Intraday Market Thoughts

GBP Weak On Declining Mortgage Approvals

by Patrik Urban
Mar 23, 2012 11:21

French business confidence and production outlook rose; Italian retail sale increased. UK mortgage approvals declined and Canadian CPI was higher. New home sales will be next. All of Wednesdays EURUSD. GBPUSD & AUDCAD shorts were done. Those remaining unfilled or in progress are below.

The greenback is mixed today. It is weaker against the EUR, GBP, CHF and JPY and unchanged against commodity dollars. European equities are in the red by about 0.5%. The relative strength winner is CHF.

Market sentiment improved considerably at the beginning of the London session on reoccurring rumor of looming Chinese RRR cut. French and Italian data that followed helped to push EURUSD a bit higher but the pair gave up some of its gains.

French business confidence rose in March to 96 from 93 and the production outlook indicator improved to -15 from -27. Italian retail sales also surprised to the upside as they rose 0.7% from -0.8% m/m and improved to -0.8% from -3.7% y/y.

Another disappointing report from the UK was released today. After yesterday's weak retail sales and Wednesday's terrible budget deficit figures, the BBA mortgage approvals declined to 33.1K in February from previous 38.1K which is the lowest print since June 2011. However, MPC member Martin Weale was quoted saying that Q1 was better than anticipated and that the growth will be positive. GBPUSD rose to 1.5907 but quickly retraced lower to around 1.5860.

There are were no sovereign bond auctions today and the issuance for next week should reach EUR 11 bln compared to EUR 7.58 bln this week.

Canadian CPI remained in February at 0.4% (core CPI rose to 0.4% from 0.2%) m/m. The annual figures rose 2.6% from 2.5% (core 2.3% from 2.1%). Notable increase of electricity price contributed to the raise.

The only US report due today is new home sales which is expected to rise in February to 326K from previous 321K. The report will be published at 10:00 am.

FED chairman Bernanke talks on central banking in Washington DC at 1:45 pm.

In Wednesdays PREMIUM INTERMARKET TRADES all EURUSD. GBPUSD & AUDCAD trades were done. 1 of 2 AUDCAD & and 1 of AUDUSD shorts were done the others unfilled. EURGBP & silver are in progress, while gold is unfilled. For more detail, see Non Subscribers can click here:


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