Monday September 1, 2008 - 14:40:01 GMT
Share This Story
GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (1 September 2008)
The euro weakened vis-√†-vis the U.S.
dollar today as the single currency
tested bids around the US$ 1.4595 level and was capped around the $1.4720
level. Technically, today‚Äôs intraday
high was right around the 76.4% retracement of the move from $1.4315 to
$1.6040. The common currency moved lower
after hurricane Gustav weakened in strength as it approaches the Gulf of Mexico, resulting in a pullback in crude oil
prices to the $112 handle. There has been a strong positive correlation between
the euro and the price of oil over the last several weeks. Data released in the eurozone today saw
German July retail sales fall 1.5% m/m and was unchanged y/y. Also, EMU-15 manufacturing activity
contracted for the third consecutive month in August, improving to 47.6 from
47.4 in July but still below the 50 level that denotes growth in the
sector. European Central Bank
policymakers convene Thursday and are expected to keep interest rates
unchanged. Liquidity is expected to be
light during the North American session on account of the U.S. Labour Day
holiday. Euro bids are cited around the US$
The yen appreciated
vis-√†-vis the U.S. dollar today as the greenback tested bids around the ¬•107.60
level and was capped around the ¬•108.65 level.
The pair traded at its lowest level since 4 August as long positions
built-up from the ¬•103 handle in mid-July continue to unwind. Prime Minister
Fukuda resigned overnight and will likely step down in the coming months. Early speculation suggests that Foreign Minister
Taro Aso could assume the top position.
An election was due by late 2009 but today‚Äôs announcement suggests there
could be a change in leadership before the end of the year. The Nikkei 225 stock index lost 1.83% to
close at ¬•12,834.18. 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 ¬•157.55 level and was capped around
the ¬•159.60 level. The British pound and Swiss franc moved lower vis-√†-vis the yen as
the crosses tested bids around the ¬•194.15 and ¬•97.95 levels,
respectively. The Chinese yuan appreciated vis-√†-vis the U.S. dollar as the
greenback closed at CNY 6.8256 in the over-the-counter market, down from CNY
6.8350. Data released in China overnight
saw the CFLP August manufacturing PMI survey remain unchanged at 48.4 while the
CLSA August manufacturing PMI survey fell to 49.2.
The British pound fell
sharply vis-√†-vis the U.S. dollar today as cable tested bids around the US$
1.7990 level and was capped around the $1.8150 level. Technically, today‚Äôs intraday low was just
below the 76.4% retracement of the move from $1.7045 to $2.1160. Sterling
continued its move lower after U.K.
economic data were released that continued to evidence a weakening
economy. Chancellor of the Exchequer
Darling reported the U.K.‚Äôs
economic difficulties are the worst the country has encountered in 60
years. Data released in the U.K. today saw Bank of England July
mortgage approvals sink to 33,000, the lowest reading since April 1993. Also, the U.K. August CIPS manufacturing
survey climbed to 45.9 from 44.1 in July but remained in a contractionary
reading below the ‚Äúboom-or-bust‚ÄĚ 50.0 level.
These data suggest the U.K.
economy will recede in Q3. Bank of
England‚Äôs Monetary Policy Committee meets on Wednesday and Thursday to
deliberate interest rates and is unlikely to change rates at this time on
account of elevated inflation pressures.
Many traders, however, believe the MPC will be forced to reduce interest
rates before the end of the year. Other
data released today saw Hometrack August house prices of 5.3% y/y while U.K. July net
consumer credit increased to ‚ā§1.1 billion.
Cable bids are cited around the $1.7420 level. The
euro gained ground vis-√†-vis the British pound as the single currency
tested offers around the ‚ā§0.8140 level and was supported around the ‚ā§0.8090
The Swiss franc depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the CHF 1.1045 level and was supported around
the CHF 1.0945 level. Data released in Switzerland
today saw the August manufacturing PMI survey slow to its lowest level in three
years, dropping to 52.5 from 54.1 in July.
Notably, cost pressures eased from July‚Äôs thirteen-year high. Most traders believe Swiss National Bank‚Äôs
next interest rate move will be lower, possibly before the end of the
year. U.S. dollar offers are cited
around the CHF 1.1135 level. The euro and British pound came off
vis-√†-vis the Swiss franc as the crosses tested bids around the CHF 1.6055 and
CHF 1.9760 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."