Friday December 28, 2007 - 17:21:40 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (28 December 2007)
The euro appreciated
vis-Ã -vis the U.S. dollar today as the single currency tested offers around
the $1.4725 level and was supported around the $1.4590 level. Technically, todayâ€™s intraday high was right
around the 61.8% retracement of the move from $1.4965 to $1.4310. Data released in the U.S. today saw
November new home sales fall 9% to an annualized rare of 647,000 units, the
lowest sales rate since April 1995.
Also, the Chicago PMI business index improved to 56.6 in December from
52.9 in November, far above expectations.
The February fed funds futures contract is now predicting a 90% chance
the Federal Open Market Committee will reduce the fed funds target rate by
25bps to 4.0% at the end of January. The
contract is also pricing in a 45% chance the FOMC will reduce rates by 50bps. In eurozone news, German consumer prices were
up 0.5% m/m and 2.8% y/y. Euro bids are
cited around the US$ 1.4585 level.
The yen appreciated vis-Ã -vis the U.S. dollar today as the
greenback tested bids around the Â¥112.65 level and was capped around the Â¥114.00
figure. Technically, todayâ€™s intraday
low was right around the 61.8% retracement of the move from Â¥115.90 to
Â¥107.20. Data released in Japan today saw
November core CPI up for the second consecutive month, up 0.4% y/y and above
expectations. Overall CPI was up 0.6%
and the core CPI data are important because they suggest price conditions may
be improving sufficiently to justify a 25bps rate hike by Bank of Japan in H1
2008. Other data released overnight saw
November retail sales up 1.6% while November industrial output fell 1.6% m/m
and was up 2.9% y/y. Also, the November
unemployment rate fell back to 3.8% from 4.0% in October. The Nikkei 225 stock index lost 1.65% to
close at Â¥15,307.78. Dollar bids are cited around the Â¥112.50/
Â¥111.75 levels. The euro came off
vis-Ã -vis the yen as the single currency tested bids around the Â¥165.00 figure
and was capped around the Â¥166.45 level.
The British pound lost ground
vis-Ã -vis the yen as sterling tested bids around the Â¥225.10 level and was
capped around the Â¥227.60 level while the
Swiss franc appreciated vis-Ã -vis the yen and tested offers around the
Â¥100.30 level. In Chinese news, the yuanâ€™s central parity rate vis-Ã -vis the U.S.
dollar was set at a record low 7.3046 yuan vis-Ã -vis the U.S. dollar.
British pound depreciated vis-Ã -vis the U.S. dollar today as cable tested bids around the US$ 1.9900 figure and
was capped around the $2.0020 level. Technically,
the pair continues to orbit the $1.9930 level, representing the 61.8%
retracement of the move from $1.9170 to $2.1160. Data released in the U.K. today saw
Nationwide December house prices off 0.5% m/m, the second consecutive monthly
decline. Many traders believe Bank of
Englandâ€™s Monetary Policy Committee will reduce the repo rate by 25bos to 5.25%
as early as 10 January. Cable bids are
cited around the US$ 1.9640 levels. The euro gained ground vis-Ã -vis the
British pound as the single currency tested offers around the â‚¤0.7385 level and
was supported around the â‚¤0.7310 level.
franc appreciated vis-Ã -vis the U.S. dollar today as the greenback tested
bids around the CHF 1.1265 level and was capped around the CHF 1.1410
level. Technically, todayâ€™s intraday low
was right around the 23.6% retracement of the move from CHF 1.2475 to CHF
1.0885. Data released in Switzerland
today saw the December KOF economic barometer decline to 1.99 from 2.02 in November. Swiss National Bank released a report today
that confirms most Swiss companies are confident about business prospects in
2008 but conditions are seen as being more difficult. U.S.
dollar offers are cited around the CHF 1.1680 level. The
euro and British pound came off vis-Ã -vis the Swiss franc as the crosses
tested bids around the CHF 1.6585 and CHF 2.2455 levels, respectively.
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