Wednesday January 23, 2008 - 19:14:24 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (23 January 2008)
The euro weakened
vis-√†-vis the U.S. dollar today as the single currency tested bids around
the US$ 1.4510 level and was capped around the $1.4685 level. Technically, today‚Äôs intraday high was right
around the 38.2% retracement of the move from $1.4310 to $1.4920. The common currency continues to weaken on
the notion the European Central Bank will eventually need to ease monetary
policy from current levels. ECB
President Trichet spoke overnight and said there is a ‚Äúvery significant‚ÄĚ market
correction afoot and said there are downward economic pressures but did not
talk about a rate cut. Data released in the eurozone today saw EMU-15 January
manufacturing PMI remain steady at 52.6 while the services PMI survey fell to
52.0, the lowest level since August 2003.
ECB member Stark reported the downside risks to economic growth have
increased since December and said the eurozone ‚Äúcannot decouple itself
completely from the rest of the world.‚ÄĚ He added, however, ‚ÄúPlease regard our
warning of second-round effects as a serious appeal. We are very anxious and
alarmed given the high inflation rate.‚ÄĚ Other data released today saw EMU-13
November industrial orders up 2.7% m/m and 11.9% y/y. Euro bids are cited around the US$ 1.4355
The yen appreciated vis-√†-vis the U.S. dollar today as the
greenback tested bids around the ¬•104.95 level and was capped around the
¬•107.35 level. The pair reached its
lowest level since May 2005. BoJ
Governor Fukui yesterday acknowledged the financial markets are beginning to
price in a rate cut by the BoJ. Notably,
Fukui did not
reiterate the central bank plans to maintain its gradualist rate hike policy,
suggesting there may be little or no impetus to raise the overnight call rate
from 0.50% now. The Nikkei 225 stock
index lost 2.04% to close at ¬•12,829.06.
Dollar bids are cited around the ¬•104.20 level. The
euro moved lower vis-√†-vis the yen as the single currency tested bids
around the ¬•152.80 level and was capped around the ¬•157.15 level. The
British pound and Swiss franc weakened vis-√†-vis the yen as the crosses
tested bids around the ¬•204.60 and ¬•96.35 levels, respectively. In
Chinese news, the government estimated 2007 CPI was up 4.8%.
British pound came off vis-√†-vis the U.S dollar today cable tested bids around the US$ 1.9465 level and was
capped around the $1.9645 level.
Technically, today‚Äôs intraday high was right around the 76.4%
retracement of the move from $1.9170 to $2.1160. Minutes from Bank of England
Monetary Policy Committee‚Äôs January meeting were released today and they
evidenced an 8-to-1 vote to keep rates steady with Blanchflower dissenting in
favour of a 25bps monetary easing.
Policymakers reported the short-term inflation outlook ‚Äúworsened
markedly‚ÄĚ and many traders think the MPC may keep rates steady next month as
well while others see an easing. BoE Governor King spoke last night and said
the current repo rate of 5.5% is ‚Äúprobably bearing down on demand.‚ÄĚ Data
released in the U.K.
saw Q4 GDP expand 0.6% q/q and 2.9% y/y, down from Q3‚Äôs 3.3% annualized pace.
The European Union called on the U.K. to improve its public
finances. Cable bids are cited around
the US$ 1.9260 level. The euro moved higher vis-√†-vis the
British pound as the single currency tested offers around the ‚ā§0.7480 level and
was supported around the ‚ā§0.7440 level.
franc appreciated vis-√†-vis the U.S. dollar today as the greenback tested
bids around the CHF 1.0870 level and was capped around the CHF 1.0990
level. Technically, today‚Äôs intraday
high was right around the 50% retracement of the move from CHF 1.0835 to CHF
1.1120. U.S. dollar offers are cited
around the CHF 1.1155 level. The euro and British pound slumped
vis-√†-vis the Swiss franc as the crosses tested bids around the CHF 1.5820 and
CHF 2.1180 levels, respectively.
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