Wednesday July 16, 2008 - 15:40:50 GMT
Share This Story
GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (16 July 2008)
The euro depreciated
vis-Ã -vis the U.S. dollar today as the single currency tested bids around
the US$ 1.5865 level and was capped around the $1.5945 level. The common currency extended yesterdayâ€™s
losses after it established a new lifetime high yesterday. Traders are paying attention to a few key
factors. First, there is ongoing concern in the credit markets regarding the
health of the U.S.
banking sector, especially after the government bailed out Fannie Mae and
Freddie Mac in an extraordinary move to prevent contagion. Second, crude oil prices continue to recede
and NYMEX crude oil futures for August delivery have traded today with a $133
handle. Third, traders are still digesting
remarks from Federal Reserve Chairman Bernanke yesterday in which he reaffirmed
the Fedâ€™s commitment to containing inflation and stabilizing the financial
markets. Data released in the U.S.
today saw June consumer price inflation rise 1.1% m/m at the headline level,
the fastest monthly gain since June 1982, while core inflation rose 0.3% m/m.
On an annualized basis, overall inflation is up 5.0% y/y and core inflation is
up 2.4% y/y. These data are consistent with yesterdayâ€™s elevated producer price
inflation data and well above the 2.0% upper limit of the Fedâ€™s perceived comfort
zone. It was also reported that average
weekly earnings were off 0.9% m/m in June and off 2.4% y/y, an indication that
wages are not keeping up with rising prices.
Other data released today saw June industrial production up 0.5% while
capacity utilization improved to 79.9%.
Capital flows data saw monthly net purchases of U.S. securities in May by foreign
investors total â€“US$ 2.5 billion. Net
long-term capital inflows totaled US$ 67.0 billion, down from Mayâ€™s revised US$
111.9 billion, and net foreign purchases of long-term U.S. securities
fell sharply to US$ 44.4 billion. In eurozone news, EMU-15 June CPI
jumped to 4.0% from 3.7% in May, far above the ECBâ€™s 2.0% ceiling target. Also,
German final June CPI was up 0.3$ m/m and 3.3% y/y. European Central Bankâ€™s
Constancio reported he expects a significant Q2 economic slowdown in the
eurozone. Euro bids are cited around the
$1.5645/ $1.5230 levels.
The yen appreciated
vis-Ã -vis the U.S. dollar today as the greenback tested bids around the Â¥103.75
level and was capped around the Â¥104.85 level.
Technically, todayâ€™s intraday low was just above the 61.8% retracement
of the move from Â¥108.60 to Â¥95.70. Bank
of Japan downgraded its views on exports, production, and housing investment
overnight and the Japanese media reported the government is likely to reduce
its economic growth forecast for the current fiscal year to March 2009 to 1.3%
or lower from last yearâ€™s 2.0% estimate.
This report surfaced one day after BoJ reduced its growth forecast to 1.2%
for the current fiscal year. Revised
forecasts from the government are expected on 22 July. Data released in Japan overnight saw the May
tertiary index fall 0.2% m/m, the first decline in three months. The Nikkei 225 stock index gained 0.05% to
close at Â¥12,760.80. Dollar bids are cited
around the Â¥103.65 level. The euro weakened vis-Ã -vis the yen as
the single currency tested bids around the Â¥165.30 level and was capped around
the Â¥166.85 level. The British pound and Swiss franc depreciated vis-Ã -vis the yen as
the crosses tested bids around the Â¥208.00 and Â¥103.15 levels,
respectively. The Chinese yuan appreciated vis-Ã -vis the U.S. dollar as the
greenback closed at CNY 6.8113 in the over-the-counter market, down from CNY
6.8211 and the pairâ€™s lowest close since the yuan revaluation of July
2005. The Chinese government denied a
rumour that it is considering a proposal to slow the pace of the yuanâ€™s
The British pound depreciated
vis-Ã -vis the U.S. dollar today as cable tested bids around the US$ 1.9960
level and was capped around the $2.0095 level.
Data released in the U.K.
today saw the June claimant count of jobseekersâ€™ allowance rise 15,500, the
largest rise since December 1992. Also,
average earnings including bonuses rose 3.8% in the three months to May, down
from 3.9% in the three months to April. Cable
bids are cited around the US$ 1.9870/ 1.9360 levels. The
euro came off vis-Ã -vis the British pound as the single currency tested
bids around the â‚¤0.7920 level and was capped around the â‚¤0.7955 level.
The Swiss franc
depreciated vis-Ã -vis the U.S. dollar today as the greenback tested offers
around the CHF 1.0170 level and was supported around the CHF 1.0030 level. Data released in Switzerland today saw May retail
sales climb 9.3%. U.S. dollar offers are
cited around the CHF 1.0395 level. The euro and British pound moved higher
vis-Ã -vis the Swiss franc as the crosses tested offers around the CHF 1.6090
and CHF 2.0305 levels, respectively.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."