Intraday Market Thoughts

UK CPI Slows, US Housing Data & Bernanke Next

by Patrik Urban
Mar 20, 2012 12:01

RBA meeting minutes; German PPI declined; Swiss industrial production rose; UK CPI declined less than expected; Spanish and Greek auctions. Housing starts and building permits are next. Last nights Pemium Intermarket Insights focused on shorts in Aussie vs CAD & USD as well as fresh trades on EURUSD, EURGB and gold.

The USD is higher across the board, especially against commodity currencies. European equities are lower by more than 1.2% and the relative strength losers are AUD and NZD.

RBA meeting minutes that said that the economy faces less danger from the Eurozone crises and that downside risks are somewhat smaller were not able to stop the AUD decline caused by earlier comments from the largest mining company BHP that Chinese iron ore demand was slowing. The AUD has been declining since the beginning of the Asian session and trades around 1.05.

European data showed that despite higher energy prices, German PPI declined in February to 0.4% from 0.6% m/m which translates to 3.2% from 3.4% y/y and that Swiss industrial production in Q4 soared 7.9% q/q from previous -2%. The annual print improved to -1.4% from previous -1.9%.

UK CPI declined slightly less than expected in February to 3.4% from 3.6% y/y which is the lowest print since November 2010 (core CPI declined to 2.4% from 2.6%). Even thought the consumer inflation has been declining for 5 months in a row, it declined less than economists expected (3.3%) which could lower chances for additional QE. BOE projects CPI at 3.35% by Q1 end.

Spain sold EUR 5.05 bln worth of bonds today (target EUR 4.5 5.5 bln) with lower average yields and Greece sold EUR 1.3 bln worth of T bill (EUR 1 bln target) with lower yield and marginally better cover. This was the first post debt swap auction.

In other news, the senate banking committee will start confirmation hearings for two new FED governors Jerome Powell and Jeremy Stein and the government in Cyprus, which is a member of the Eurozone, allegedly asked the ECB for SMP support.

The US session kicks off at 8:30 am ET with building permits that are seen higher in February at 0.69M from January's 0.68M and also with housing starts that are expected to remain steady at 0.7M.

Market volatility could increase at 10:00 am when treasury secretary Geithner testifies before the Financial Services committee in Washington DC and also at 12:45 pm when FED chairman Bernanke delivers the first out of four lectures at the George Washington University.

Last nights Pemium Intermarket trades focused on AUDCAD, AUDUSD as well as fresh trades on EURUSD, EURGB and gold. Click here for direct access: Nonsubscribers click here:


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