Thursday August 21, 2008 - 15:38:14 GMT
Share This Story
GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (21 August 2008)
The euro moved sharply higher vis-Ã -vis
the U.S. dollar today as the single
currency tested offers around the US$ 1.4890 level and was supported around the
$1.4730 level. The common currency
rallied on growing speculation the U.S.
government will bail out U.S.
mortgage banking giants Fannie Mae and Freddie Mac, leading to a significant
decrease in shareholder equity. The U.S.
dollar also suffered on news that U.S. investment banking giant
Lehman Brothers is having difficulties selling up to 50% of its current
value. Traders also sold U.S. dollars
after data revealed the U.S.
July index of leading indicators fell 0.7%, worse-than-expected. It was also reported that the Philadelphia
Fedâ€™s August manufacturing index improved to -12.7 from -15.0 while the prices
paid component fell to 57.5 from 75.6 â€“ another reason why the U.S. dollar
weakened. Additionally, weekly initial
jobless claims fell 13,000 to 432,000 while the continuing jobless claims were
off 17,000 to 3.362 million. In eurozone news, the EMU-15 Purchasing
Managers Index improved marginally to 48.0 in August from 47.8 in July with Germanyâ€™s
result falling to 50.6. European Central
Bank member Wellink reported commercial banks must not become overly reliant on
the ECB for funding. Euro bids are cited
around the US$ 1.4315 level.
The yen appreciated
vis-Ã -vis the U.S. dollar today as the greenback tested bids around the
Â¥108.15 level and was capped around the Â¥109.85 level. Technically, todayâ€™s intraday low was just
above the 50% retracement of the move from Â¥103.75 to Â¥110.65. Data released in Japan overnight saw the July
merchandise trade surplus fall 86.6% to Â¥91.15 billion, below forecasts. The pair shook these data off and traders
instead focused on ongoing problems in the U.S.
credit markets where Fannie Mae, Freddie Mac, and U.S. investment banking giant
Lehman Brothers are said to be facing extreme difficulties. Most traders expect Bank of Japan to keep the
overnight call rate unchanged at 0.50% for the foreseeable future. The Nikkei 225 stock index lost 0.77% to
close at Â¥12,752.21. Dollar bids are cited
around the Â¥106.40 level. The euro moved lower vis-Ã -vis the yen
as the single currency tested bids around the Â¥160.20 level and was capped
around the Â¥162.20 level. The British
pound and Swiss franc came off vis-Ã -vis the yen as the crosses tested bids
around the Â¥201.80 and Â¥99.05 levels, respectively. The
Chinese yuan appreciated vis-Ã -vis the U.S. dollar as the greenback closed
at CNY 6.8442 in the over-the-counter market, down from CNY 6.8546.
The British pound made
significant gains vis-Ã -vis the U.S. dollar today as cable tested offers
around the US$ 1.8780 level and was supported around the $1.8605 level. Data released in the U.K. today saw
July retail sales expand 0.8% m/m and 2.1% y/y. These data suggest consumer
sentiment may not have weakened as much as previously forecast but government
and Bank of England officials have cautioned against reading too much into one
monthâ€™s data. Cable bids are cited
around the $1.8015 level. The euro moved higher vis-Ã -vis the
British pound as the single currency tested offers around the â‚¤0.7945 level and
was supported around the â‚¤0.7905 level.
The Swiss franc appreciated vis-Ã -vis the U.S. dollar today as the
greenback tested bids around the CHF 1.0840 level and was capped around the CHF
1.1000 figure. Data released in Switzerland
today saw July input price inflation reach a nineteen-year high, up 4.9%
y/y. These data, however, are not
expected to persuade Swiss National Bank to tighten interest rates. Also, the August ZEW investor sentiment
indicator fell to -79.6. Additionally,
the July trade surplus was flat from Juneâ€™s tally of CHF 2.37 billion. U.S.
dollar offers are cited around the CHF 1.1135 level. The
euro and British pound came off vis-Ã -vis the Swiss franc as the crosses
tested bids around the CHF 1.6145 and CHF 2.0335 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."