Monday February 4, 2008 - 15:13:33 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (4 February 2008)
The euro gained
ground vis-√†-vis the U.S. dollar today as the single currency tested offers
around the US$ 1.4850 level and was supported around the $1.4790 level. Technically, today‚Äôs intraday low was right
around the 76.4% retracement of the move from $1.4920 to $1.4360. The common currency gained ground after the
release of stronger-than-expected EMU-13 producer prices that saw price
increases of 0.1% m/m and 4.3% y/y ‚Äď the highest annual increase since November
2006. These data underscore the fact that factory gate prices and some consumer
prices remain elevated in the eurozone.
The ECB is expected to keep interest rates unchanged on Thursday but
today‚Äôs data suggest ECB President Trichet will remain hawkish in his
comments. It is clear ECB policymakers
cannot yet deem an end to the long-term monetary tightening cycle. ECB‚Äôs Liebscher today said the ECB must fight
the ‚Äúcauses‚ÄĚ of inflation and not the ‚Äúsymptoms.‚ÄĚ In
U.S. news, December factory orders were up 2.3% from an upwardly revised
+1.7% November figure. The January ISM services index will be released tomorrow
and many Fed officials will speak this week including Fed Governor Kroszner
today. Euro bids are cited around the
US$ 1.4685 level.
The yen depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the ¬•107.10 level and was supported around the
¬•106.50 level. Technically, today‚Äôs
intraday high was just below the 23.6% retracement of the move from ¬•104.95 to
¬•107.85. Traders displayed more evidence
for risk today following the U.S.
equity market‚Äôs strong performance of Friday despite the January non-farm
payrolls losses that were announced on Friday.
Some traders continue to aggressively speculate that Bank of Japan will
reduce interest rates in the near future but the most likely scenario includes
steady rates for the foreseeable future.
The Nikkei 225 stock index climbed 2.69% to close at ¬•13,859.70. Dollar bids are cited around the ¬•105.65/
104.95 levels. The euro moved higher vis-√†-vis the yen as the single currency
tested offers around the ¬•158.70 level and was supported around the ¬•157.65
level. The British pound and Swiss franc moved higher vis-√†-vis the yen as
the crosses tested offers around the ¬•211.75 and ¬•98.20 levels,
respectively. The Chinese yuan appreciated marginally vis-√†-vis the U.S. dollar
as the greenback closed at CNY 7.1884 in the over-the-counter market, down from
CNY 7.1890. Some economists are
downwardly revising their 2008 GDP forecasts on account of major storms that
continue to slow China.
British pound rallied significantly vis-√†-vis the U.S. dollar today as cable tested offers around the US$ 1.9780 level
and was supported around the $1.9625 level.
Technically, today‚Äôs intraday low was right around the 50% retracement
of the move from $1.8090 to $2.1160.
Bank of England‚Äôs Monetary Policy Committee is expected to reduce its
headline repo rate by 25bps on Thursday to 5.25%. Traders will also pay close attention to the Halifax January house
prices survey. Data released in the U.K. today saw
the January PMI construction survey fall to 53.9 from 56.0 in December. Cable bids are cited around the US$ 1.9575
level. The euro weakened vis-√†-vis the British pound as the single
currency tested bids around the ‚ā§0.7485 level and was capped around the ‚ā§0.7545
franc depreciated vis-√†-vis the U.S. dollar today as the greenback tested
offers around the CHF 1.0925 level and was supported around the CHF 1.0875
level. Friday‚Äôs low represented a
multi-decade low. Swiss January consumer prices will be released on
Friday. U.S. dollar offers are cited
around the CHF 1.1155 level. The euro and British pound appreciated
vis-√†-vis the Swiss franc as the crosses tested offers around the CHF 1.6180
and CHF 2.1580 levels, respectively.
Australian dollar appreciated vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.9085
level and was supported around the $0.9020 level. The pair reached its highest level since 9
November 2007. Most traders expect
Reserve Bank of Australia
will tighten monetary policy by 25bps to 7.0% tomorrow. Data released in Australia today saw TD Securities
January underlying inflation up a record 4.0% y/y. Australian dollar bids are cited around the
US$ 0.8955 level. The New Zealand
dollar came off vis-√†-vis the U.S. dollar as the kiwi tested bids around
the US$ 0.7900 figure and was capped around the US$ 0.7955 level. New Zealand dollar bids are cited
around the US$ 0.7805 level.
The Canadian dollar slumped vis-√†-vis
the U.S. dollar today as the
greenback tested offers around the C$ 1.0010 level and was supported around the
C$ 0.9930 level. Technically, the pair
continues to orbit the $0.9990 level, representing the 23.6% retracement of the
move from C$ 1.0380 to C$0.9870. U.S.
dollar offers are cited around the C$ 1.0065 level.
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