Intraday Market Thoughts

UK Manufacturing Mulled, Risk Rally Steady

by Kyle Morrison
Oct 11, 2011 6:51

UK manufacturing and industrial production data expected to disappoint, reinforcing MPC doves economy concerns, Malta ratifies EFSF, Slovakia up next, Japanese Trade balance and consumer confidence, FOMC minutes. Gold is the only trade in the Intermarket Insights hitting all targets, while all other 8 trades remain in progress.

Todays release of August Industrial and Manufacturing production data is expected to bear out Bank of England concerns about the tepid nature of the recovery of the UK economy and reinforce last weeks decision to resume the controversial asset purchase scheme by 75bn. The pound has had a pretty poor last 24 hours after previous hawk Martin Weale suggested that the current bout of QE could well be the first of several tranches. Expectations for manufacturing and industrial production are for declines of 0.2% on both measures with industrial production expected to slide by 1.2% year on year, much worse than the previous month of a decline of 0.7%.

Late last night Malta become the latest EU member to ratify the changes to the EFSF agreed on the 21st July, leaving Slovakia as the only country yet to ratify the changes to the fund. The EFSF is the subject of fierce division within Slovakian parliament. The bill will likely be passed, but it could be at the cost of the Slovakian PM calling a general election.

Italy is due to hold its first bond auction since being downgraded by Fitch on Friday

Ashraf's Interamarket Insights saw gold as the only trade to have hit all targets in the Intermarket Insights hitting all limits, while all other 6 trades remain in progress. EURUSD long trade was 11 pips away from hitting all targets. EURJPY, EURGBP, USDCAD, AUDCAD, ES and silver . For direct access here: Non-subscribers click here:

In Japan the latest August trade balance showed that the current account surplus shrank 64% from a year ago to 407.5bn yen. The decline was mainly due to the country's trade balance swinging into a 694.7bn deficit, the third-biggest on record. This was largely down to a 22.4% gain in imports, mainly crude oil, and other fuels due to the damage to its nuclear capability.

The latest Bank of Japan monthly economic report painted an uncertain outlook for overseas economies, though it did see improvement in emerging economies and was optimistic that Japanese output will continue to rise in Q4, but at a slower pace than in July-September.

Japanese consumer confidence for September improved slightly from Augusts 37 to 38.6, above expectations of 37.4 reflecting the slow recovery from the uncertainty seen after the earthquake in March.

Later this evening the release of the latest FOMC minutes is expected to highlight the discussions with respect to operation twist


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