Intraday Market Thoughts

Greek Turmoil Continues, China PMI Up Next

by Ashraf Laidi
Feb 1, 2012 1:19

Conflicting reports about the likelihood of a Greek PSI deal continue to whipsaw traders. NZD was the best performer on Tuesday while EUR lagged. China releases its official PMI in the upcoming session. Latest Premium Trades are out Buy the Euro Dip of Sell the Euro Bounce? See below.

The optimism in early in Europe dissipated by the close as the combination of weak US economic data and fresh problems in Greece knocked down risk trades.

Signs the US may lose the momentum from Q4 are mounting. The Chicago PMI fell to 60.2 compared to the 63.0 expected. Consumer confidence dropped to 60.2 compared to the 68.0 consensus. Especially troubling were comments about the difficulty of finding work in the sentiment survey. Housing remains deeply in the doldrums with the Case-Shiller house price index down 3.67% in Nov versus -3.3% expected.

The US news took the focus off Greece, but only briefly. Signs have been mounting that Greece is close to a PSI deal but approval from the Troika for the next round of bailout funds has become a necessary condition. On that front, there is trouble. The Guardian reported that Greek lawmakers are balking at further wage cuts and lowering the minimum wage.

At the same time, the ECB continues to haggle over how/whether to accept losses on its 50 billion euros of Greek debt.

The focus of Asia-Pacific trading is the release of Chinas official PMI at 0100 GMT. The consensus is for a fall to 49.6 from 50.3 but yesterday there were whispers in Chinese stock markets of 52. Last weeks HSBC flash estimate would indicate a downside bias to the consensus.

Our latest Premium Intermarket Insights for Tuesday are out Buy the Euro Dip of Sell the Euro Bounce, with new trades in EURUSD, AUDUSD, CADJPY and US crude oil


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