Thursday August 14, 2008 - 10:50:48 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (14 August 2008)
The euro depreciated vis-Ã -vis the U.S.
dollar today as the single currency
tested bids around the US$ 1.4850 level and was capped around the $1.4935
level. The common currency continues to
consolidate some of the losses it has realized over the past couple of
weeks. Data released in the eurozone
revealed the EMU-15 economy shrank in size in the three months from April to
June, down 0.2% q/q and up 1.5% y/y, for the first quarterly contraction since
early 1995. These data render it less
possible that European Central Bank policymakers will consider raising interest
rates again right now and may move to cut rates soon. Revised July consumer price inflation data
released today saw annualized inflation at 4.0% in the eurozone, down from the
provisional 4.1% reading. Germanyâ€™s economy contracted 0.5% in Q2 with Franceâ€™s
economy off 0.3%. Other data saw German
final July CPI up 0.6% m/m and 3.3% y/y.
In U.S. news, traders await
the release of July consumer price inflation data along with weekly initial jobless
claims and continuing claims numbers. Euro
bids are cited around the US$ 1.5175 levels.
The yen depreciated
vis-Ã -vis the U.S. dollar today as the greenback tested offers around the
Â¥109.80 level and was supported around the Â¥109.00 figure. Technically, todayâ€™s intraday high was right
around the 50% retracement of the move from Â¥124.15 to Â¥95.70. The Nikkei reported Bank of Japan will
likely reduce its economic assessment next week when the BoJ Policy Board
convenes. Traders are now pricing in a
very small chance the central bank will lift interest rates in the next
year. Data released in Japan overnight
saw the June tertiary index fall 0.8% m/m, the second consecutive monthly
decline. The Nikkei 225 stock index lost
0.51% to close at Â¥12,956.80. Dollar
bids are cited around the Â¥106.40 level.
The euro moved higher
vis-Ã -vis the yen as the single currency tested offers around the Â¥163.65 level
and was supported around the Â¥162.50 level.
The British pound and Swiss franc
appreciated vis-Ã -vis the yen as the crosses tested offers around the
Â¥205.60 and Â¥100.95 levels, respectively.
The Chinese yuan weakened
vis-Ã -vis the U.S. dollar as the greenback closed at CNY 6.8600 in the
over-the-counter market, up from CNY 6.8570.
Data released in China
overnight saw industrial value-added output up 16.1% in the January to July
period. Peopleâ€™s Bank of China formed an exchange rate department to better
manage the yuan. A report suggests
Chinese CPI will continue to fall in H2 2008 and 2009.
The British pound gained
ground vis-Ã -vis the U.S. dollar today as cable tested offers around the
US$ 1.8735 level and was supported around the $1.8615 level. Technically, todayâ€™s intraday low was right
around the 61.8% retracement of the move from $1.7045 to $2.1160. Sterling
has fallen more than fourteen big figures over the past five weeks. Bank of Englandâ€™s quarterly inflation report
was released yesterday and was more dovish than most traders expected. Cable bids are cited around the $1.8515
level. The euro came off vis-Ã -vis
the British pound as the single currency tested bids around the â‚¤0.7955 level
and was capped around the â‚¤0.7990 level.
The Swiss franc weakened vis-Ã -vis the U.S. dollar today as the
greenback tested offers around the CHF 1.0890 level and was supported around
the CHF 1.0840 level. The pair continues
to consolidate the gains made during the past couple of weeks. Data released in
today saw the SECO Q3 consumer sentiment index fall to -17 from +2 in Q2, its
lowest level in 4.5 years and well below expectations. These data support growing expectations that
Swiss National Bank may need to reduce interest rates to stimulate economic
growth. U.S. dollar offers are cited
around the CHF 1.1135 level. The euro and British pound gained ground
vis-Ã -vis the Swiss franc as the crosses tested offers around the CHF 1.6215
and CHF 2.0375 levels, respectively.
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