Friday August 1, 2008 - 18:45:49 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (1 August 2008)
The euro weakened vis-√†-vis the U.S.
dollar today as the single currency
tested bids around the US$ 1.5515 level and was capped around the $1.5605
level. The common currency traded at its
lowest level since 24 June. U.S. non-farm
payrolls data for July were released and were off 51,000, better-than-expected. The U.S. unemployment rate rose to
5.7%, its highest level in more than four years, and average hourly wages rose
0.3% m/m and 3.4% y/y in July. The U.S. economy has shed 463,000 jobs since January
and many economists believe the weakening U.S. labour market will
worsen. Other data released today saw
June total construction spending fall 0.4% as June housing spending fell to its
lowest level in nearly seven years while July ISM manufacturing fell to 50.0
from 50.2 in June with the prices index decline to 88.5 from 91.5 in June. In
eurozone news, German retail sales fell 3.9% y/y while German final July
manufacturing PMI printed at 50.9. Also,
EMU-15 July manufacturing PMI fell to 47.4.
Euro bids are cited around the $1.5585/ 1.5230 level.
The yen appreciated
vis-√†-vis the U.S. dollar today as the greenback tested bids around the
¬•107.30 level and was capped around the ¬•107.90 level. As expected, Prime Minister Fukuda reshuffled
his cabinet and named some fiscal hawks to key government positions including Bunmei
Ibuki who is the new finance minister. When the pair was trading below the
psychologically-important ¬•100 figure, Ibuki is quoted as having said it is
‚Äúundesirable.‚ÄĚ Fukuda said his country
faces ‚Äúacute economic hardship‚ÄĚ but the new Cabinet members are more known for
their views regarding cutting the national debt by raising taxes. The pair moved to intraday lows after the
release after the release of U.S.
jobs data for July. The Nikkei 225 stock
index lost 2.11% to close at ¬•13,094.59.
Dollar bids are cited around the ¬•106.40 level. The
euro moved lower vis-√†-vis the yen as the single currency tested bids
around the ¬•166.95 level and was capped around the ¬•168.30 level. The British
pound and Swiss franc came off vis-√†-vis the yen as the crosses tested bids
around the ¬•212.00 figure and ¬•102.30 levels, respectively. The
Chinese yuan weakened vis-√†-vis the U.S. dollar as the greenback closed at
CNY 6.8425 in the over-the-counter market, up from CNY 6.8317. Data released in China overnight saw the CFLP July
PMI weaken to 48.4 while the CLSA July PMI was unchanged at 53.3.
The British pound fell
sharply vis-√†-vis the U.S. dollar today as cable tested bids around the US$
1.9725 level and was capped around the $1.9840.
The pair fell to its lowest level since 10 July. Bank of England Monetary Policy Committee
member Tucker reported ‚ÄúMy take at our recent July meeting was, broadly, that
since the May inflation report, the near-term outlook for inflation had
deteriorated, underlining the risk that the rise in commodity prices will feed
through to wage and price setting. The outlook for demand and output had also
deteriorated, which in degree should help to contain those upside risks to
inflation.‚ÄĚ Data released in the U.K. today saw July factory activity decline for
a third consecutive month while Q2 company liquidations rose in England and Wales. In mergers and acquisitions
news, it is being reported that Electricite de France SA has abandoned its
proposed ‚ā§12 billion bid for British Energy. Also, U.K. manufacturing PMI fell to
44.3. Cable bids are cited around the
$1.9360 level. The euro moved higher vis-√†-vis the British pound as the single
currency tested offers around the ‚ā§0.7890 level and was supported around the
The Swiss franc depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the CHF 1.0510 level and was supported around
the CHF 1.0460 level. U.S. dollar offers
are cited around the CHF 1.0515/ 1.0625 levels.
The euro and British pound came
off vis-√†-vis the Swiss franc as the crosses tested bids around the CHF
1.6285 and CHF 2.0680 levels, respectively.
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