims fell 1k to 428k vs exp 420k. Later at 9:45 am ET Chicago PMI is due. Analysts expect fourth month of back to back deterioration. Headline is expected to show a decrease to 54.0 from previous 56.6.

EURUSD & USDJPY hit their targets from Thursday's PREMIUM TRADES

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