Tuesday August 12, 2008 - 16:12:52 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (12 August 2008)
The euro depreciated vis-√†-vis the U.S.
dollar today as the single currency
tested bids around the US$ 1.4815 level and was capped around the $1.4965
level. The common currency reached its
lowest level since 26 February. There
are many factors driving trading now. First, Russia
is said to have halted its military actions against Georgia. Second, there are reports that Iran has
stepped up its military maneuvers, leading to volatility in the crude oil
market. Third, there is a growing perception that the U.S.‚Äôs next
rate move will be higher while the eurozone‚Äôs next rate move will be lower.
Data released in the U.S.
today saw the June trade deficit narrow unexpectedly by 4.1% to US$ 56.8
billion. In eurozone news, European Central Bank member Weber warned the
German economy may be going through a ‚Äúdry spell‚ÄĚ but said this won‚Äôt amount to
a recession. Weber sees German GDP
growth around 2.0% this year and ‚Äúaround 1.0%‚ÄĚ next year. ECB‚Äôs Bini Smaghi sees eurozone growth
slowing faster than expected. EMU-15 GDP
data are scheduled for release on Thursday.
Euro bids are cited around the US$ 1.5175 levels.
The yen appreciated
vis-√†-vis the U.S. dollar today as the greenback tested bids around the
¬•109.60 level and was capped around the ¬•110.35 level. The pair continues to orbit the 50%
retracement of the move from ¬•124.15 to ¬•95.70.
Data released in Japan
overnight saw July corporate goods price inflation climb to 7.1%, a 27-year
high and above expectations. Also, July
consumer confidence fell to 31.4, its lowest level since June 1982. Traders await the release of April-June gross
domestic product data that are scheduled for release on Wednesday with many
economists eyeing a 0.6% contraction.
Other data released overnight saw June industrial output decline
2.2%. The Nikkei 225 stock index lost
0.95% to close at ¬•13,303.60. 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 ¬•163.25 level
and was capped around the ¬•164.40 level. The
British pound and Swiss franc weakened vis-√†-vis the yen as the crosses
tested bids around the ¬•208.25 and ¬•100.75 levels, respectively. The
Chinese yuan came off vis-√†-vis the U.S. dollar today as the greenback
closed at CNY 6.8632 in the over-the-counter market, up from CNY 6.8577. Data released in China overnight saw July consumer
price inflation up 6.3% y/y while foreign direct investment was up 44.54% y/y
between January and July.
The British pound weakened
vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9105
level and was capped around the $1.9255 level.
Cable reached its lowest level since November 2006. Data released in the U.K. today saw
July CPI inflation spike to 4.4% from 3.8% in June, more than double Bank of
England‚Äôs inflation target of 2.0%. This
decreases the likelihood that BoE‚Äôs next rate move will be lower. Bank of England Monetary Policy Committee‚Äôs
quarterly inflation report will be released tomorrow. Also, CML reported June gross mortgage lending
was off 4% to ‚ā§23.6
billion while government data saw June house price growth of 0.6% y/y. Additionally, BRC high street sales fell 0.9%
y/y in July. Cable bids are cited around the $1.8615 level. The
euro gained ground vis-√†-vis the British pound as the single currency
tested bids around the ‚ā§0.7795 level and was capped around the ‚ā§0.7850 level.
The Swiss franc depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the CHF 1.0925 level and was supported around
the CHF 1.0830 level. The pair reached
its highest level since 25 February. U.S.
dollar offers are cited around the CHF 1.1135 level. The
euro moved higher vis-√†-vis the Swiss franc as the single currency tested
offers around the CHF 1.6240 level while the
British pound weakened vis-√†-vis the Swiss franc and tested bids around the
CHF 2.0640 level.
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