Intraday Market Thoughts

Euro Counters Rising Unemployment & French Downgrade Chatter

by Patrik Urban
Jan 8, 2013 14:10

Japan to buy ESM bonds; German trade surplus lower and factory orders disappointed; Eurozone retail sales below expectations and unemployment rate hit a new record high. The sole item on the US data calendar is IBD/TIPP economic optimism. Our LATEST PREMIUM INSIGHTS cover 32 asset markets over the last 4 years tackling the following questions: 1)  What has EURUSD done in 2012 that it hasn’t in 10  years and what it means for the current cycle? 2)  Gold’s secular showing against 11 major currencies fared weaker than any of the prior 5 years but what it means for other commodities? 3) Commodities fared better in 2012 than their dismal 2011, but what it means for CAD and AUD? 4) Nikkei posts its biggest annual gain since 2005, but what has JPY done relative to 2009? More analysis on S&P500, FTSE-100, Dax, Copper, Coffee and oil See link below for Premium Insights.

The greenback is slightly weaker against all majors except JPY. European equities are gaining around 0.4% and the relative strength winner is CAD.

EUR is underpinned after Japan's finance minister Aso said that Japan plans use its FX reserves to buy ESM bonds to help stabilize JPY strength. The exact amount has not been decided yet. EURUSD trades around 1.3120 and EURGBP pushed to 0.8160.

On the data front, German trade surplus declined slightly in November to EUR 14.5 bln vs. October's upwardly revised EUR 14.9 bln and factory orders disappointed as they were below expectations at -1.8% after growing solid 3.9% in October.

Eurozone retail sales grew 0.1% in November after declining 0.7% in October and the unemployment rate hit another high yet again as it inched to 11.8% from previous 11.7%. The unemployment rate for people under 24 years is 24.4% which is the highest rate since record inception in 1995.

Gold continues to underperform as it trades little changed around 1654. WTI on the other hand trades in a solid uptrend that started nearly a month ago. It trades right below 94.00.

US reports are limited to a second tier IBD/TIPP economic optimism index at 10:00 am ET that is expected to improve to 46.3 from prior 45.1.

Act Exp Prev GMT
Factory Orders (m/m)
-1.8% -1.4% 3.8% Jan 08 11:00
Retail Sales (NOV) (m/m)
0.4% 0.0% Jan 09 0:30
Retail Sales (m/m)
0.1% 0.3% -0.7% Jan 08 10:00
IBD/TIPP Economic Optimism (JAN) (m/m)
46.3 45.1 Jan 08 15:00
NFIB Business Optimism Index (DEC)
88.0 87.5 Jan 08 12:30
Unemployment Rate
11.8% 11.8% 11.7% Jan 08 10:00

Latest IMTs