Tuesday August 5, 2008 - 13:27:40 GMT
Share This Story
GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (5 August 2008)
The euro depreciated vis-√†-vis the U.S.
dollar today as the single currency
tested bids around the US$ 1.5460 level and was capped around the $1.5575
level. The common currency reached its
lowest level since 17 June as traders positioned themselves ahead of the
Federal Open Market Committee‚Äôs interest rate decision later today. Most traders expect the FOMC will keep the
federal funds target rate unchanged with a strong possibility that more than
one voting member will call for higher rates.
The pair also came off as NYMEX crude oil futures for September delivery
tested the US$ 118.00 figure, its lowest level since 5 May. Data released in the eurozone saw June retail
sales decline 0.6% m/m and 3.1% y/y, the fastest rate on record, while May‚Äôs
results were revised to +0.5% m/m and -0.1% y/y. Also, the EMU-15 PMI services survey receded
to 48.3 in July from 49.1 in June. Most
traders expect the European Central Bank will keep interest rates unchanged
when policymakers convene on Thursday.
There are increasing signs of a slowdown in economic growth across the
eurozone at a time when inflation remains elevated or is actually
increasing. The German media reported
GDP decline by 1% in Q2. Euro bids are
cited around the $1.5380/ 1.5175 levels.
The yen appreciated
vis-√†-vis the U.S. dollar today as the greenback tested bids around the
¬•107.65 level and was capped around the ¬•108.30 level. The pair failed to build on yesterday gains
as dollar bulls booked some profits ahead of today‚Äôs Federal Reserve announcement. Finance minister Ibuki reported ‚Äúit‚Äôs hard to
move now‚ÄĚ regarding a change in Bank of Japan interest rates. Newly appointed Economy Minister Yosano
supports the BoJ‚Äôs independence and many Japan-watchers believe his appointment
will render it easier for the central bank to lift interest rates when it
eventually does, something that is not expected to happen for several
months. Liberal Democratic Party
Secretary General Aso today reported the Japanese economy is in a recession
while Yosani said the Fukuda government‚Äôs economic stimulus package may require
a supplementary budget. The Nikkei
reported the Japanese government may eliminate the word ‚Äúrecovery‚ÄĚ from its
monthly economic assessment in August for the first time in nearly five years. The Nikkei 225 stock index lost 0.14% to close
at ¬•12,914.66. Dollar bids are cited
around the ¬•106.40 level. The euro came off vis-√†-vis the yen as
the single currency tested bids around the ¬•166.85 level and was capped around
the ¬•168.65 level. The British pound and Swiss franc moved lower vis-√†-vis the yen as
the crosses tested bids around the ¬•210.55 and ¬•102.20 levels,
respectively. The Chinese yuan weakened vis-√†-vis the U.S. dollar as the
greenback closed at CNY 6.8556 in the over-the-counter market, up from CNY
The British pound came off
vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9520
level and was capped around the $1.9625 level.
Technically, today‚Äôs intraday low was right around the 61.8% retracement
of the move from $1.8515 to $2.1160.
Data released in the U.K.
today saw the July PMI services index improve to 47.4 from 47.1 in June, above
expectations but still a contractionary number.
Also, Q1 mortgage repossessions were up 40% y/y. Many economists believe that other data
released today will result in downward revisions to Q2 GDP growth. June manufacturing output fell 0.5% m/m and
has now declined four consecutive months.
Manufacturing output was also off 1.3% y/y and industrial output was off
0.2% m/m. Chancellor of the Exchequer Darling characterized Bank of England‚Äôs
inflation remit as ‚Äúperfectly adequate.‚ÄĚ
Cable bids are cited around the $1.9140 level. The
euro weakened vis-√†-vis the British pound as the single currency tested
bids around the ‚ā§0.7915 level and was capped around the ‚ā§0.7945 level.
The Swiss franc depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the CHF 1.0550 level and was supported around
the CHF 1.0480 level. Technically,
today‚Äôs intraday high was right around the 61.8% retracement of the move from
CHF 1.1105 to CHF 0.9645. The pair
reached its highest level since 19 May as traders reacted to lower crude oil
prices and prepared the Fed‚Äôs interest rate announcement. U.S. dollar offers are cited around the CHF
1.0760 level. The euro moved higher vis-√†-vis the Swiss franc as the single
currency tested bids around the CHF 1.6300 figure while the British pound gained ground vis-√†-vis the Swiss franc and
tested offers around the CHF 2.0615 level.
Australian dollar depreciated sharply vis-√†-vis the U.S. dollar today as
the Aussie tested bids around the US$ 0.9150 level and was capped around the
$0.9295 level. The pair reached its
lowest level since 4 April. As expected,
Reserve Bank of Australia
kept its official interest rate unchanged at 7.25% overnight, a twelve-year
high. RBA officials noted slowing demand
could result in lower interest rates in the coming months. Data released in Australia overnight saw the July
service sector PMI reading decline further. Australian bids are cited around the US$
0.8945 level. The New Zealand
dollar weakened vis-√†-vis the U.S. dollar as the kiwi tested bids around
the US$ 0.7220 level and was capped around the $0.7295 level. The pair reached its lowest level since
September 2007. New Zealand
dollar bids are cited around the US$ 0.7010 level.
The Canadian dollar weakened vis-√†-vis the U.S. dollar today as the
greenback tested offers around the C$ 1.0450 level and was supported around the
C$ 1.0360 level. Technically, today‚Äôs
intraday high was right around the 50% retracement of the move from C$ 1.1875
to C$ 0.9055. July PMI will be released
tomorrow. U.S. dollar offers are cited
around the C$ 1.0795 level.
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."