Intraday Market Thoughts

EURUSD 5th Straight Daily Loss, Awaiting Philly Fed

by Patrik Urban
Feb 16, 2012 12:54

Possibility of a bridging loan; Moody's warns of a downgrade; solid Spanish and French auctions fail to improve confidence; ECB deposits fell sharply. US session will bring PPI, housing data and Philly FED index. Ashraf is on the road, readying for next weeks appearances at the NY Traders Expo. Todays Premium piece will be released after the US close. See more detail below on Mondays Premium trades.

USD pushes higher across the board. European equities lose about 1% and the JPY is the loser in relative strength.

The sharp reversal of sentiment that started yesterday continued throughout the Asian session and brought EURUSD back below 1.30 where the common currency continues to consolidate. Fears that Greek aid will not be secured before bond redemption on 3/20 were not alleviated by reports of a possible bridging loan that would provide enough funds to avoid default in case the bailout is delayed.

News of Moody's warning that it may cut rating of 17 global banks and 114 European institutions weighted further on the sentiment.

Not even two solid auctions were able to bring optimism back into the market. Spain sold EUR 4.07 bln worth of bonds today (EUR 3 4 bln target) and according to MNI completed 34.2% of its 2012 funding needs. French auction also went well a France sold EUR 8.45 bln worth of bonds (EUR 7 8.5 bln target).

ECB deposits fell sharply on Wednesday to EUR 391.55 bln. On Monday deposits were still well over half a trillion.

The US session starts at 8:30 am ET with PPI that is expected to decline to 4.1% in January from 4.8% y/y but rise 0.3% from -0.1% m/m. Building permits and housing starts should rise in January to 0.68M from 0.67M and 0.68M from 0.66M respectively. Jobless claims are seen marginally higher at 364K from 358K and

At 9:00 am FED chairman Bernanke delivers a speech on community banking in Arlington but it is unlikely to have a strong impact on the market.

Philly fed index is due at 10:00 am and it is anticipated to grow in February to 9 from previous 7.3.

Canadian data include manufacturing sales that are seen lower in December at 1% from November's 2% and international securities transactions that are expected to decline considerably to CAD 7.98 bln in December from previous CAD 14.99 bln. Both reports are due at 8:30 am.

Our PREMIUM INTERMARKET INSIGHTS trades in GBPJPY, oil AUDNZD hit all targets, while EURUSD and EURGBP were stopped out. Trades remaining in progress are gold, silver and USDCAD. Direct Access


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