Intraday Market Thoughts

Euro Remains Weak Despite Ezone CPI Jump

by Patrik Urban
Sep 30, 2011 12:43

German retail sales drop; Eurozone unemployment remains high; Eurozone CPI surges to highest level in 3 years; Swiss KOF declines. Market turns to US PCE price index, personal income and spending, Chicago PMI and Canadian GDP. Ashraf's Premium Trades

The common currency has been under pressure over the past two trading sessions, declining from 1.3679 to 1.3487. The downside pressure is likely to continue as German Retail sales dropped -2.9% in August from +0.3% in July and Eurozone unemployment rate remained elevated at 10%.

Eurozone annual CPI surged to 3% in September, nearing a 3-year high, beating expectations of 2.5%. In August, CPI was at 2.5% and even that reading exceeded ECB target of 2%. CPI rose at the fastest rate since 10/2008.

EURUSD is likely to close current week at the lows confirming its inability to remain above key weekly trendlines. More about key levels and longer term trendlines in Ashraf's premium piece here: Non-members can get a trial here: CL, ES Premium trades all hit targets; One EURUSD trade done, the other as well as EURJPY & EURGBP in progress.

Swiss fundamental data started to deteriorate recently and the SNB projects that the economy will slow significantly towards the end of the year. KOF Economic barometer that fell to 1.21 in September from 1.61 in August, marking fourth decline in a row, confirms this view. CHF strength that impacted exports is blamed for the KOF falling to two year low.

The New York session starts at 8:30 am ET with FED's preferred inflation gauge, the Core PCE price index which is expected to remain at 0.2% in August. August Personal spending is seen lower at 0.2% from 0.8% in July and Personal income is anticipated to increase 0.1% from previous increase of 0.3%.

Canadian GDP is also due at 8:30 am ET and is expected to tick up to 0.3% in July from 0.2% in June. Annual GDP is seen at 2.3% from previous 2%.

Chicago PMI due at 9:45 am is anticipated to decline to 55.8 from 56.5 and University of Michigan consumer confidence due at 9:55 am is expected unrevised at 57.8.

Today marks the end of the week, month and the quarter. Markets could be thin and flows somewhat harder to predict as participants rebalance their portfolios.


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