Intraday Market Thoughts

Weak German Data; Canadian CPI Next

by Patrik Urban
Jun 22, 2012 13:08

German confidence deteriorates; SNB bulletin; WTI and periphery yields. Focus turns to Canadian consumer inflation.4 new charts & 10 new trades added in Thursday nights Premium Insights, including GBPJPY, EURJPY & EURUSD. See more below.

The USD rally that started on the back of Moody's downgrade of 15 global banks continues against commodity dollars that broke yesterday's lows but stalled against the rest of the majors. European equities are trading between -0.1% and -0.6%.

German IFO business climate declined slightly more than expected in June to 105.3 from 106.9 which is the lowest print since 03/2010 and the expectations component fell to 97.3 from 100.8. The silver lining of the report is the current conditions indicator that unexpectedly rose to 113.9 after a sharp fall in May to 113.3.

The uncertainty surrounding the Eurozone is impacting the German economy and deteriorating data (PMIs, ZEW, IFO) prove that Germany is not immune to the ongoing crises. This increases the risk that the economy will come to a halt and also adds pressure on the ECB to cut rates below current 1%. The next ECB meeting is on July 5th. EURUSD fell to 1.2520 but regained 1.2555 a few hours later.

The SNB quarterly bulletin did not reveal anything surprising and only reiterated comments about defending the Franc cap and not tolerating further appreciation. EURCHF continues to trade only a few points above the 1.20 floor.

The economic calendar is limited to Canadian CPI that is expected to ease to 0.1% from 0.4% m/m and to 1.5% from 2.0% y/y. Core CPI is seen at 0.3% from 0.4%.

WTI erased some of its previous losses as it rose from 8 month low at 77.53 to current 78.65. Spanish 10 year yield continues to decline and trades around 6.53% while the Italian bond yields 5.79%.

3 new charts on yen crosses, 1 chart on latest US business surveys and 10 new trades in the latest Premium Insights. Click here for today's full Premium Insights titled "Focusing on Yen Crosses" Non subscribers please click here:


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