Intraday Market Thoughts

Euro Tests $1.30, Fed Stands Pat, Rating Agencies Awaited

by Adam Button
Dec 14, 2011 0:55

The euro fell to the lowest levels since January after Merkel rejected a hike to the permanent bailout fund and the Fed remained firmly on the sidelines. USD and JPY were the leaders while EUR and CHF lagged. Japanese industrial production is a highlight in the upcoming session. Ashrafs premium Intermarket Insights warned that a lack of QE3 would upset markets and weigh on EUR & metals. Of Tuesdays 13 new trades, 5 hit all targets, 4 are in progress, 1 stopped out and 5 remain unfilled.

There were no surprises in the FOMC statement. They continue to expect moderate economic growth to slowly bring down unemployment. New references were to an apparent slowing in global growth and strains in global financial markets as a primary source of downside risks.

Like markets, the Fed appears to be waiting and watching how the situation will unfold in Europe before tipping its hand. If anything, the absence of a more upbeat tone was a surprise in light of recent positive data.

But the Feds caution was underlined by November US retail sales which advanced just 0.2% compared to the 0.6% expected. Ex-autos and gas sales also climbed 0.2% compared to the 0.4% consensus. Disappointing sales coming into the holidays were underscored by a poor quarterly report from electronics retail giant Best Buy, sending shares 15% lower.

Of Tuesdays 13 new trades, 5 hit all targets (2 EURUSD, 1 EURJPY & 2 ES), 4 are in progress (gold, silver USDCAD and CL_F) , 1 stopped out (CL_F) and 5 remain unfilled. For direct access to these trades, click here:

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The S&P 500 fell 0.9% to 1226.

The euro broke the October lows after a Reuters headline said Merkel rejected raising the 500B upper limits of the ESM. The euro bounced on talk of Fed QE and a rumoured closure of the Straits of Hormuz, which was later denied.

Asia-Pacific Preview

The session will be quiet 0430 when Japan unveils revised Oct industrial production figures. A 2.4% rebound is expected after a 3.3% decline in September.


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