Monday July 7, 2008 - 17:18:03 GMT
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Forex Market Commentary and Analysis (7 July 2008)
The euro depreciated
vis-√†-vis the U.S. dollar today as the single currency tested bids around
the US$ 1.5610 level and was capped around the $1.5705 level. Technically, today‚Äôs intraday low was just
above the 50% retracement of the move from $1.5300 to $1.5910. San Francisco Federal Reserve President
Yellen reported U.S.
monetary policy is ‚Äúnearing a crossroads‚ÄĚ and added ‚ÄúThe risks to inflation are
likely not symmetric and they have definitely increased. We cannot and will not
allow a wage-price spiral to develop.‚ÄĚ President Bush verbally intervened on
the dollar saying ‚ÄúThe U.S. believes in a strong dollar policy and believes
that the strength of our economy will be reflected in the dollar.‚ÄĚ Federal Reserve Chairman Bernanke speaks
tomorrow and Thursday about financial regulation. Data released in the U.S. today saw
the Conference Board‚Äôs June employment index fall 0.6% to 111.9. In
eurozone news, European Central Bank member Juncker said the ECB‚Äôs decision
on Thursday to lift its main refinancing rate by 25bps to 4.25% ‚Äúwas a message‚ÄĚ
to wage negotiators. Data released in Germany today
saw May industrial output off 2.4% m/m. Euro
bids are cited around the $1.5645/ $1.5230 levels.
The yen depreciated
appreciated vis-√†-vis the U.S. dollar today as the greenback tested offers
around the ¬•107.75 level and was supported around the ¬•106.65 level. Technically, today‚Äôs intraday high was right
around the 76.4% retracement of the move from ¬•108.55 to ¬•105.00. Group of Eight policymakers convened in Hokkaido and President
Bush verbally intervened to support the U.S. dollar. Bank of Japan
Governor Shirakawa reported ‚ÄúJapan's
economic growth is slowing, mainly due to the effects of high energy and
material prices. Inflationary risks are
also intensifying globally. We thus need
to watch closely uncertainties about the global economy and international
financial markets, as well as the impact of higher energy and material costs.‚ÄĚ The
central bank released a quarterly survey overnight that reported ‚ÄúAccording to
reports from each of the nine regions in Japan, growth of the economy as a
whole continued slowing recently, mainly due to the effects of high energy and
material prices, although there were regional differences.‚ÄĚ Data released in Japan overnight
saw foreign exchange reserves rise to ¬•1.00 trillion in June, the first
increase in three months. The Nikkei 225
stock index gained 0.92% to close at ¬•13,360.04. Dollar bids are cited around the ¬•103.00/
101.35 levels. The euro moved higher vis-√†-vis the yen as the single currency
tested offers around the ¬•168.50 level and was supported around the ¬•167.10
level. The British pound and Swiss franc came off vis-√†-vis the yen as the
crosses tested bids around the ¬•211.30 and ¬•103.90 levels, respectively. The
Chinese yuan depreciated vis-√†-vis the U.S. dollar as the greenback closed
at CNY 6.8690 in the over-the-counter market, up from CNY 6.8589.
The British pound weakened
vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9645
level and was capped around the $1.9825 level.
Technically, today‚Äôs intraday low was right around the 50% retracement
of the move from $1.9405 to $2.0005.
NIESR reported U.K.
economic growth is likely to be around 0.2% in the three months to June. Sterling fell
sharply after the release of economic data that suggests the U.K.‚Äôs
industrial sector is set to slip into a recession. May manufacturing output fell 0.5% m/m and
0.8% y/y, the largest decline since February 2006. Also, April industrial production fell 0.8%
m/m and 1.6% y/y. Cable bids are cited
around the US$ 1.9360/ 1.9100 levels. The
euro moved higher vis-√†-vis the British pound as the single currency tested
offers around the ‚ā§0.7965 level and was supported around the ‚ā§0.7900 figure.
The Swiss franc
appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids
around the CHF 1.0230 level and was capped around the CHF 1.0340 level. Data released in Switzerland overnight saw June
unemployment fall to 2.3% from 2.4% in May.
U.S. dollar bids are cited around the CHF 1.0020 level. The
euro moved higher vis-√†-vis the Swiss franc as the single currency tested
offers around the CHF 1.6165 level while the
British pound moved lower vis-√†-vis the Swiss franc and tested bids around
the CHF 2.0220 level.
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