Fx Commentary EUR/USD, GBP/USD, EUR/JPY April 10, 2012
After yesterdays price action the markets are a little more clear and I am more confident we have seen the first push up and will be looking for the long today. Of course I followed my plan and took the short after the 3 intraday pushes up on both the EUR/USD and GBP/USD. Since they never went 25 pips in my direction I moved my stop to -10 before I went to bed and woke up -20 for the day. No big deal today is another day and a bit more clear. the EUR/USD has made a clearer push above the recent highs from Fridays NFP push so we are looking to see the next push today. I am curious to see how much support that break out level has during Asia but wouldn’t surprise me if it has a small break down before the stop run and move up.
The GBP/USD seems to look even better with its break above the hourly 200ema and seems to be finding support there during the Asian session. It could also go back down for some manipulation but I expect the next push up in this pair today also.
The pair I like most today is the EUR/JPY. The reason is the USD/JPY is due for a reversal to the upside and with the EUR/USD looking for another level up the EUR/JPY should make an extended move.
In the news
First off for the Asian market we have had Ben Bernanke speaking and by the looks of the markets the Q&A session has started. Things could get a bit choppy until after thats over. The speech its self seemed to say that QE3 is not going to come soon as many expect. He did say that they have plenty of new tools to avoid a credit crisis so it would seem like more twisting will be going on but not full blown QE. This is my point of view also. I agerr that Ben cant do more QE until after the election or stocks take a big plunge which is not likely in the near future.
It would seem that Forex Factory had a misprint yesterday or the Sentix Investor Confidence release got moved to today. Anyway its not a big issue but will have an impact if its a big surprise. There is also French Industrial Production which shouldt be too much of a market mover. the big one for today is the Japanese rate decision and press conference scheduled tentatively so this will more than likely be a tape bomb of sorts especially if they decide to fire up their printing presses again.
Here is one reason why Ben will not QE3 just yet. This is an excerpt of an article that I agree with on one of the many arguments against QE3 from Zero Hedge. It also explains well why the Chinese are most likely manipulating their data to give them a “wait and see what Ben does” period of time.
Last week, when we commented on the amusing spread between the Chinese PMI as measured by HSBC on one hand (plunging) and the official number (soaring), we had one very simple explanation for this divergence: “the Schrödinger paradox – where the economy was doing better and worse at the same time – which was experienced for the past three months in the US (and is now finished with the economy rolling over), has shifted to Shanghai, where it is now the PBOC’s turn to baffle all with bullshit. Why? One simple reason: despite what everyone believes, China still has residual and quite strong pockets of inflation. So while the world may be expecting an RRR, or even interest rate, cut any second now (just as China surprised everyone literally house before the November the global FX swap line expansion by the Fed in November 2011), the PBOC is just not sure it can afford the spike in inflation, or even perception thereof.” It appears we were correct, following the just released Chinese CPI number, which in March printed at a far greater than expected 3.6%, on expectations of a 3.4% print, and well above the February 3.2%.
Along with these quotes from Bloomberg and Reuters.
“Inflation will pick up further as China’s economy warms up again,” Liu Li-Gang, Hong Kong-based head of Greater China Economics at Australia & New Zealand Banking Group Ltd., said before the release. Rising wage costs and the government’s policies to boost consumption will add upward pressure on prices, he said.
Wen said last month the government aims to keep consumer- price gains within about 4 percent for 2012, taking into account risks from imported inflation and rising costs of land, labor and capital. He also pledged to change the way the price of resources including electricity and fuel are set to better reflect their costs.
China, the world’s largest oil consumer after the U.S., increased gasoline and diesel prices for the second time in less than six weeks on March 20 after crude had its biggest monthly gain in a year, adding to pressure for consumer prices to rise.
China Petroleum & Chemical Corp., Asia’s biggest refiner, said last month it will ramp up crude production and develop natural gas fields to counter losses from selling diesel and gasoline at state-mandated prices. Sinopec, as the Beijing-based company is known, said fourth-quarter profit dropped 23 percent, missing estimates.
China’s annual inflation spiked unexpectedly in March to 3.6 percent driven by rising food prices, data showed on Monday, surprising investors who had bet on cooling price pressures to give Beijing room to ease monetary policy.
Underlining slowing food inflation, official data showed pork prices fell every week in March and have shed 10 percent in the past two months. Pork is a staple meat in Chinese diets and a key component of food inflation.
And though China raised retail gasoline and diesel prices in March by 6-7 percent, analysts say that has limited direct impact on overall inflation as they believe energy carries a small weight in China’s consumer price index basket
Shouldnt be QE3 any time soon guys
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