Intraday Market Thoughts

USD Weaker Ahead of Data Flurry

by Patrik Urban
Sep 15, 2011 13:04

SNB kept rates unchanged and reiterated it would defend the 1.20 level against the Euro; UK retail sales disappoint; Eurozone CPI remained unchanged. Market turns to US CPI, jobless claims, indus production & Philly Fed, Trichets speech all due later today.

The SNB has kept the target for CHF libor rate unchanged between 0-0.25% and reiterated that it will defend the 1.20 level and that it is prepared to buy foreign currencies in unlimited quantities to weaken the Franc. EURCHF gained about 50 pips on the comments and currently trades around 1.2070

GBPUSD has reached above the 1.58 level despite UK Retail sales falling 0.2% in August. The yearly figure remained unchanged. The Office for National Statistics said that it was impossible to quantify the impact of the riots that hit London and other cities at the beginning of August. Ashrafs EURGBP trade mentioned in his latest premium piece is close to hitting its target as EURGBP broke above yesterdays highs at 0.8724

EURUSD has regained the 1.38 level despite an article published by Reuters that European finance ministers were warned of a renewed risk of a credit crunch by senior EU officials who also said that Eurozone faces a risk of vicious circle between debt, funding and negative growth. German chancellor Merkel has also repeated her stance against Eurobonds saying that they would be absolutely the wrong way forward.

On the data front, Eurozone annual CPI was steady at 2.5% in August and the core measure remained unchanged at 1.2%.

The NY session starts at 8:30 am ET with August CPI that is expected to tick up to 1.9% in August from 1.8% on annual basis. Core yearly CPI is seen steady at 3.6%.

Unemployment claims are anticipated to print 410K and Current account deficit is likely to widen slightly to USD -122 bln from USD -119 bln.

Last news that is due at 8:30 am is Empire state manufacturing index that analysts predict will lower the rate of decline and show -3.9 in September from -7.7 in August. Nevertheless, the print is still seen below 0 which indicates worsening conditions.

Capacity utilization rate should remain at 77.5% and Industrial production should decline to 0.1% from 0.9%. Both indicators are due at 9:15 am and show August results.

September Philly Fed index due at 10:00 am is expected at -14.7 from -30.7.

Volatility could increase at 2 pm when J. C. Trichet speaks at Eurofi Financial Forum in Poland.


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