Intraday Market Thoughts

EURUSD Tests 1.33, PCE & Manuf ISM Next

by Patrik Urban
Mar 1, 2012 12:59

Eurozone unemployment rose and CPI remained steady; UK house prices rose; Swiss GDP growth slowed and PMI improved; Spanish and French solid bond auctions. Market turns to core PCE, personal spending, ISM manufacturing and Bernanke's senate testimony. Our new Premium Trades for Thursday include AUDUSD longs at lower entries, EURUSD, oil & gold.

The USD consolidates its gains with a mild downside bias. The greenback gained yesterday after FED chairman Bernanke's testimony diminished QE3 expectations. The hawkish testimony combined with a solid PMI data and upward revision of Q4 GDP sent gold nearly 5% lower.

Worrying development came from Eurozone's labor market today as the unemployment rate rose to 15 year high in January and reached 10.7% from December's 10.6%. However, CPI remained steady in February at 2.7% suggesting that consumer spending may slow which would be reflected in a slower growth.

Swiss Q4 GDP grew 0.1% from previous 0.3% q/q (1.3% from 1.6% y/y). February PMI experienced another contraction but rose to 49.0 from 47.3.

UK nationwide house prices rose in February 0.6% from -0.3% m/m which is 0.9% from 0.6% y/y. Manufacturing PMI slowed to 51.2 from 52.0 as orders were little changed but cost increased.

Spain sold EUR 4.501 bln worth of bonds today, marginally above EUR 3.5 - 4.5 bln target with mixed yields and bid to cover ratios. France sold EUR 7.991 bln vs. EUR 7-8 bln target. Average yields declined.

Eurogroup finance ministers start their meeting where the Greek debt swap is discussed at 8:00 am ET.

The US session starts at 8:30 am ET with core PCE that is expected to remain steady in January at 1.8% y/y (0.2% m/m). Personal spending is anticipated to grow 0.4% after an unchanged print last month and jobless claims are seen slightly lower at 350K from 351K.

ISM manufacturing is due at 10:00 am and is expected to rise to 54.6 from 54.1. FED chairman Bernanke delivers his testimony to the senate banking committee at the same time.

Market volatility could also increase at 12:30 pm when Atlanta FED president and FOMC member Dennis Lockhart delivers a speech at a conference in Atlanta.

Our new Premium Trades for Thursday include AUDUSD, EURUSD, oil & gold as well as 4 charts on AUDUSD, gold and EURUSD.

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