Intraday Market Thoughts

Finns' EFSF Approval Adds to Euro Bounce

by Patrik Urban
Sep 28, 2011 12:40

Euro extends bounce along with equities as Finns approve EFSF expansion, Greece backed tax hikes, German CPI could surprise to the upside; German import prices fell; Italian business confidence declined; French GDP unrevised. Market turns to US durable goods orders.

The greenback is weaker as overall sentiment remained stable. Risk currencies and equities are benefiting from the expectation that Germany will pass tomorrow the legislation needed to expand the Eurozone bailout fund. EURUSD breached yesterday's highs and trades around 1.3670 hitting all targets mentioned in the premium piece.

German CPI is still being collected and analysts expect a decline to -0.1% in September from an unchanged reading in August. Annual figure is seen unchanged at 2.4%. However, the numbers from regions that have already completed collecting data suggest that we could see an upside surprise. Region of Saxony reported +0.3% monthly increase, which is the highest print since October 2008. North Rhine Westphalia and Hessen have also reported 0.3% monthly increase.

Ashraf's Premium Intermarket Insights hit all or most targets for EURUSD, EURJPY, US Crude, while gold, EURGBP and CADJPY remain in progress. Silver, USDCAD and ES were stopped out. Direct access here:

In other news, German August Import prices came at -0.7% m/m which is the largest fall since September 2009. Italian September business confidence fell to 94.5 from 98.6 in August printing the lowest number since 1/2010 and French final Q2 GDP was confirmed at 0.0% sparking fears of a recession. Weak print is attributed to contraction of household spending which accounts for a significant part of French GDP. Annual print declined to 1.7% from 2.2%.

GBP could come under renewed pressure in the days ahead as calls for more QE are becoming stronger. MPC member David Miles said that he was closer to voting for new QE because a "second dose of QE would boost the economy".

The EU/ECB/IMG troika has decided to return to Greece on Thursday and will hold meeting in October to determine disbursement of the next part of the aid.

The New York session will bring Durable goods orders at 8:30 am ET that are expected to contract by 0.5% in August after growing 4.1% in July. Core orders are seen at 0.1% from previous 0.8%. Crude oil inventories due at 10:30 am ET are anticipated at +1.1M barrels after dropping by 7.3M barrels last week.

Traders should note that Fed chairman Ben Bernanke speaks at 5 pm ET in Cleveland so volatility could increase during this illiquid time of the day.


Latest IMTs