Intraday Market Thoughts

AUD Likes China, EUR Likes Spain, Onto ECB

by Patrik Urban
Jan 10, 2013 12:10

Aussie jumped on soaring Chinese exports ; MPC keeps rates and QE steady; strong auctions from Spain and Italy. Market awaits ECB rate decision and press conference; jobless claims and two FED speakers. 3 charts were added to the existing Premium Insights (2 on EURUSD & 1 on AUDUSD). Both of the new USDJPY Premium longs used to replace Tuesday's unfilled trades are in progress.

The Aussie pushed higher across the board after December Chinese trade surplus rose sharply to USD 31.62 bln from previous USD 19.63 bln. Export skyrocketed 14.1% and imports rose 6.0%. AUDUSD trades near session highs around 1.0575.

As expected, the MPC kept the official bank rate unchanged at 0.5% and the asset purchase facility at GBP 375 bln. GBPUSD trades around 1.6060 and EURGBP around 0.8155.

Spain had another strong auction today. It sold 2015, 2018 and 2026 bonds totaling EUR 5.817 bln, above EUR 4-5 bln target. Yields were lower and cover solid. Italy sold 1 year BOT worth EUR 8.5 bln with the average yield at the lowest level since 1/2010.

The ECB will announce its minimum bid rate decision at 7:45 am ET. In a Bloomberg survey, 50 out of 55 economists expect the key rate to remain at 0.75%. The market is awaiting the ECB press conference that begins at 8:30 am ET.

Analysts will be watching mainly whether the ECB president Draghi mentions a discussion about a potential cut of the benchmark rate or the possibility of pushing the deposit rate below the current 0.0%. Jobless claims that are due at the same time are seen lower at 361K from previous 372K.

Later in the session, the market will watch two FOMC members' speeches. Kansas FED president George speaks at 1:10 pm on economic outlook and St. Louis FED president Bullard delivers a speech on monetary policy at 2:00 pm.

Act Exp Prev GMT
Fed's George Speech
Jan 10 18:10
Fed's Bullard speech
Jan 10 19:00
Continuing Jobless Claims (DEC 29)
3.230M 3.245M Jan 10 13:30
Initial Jobless Claims (JAN 5)
365K 372K Jan 10 13:30

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