Intraday Market Thoughts

MPC Minutes Sent GBP lower, Home Sales Next

by Patrik Urban
Feb 22, 2012 12:40

MPC minutes revealed calls for more QE; European manufacturing and services PMIs mostly disappoint; USDJPY above 80; ECB deposits declined. Existing home sales are next. See the latest about our Premium Intermarket Insights below.

USD trades higher against all majors. Major European equities are lower by 0.5% and the relative strength loser is NZD.

BoE meeting minutes from 2/9 revealed unanimous voting to keep rates

unchanged and 7-2 split on QE size. MPC members Miles and Posen wanted to increase QE by GBP 75 bln while others preferred GBP 50 bln increase as they believed that larger QE would send a wrong signal.

GBPUSD fell nearly 100 points within and hour as analysts expected that the decision to boost QE by GBP 50 bln would be unanimous.

Reports on manufacturing and service sectors in the Eurozone increased economic concerns as nearly all published data was not only lower in February compared to January but also worse than expected.

German manufacturing PMI fell to 50.1 from 51 and services PMI declined to 52.6 from 53.7. Eurozone manufacturing PMI rose to 49 from 48.8 and services PMI fell to 49.4 from 50.4. Composite PMI fell to 49.7 from 50.4.

Eurozone industrial orders rose 1.9% in December from -1.1% m/m and improved to -1.7% from -2.5%.

In other news, Germany sold EUR 4.282 bln of 2 year bond today (target was EUR 5 bln). The average yield rose to 0.25% from 0.17% and cover declined to 1.8 from 2.2 and ECB deposits declined to EUR 449.05 bln on Tuesday from EUR 464.1 on Monday.

USDJPY continues to push higher and broke above the psychologically important 80.00 level reaching to highest levels since 08/2011. The divergence between rising oil and declining CAD continues as USDCAD trades higher having made a series of higher lows on the hourly chart.

The only US report for today is existing home sales that is expected to increase to 4.66M in January from 4.61M in December.

Premium trades in EURGBP and gold are done, while US crude nears our 107 target. USDCAD & AUDNZD remain in progress. For direct access, pls click here: Non subscribers can get started here:


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