Intraday Market Thoughts

Euro Shrugs France Downgrade, Onto Bernanke

by Patrik Urban
Nov 20, 2012 13:00

French downgrade; EZ finance ministers meeting; no changes from BOJ; German PPI lower; Spanish auction. Real estate market data and Lacker and Bernanke speeches ahead. Bernankes speech at the NY Econ Club will be of particular importance as these annual appearances are known to cause volatility. 5 longs from last week's Premium Insights hit all targets, including both EURUSD trades.

EURUSD faces a confluence of resistance at 1.2820s 200-DMA (previous support now a resistance) and trendline resistance from Oct 17. The common currency continues to trade around 1.28 despite the downgrade by Moody's that cut French AAA rating one notch to Aaa1 with negative outlook. The downgrade is likely to affect EFSF/ESM rating as well.

Markets are awaiting a decision from the Eurozone finance ministers who are meeting in Brussels to determine the release of the next tranche of Greek aid.

USDJPY slipped slightly to 81.15 after the BOJ left rates unchanged between 0-0.1% and did not announce any new easing. Focus turns to the election on 12/16 and the next BOJ meeting on 12/19 when new easing is likely. USDJPY recovered the losses and trades around 81.40.

In other news, German PPI was flat in October m/m but the annual print slowed to 1.5% from 1.7% and Spain sold 12 and 18 month bonds worth EUR 4.94 bln, above its EUR 3.5-4.5 bln target.

The US session kicks off at 8:30 am ET with building permits that are expected to decline in October to 0.87M from previous 0.89M while housing starts are anticipated to fall to 0.84M from 0.87M.

Markets will also focus on the Richmond FED president and the FOMC member Jeffrey Lacker's speech on monetary policy that begins at 9:00 am and especially on the FED chairman Bernanke's speech on economic recovery and policy that is scheduled to begin at 12:15 pm. Audience questions are expected so the volatility could heighten even after the speech has concluded.

5 longs from last week's Premium Insights hit all targets, including both EURUSD trades. 3 trades were stopped out as final targets were missed by 10-15 pips. Find out the rationale of these trading ideas and understand the breakdown of multi-time frame stochastic analysis. Direct access to the latest Premium Insights is found here: Non- subscribers can have a free trial here:


Latest IMTs