Intraday Market Thoughts

Sentiment Improves on Chatter of Coordinated Action

by Patrik Urban
Jun 15, 2012 13:21

Coordinated action reports; UK construction output falls and trade deficit widens; Eurozone employment declines but trade surplus higher. Market turns to Empire state manufacturing, TIC data, capacity utilization, industrial production and UoM consumer confidence. The latest on Greece is that voter polls will close Sunday 17:00 BST, (19:00 Athens time). Although there will be exit polls, media experts say they are often misleading. Initial results are expected around 20:00 BST, with a more detailed picture expected to emerge 2 hours later. Greek municipal workers plan to strike and disrupt voting centers. Find out below why Wednesdays Premium Intermarket Insights were titled Maintaining Risk-on.

USD is weaker against most majors. European equity indices are gaining between 0.5% and 1.5% and the relative strength winners are NZD and JPY while EUR lags.

Risk trades are being supported by reports that G20 is preparing coordinated action plan to inject liquidity if it is necessary after Sunday's Greek elections and also by the latest news that New Democracy is slightly ahead in the polls ahead of Syriza. It seems that additional comments about contingency plans are likely.

Ashraf mentioned that flat USD LIBOR suggests that the system is not in need of any FX swap intervention by the major central banks. He adds that the reports about central banks potentially intervening , are a statement of assurance by the authorities to step in just in case Greece event risk triggers contagion.

The BoE governor Mervyn King said yesterday that the case for further monetary easing is growing. Today's data confirm this as April construction output fell sharply in April and UK's trade deficit widened to GBP 10.1 bln from previous GBP -8.7 bln which is the second widest deficit on record. Exports to EU as well as non EU countries fell dramatically. GBPUSD fell to 1.5475 but recovered all losses and currently trades around 1.5540.

Eurozone Q1 employment declined 0.2% q/q and 0.5% y/y and the trade surplus rose in April to EUR 6.2 bln from downward revised EUR 3.7 bln. Annual exports rose 6% while imports declined 1%. EURUSD fell back to 1.2610 after trading as high as 1.2645.

The NY session starts at 8:30 am ET with Empire state manufacturing that is expected to decline in June to 13.6 from previous 17.1 followed by net long term TIC flows at 9:00 am that are seen higher in April at USD 45.3 bln from USD 36.2 bln.

At 9:15 am the Federal Reserve will release May capacity utilization that is seen steady at 79.2% and industrial production that is anticipated to decline to 0.1% from previous 1.1%.

The last report is UoM consumer confidence that comes at 9:55 am and is expected to decline in June to 77.5 from 79.3.

Wednesdays AUDUSD longs hit all, while EURUSD & gold longs are near completion. More detail on these and other trades & gold multitime frame charts, get direct access here: Non subscribers can join here:


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