Intraday Market Thoughts

Qaddafi Reportedly Captured, Euro Boosted by EFSF Guidelines

by Ashraf Laidi
Oct 20, 2011 12:25

Wire reports indicate Mouammar Qaddafi was captured. US authorities have yet to confirm the news. Euro hits 1.3830s on stronger EFSF guidelines; German PPI higher; UK retail sales rose; Swiss ZEW improved for the first time in six months. Jobless claims, existing home sales and Philly Fed manufacturing is next. All 3 of EURUSD Premium trades hit targets, making 6 out of 9. Today's Premium Trades are due at the US open.

Euro moved sharply higher today from around 1.3672 to 1.3842 on EFSF guidelines that will be presented to German lawmakers. DJ reports that these guidelines are based on the agreement reached on July 21st and allow for limited leverage through banks; limit EFSF bonds purchase to 50% of total issue and restricts market intervention to public sector debt.

German PPI rose 0.3% in September after contracting -0.3% in August. This translates to annual PPI 5.5%, unchanged from last reading. Prices have increased mainly due to rising energy and food costs.

In the UK, retail sales rose unexpectedly 0.6% in September from -0.4% in August, which is 0.6% annual growth. However, this level of growth is unlikely to be sustained due to increasing unemployment, sluggish wage growth and high inflation. GBPUSD trades around 1.58, about 90 points above the pre-announcement level.

Swiss ZEW economic expectation index was declining for the past six months. In October it slowed its rate of decline when it printed -54.4 from previous -75.7.

The NY session starts at 8:30 am ET with jobless claims that are seen lower at 401K from previous 404K and Canadian wholesale sales that are expected slightly lower in August at 0.4% from 0.8%.

10:00 am ET will bring September existing home sales anticipated to decline to 4.94M from 5.03M and Philly Fed manufacturing that is expected to lower its rate of decline to -9 in October from -17.5 in September. On Monday, the Empire State manufacturing index was below expectations.

Consumer confidence in Eurozone also due at 10:00 am is expected to worsen in October to -20 from previous -19.

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