Thursday July 3, 2008 - 15:09:06 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (3 July 2008)
The euro depreciated
vis-√†-vis the U.S. dollar today as the single currency tested bids around
the US$ 1.5735 level and was capped around the $1.5910 level. The common currency dove in the North
American session after European Central Bank President Trichet‚Äôs news
conference revealed he is not pre-committing to another rate hike. The ECB
lifted its main refinancing rate by 25bps to 4.25% today as expected. Trichet indicated policymakers have a ‚Äústrong
determination‚ÄĚ to anchor inflation expectations and pledged to ‚Äúclosely
monitor‚ÄĚ developments. In contrast to last month‚Äôs media conference in which he
strongly telegraphed today‚Äôs rate hike.
Consumer and producer price inflation data in the eurozone remain
significantly elevated thus many traders anticipate another ECB monetary
tightening before the end of the year. Data
released in the eurozone today saw EMU-15 May retail sales rise 1.2% m/m and
0.2% y/y. German June final services PMI
printed at 52.1, down from 53.8 in May, while the EMU-15 June services PMI
measure fell to 49.1 from 50.6 in May. In U.S. news, June non-farm payrolls
declined by 62,000 while the unemployment rate was steady at 5.5% and average
hourly earnings were up 3.4% y/y The jobs report was weak including a
cumulative 52,000 downward revision to April‚Äôs and May‚Äôs non-farm payrolls
numbers. Notably, June was the first
time since May 2002 that the economy has lost jobs for six consecutive
months. Other data released today saw
weekly initial jobless claims climb 16,000 to 404,000 in the week ending 28
June. President Bush verbally intervened
to support the U.S. dollar yesterday but traders doubt there will be an actual
concerted global intervention to buy the U.S. dollar. Euro bids are cited around the $1.5645/
The yen depreciated
vis-√†-vis the U.S. dollar today as the greenback tested offers around the
¬•106.90 level and was supported around the ¬•105.75 level. Traders lifted the pair to intraday highs
during the North American session after the release of disappointing U.S. non-farm
payrolls data and initial jobless claims data.
Group of Eight policymakers will convene in Hokkaido next week and a German government
source indicated inflation will be the number one topic for discussion,
especially with oil topping $146 today.
Capital flows data saw foreigners as net sellers of Japanese equities
for the first time in seven weeks. The
Nikkei 225 stock index lost 0.16% to close at ¬•13,265.40. Dollar bids are cited around the ¬•103.00/
101.35 levels. The euro moved higher vis-√†-vis the yen as the single currency
tested offers around the ¬•169.10 level and was supported around the ¬•168.00
figure. The British pound and Swiss franc appreciated vis-√†-vis the yen as
the crosses tested offers around the ¬•211.90 and ¬•105.05 levels,
respectively. The Chinese yuan appreciated vis-√†-vis the U.S. dollar as the
greenback closed at CNY 6.8510 in the over-the-counter market, down from CNY
6.8530 and the pair‚Äôs lowest close since the yuan revaluation of July 2005.
The British pound weakened
vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9810
level and was capped around the $1.9935 level.
Cable extended yesterday‚Äôs sell-off and stops were reached below the
$1.9865 level, representing the 23.6% retracement of the move from $1.9405 to
$2.0005. The pair moved lower after it
was reported that the U.K.
services sector PMI fell to 47.1 in June from 49.8 in May, below expectations
and the weakest print in five years. On
a positive note on the inflation front, the prices charged sub-index rose
modestly to 56.0. Also, Bank of England
released its quarterly Credit Conditions Survey today that reported the
availability of credit to individuals and corporations has declined since March
and will likely fall through the end of Q3.
IDS reported pay deals were stable in the quarter to May, up 3.5% in the
three months to the end of May. Bank of England
Deputy Governor Bean reported the market‚Äôs dislocation will probably continue. Cable bids are cited around the US$ 1.9360/
1.9100 levels. The euro weakened vis-√†-vis the British pound as the single
currency tested bids around the ‚ā§0.7940 level and was capped around the ‚ā§0.8000
The Swiss franc
depreciated vis-√†-vis the U.S. dollar today as the greenback tested offers
around the CHF 1.0250 level and was supported around the CHF 1.0110 level. Technically, today‚Äôs intraday high was right
around the 38.2% retracement of the move from CHF 0.9645 to CHF 1.0625. Data released in Switzerland today saw June consumer
prices rise 0.2% m/m and 2.9% y/y, below economists‚Äô forecasts for a 3.1%
increase. U.S. dollar bids are cited
around the CHF 1.0020 level. The euro and British pound gained ground
vis-√†-vis the Swiss franc as the crosses tested offers around the CHF 1.6135
and CHF 2.0320 levels, respectively.
Australian dollar came off vis-√†-vis the U.S. dollar today as the Aussie
tested bids around the US$ 0.9580 level and was capped around the $0.9630
level. Technically, today‚Äôs intraday low
was right around the 23.6% retracement of the move from $0.9325 to
$0.9665. Data released in Australia
overnight saw the May trade balance print at ‚ÄďA$ 965 million. It was also
reported that activity in Australia‚Äôs
services sector fell in June. Australian
dollar bids are cited around the US$ 0.9495.
The New Zealand dollar weakened
vis-√†-vis the U.S. dollar as the kiwi tested bids around the US$ 0.7550 level
and was capped around the $0.7605 level.
dollar bids are cited around the $0.7530 level.
dollar depreciated vis-√†-vis the U.S. dollar today as the greenback tested
offers around the C$ 1.0195 level and was supported around the C$ 1.0110
level. Technically, today‚Äôs intraday low
was right around the 38.2% retracement of the move from C$ 0.9055 to C$
1.0380. U.S. dollar offers are cited
around the C$ 1.0440 level.
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