Intraday Market Thoughts

Yen Weakness Shrugs G20

by Adam Button
Feb 18, 2013 0:37

The yen retains its decline despite all the noise ahead, during and after the G20 statement. Friday's Empire manufacturing survey confirmed the current narrative of a US recovery but Wal-Mart delivered a warning. The pound was the best performer on Friday while the kiwi lagged in a reversal of the prior 4 days price action. Weekly CFTC data showed a sharp decline in AUD longs. Progress from latest Premim Insights: 1 of 2 EURUSD in progress, the other unfilled 2 of 2 USDJPY in progress 2 of 2 in progress 1 AUDUSD short in progress (9 pips away from 1.0270 final target) 1 USDCAD in progress, 8 pips away from 1.0090 final target 1 of 2 EURJPY hit all targets, other in progress. 1 of 2 AUDJPY in progress, the other unfilled 1 CADJPY in progress - 11 pips away 1 EURGBP in progress 1 of 2 Gold in progress, the other unfilled 1 of 2 Silver in progress, the other unfilled 2 of 2 oil in progress

Fed chairman Bernanke said the US economy is recovering on Friday and the economic data continues to confirm a better tone. The Richmond Fed jumped to a 9-month high at +10 compared to -2 expected. Consumer sentiment was also stronger than forecast and hit a three-month high.

In addition, the Fed's Pianalto – who is normally a dove – said it may be appropriate to taper Fed asset purchases by year end. She is among the first 'core' members of the Fed to talk about lowering the $85 billion in monthly bond buys.

Those headlines propelled USD/JPY more than a cent higher to 93.82. Technical buying added to the move with the 92.00/20 area now looking like a solid support zone.

Later, however, some shocking headlines emerged from Wal-Mart emails obtained by Bloomberg. In them, an executive calls February month-to-date sales in the US 'a total disaster' and 'the worst start to a month I have seen in my approximately 7 years with the company.'

The rhetoric does not always reflect reality but Wal-Mart is the biggest retailer in the US and has an incredible breadth of real-time data on sales. The executives blamed the expiry of the payroll tax break and delays on income tax refunds.

The emails are the first hint that Q1 may not be as strong as it appears.

Weekly Commitments of Traders

The data on speculative futures positioning from the CFTC; collected at the close on Tuesday.

EUR + 24K vs +38K last week JPY -61K vs -68K last week GBP -16K vs +1K last week AUD +54K vs +81K prior CAD +27K vs +28K last week NZD +21K vs +23K last week


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