Thursday September 4, 2008 - 16:56:52 GMT
Share This Story
GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (4 September 2008)
The euro extended recent losses
vis-Ã -vis the U.S. dollar today as
the single currency tested bids around the US$ 1.4325 level and was capped
around the $1.4545 level. Stops were
reached below the $1.4355 level, representing the 38.2% retracement of the move
from $1.1540 to $1.6040. As expected,
the European Central Bank kept its main refinancing target unchanged at
4.25%. President Trichet was relatively
neutral in his press conference today and this caused the monetary hawks to
reduce their long euro exposure. Trichet
noted there are heightened price pressures that are coincident with slowing
economic growth and said the ECB has no bias on policy following Julyâ€™s rate
hike. The ECBâ€™s staff raised their 2008
and 2009 forecasts for EMU-15 consumer price inflation to 3.4% - 3.6% and 2.3%
- 2.9%, respectively. The ECB now sees
EMU-15 GDP growth at 1.1% - 1.7% in 2008 and 0.6% - 1.8% in 2009.
Data released in the eurozone today saw German manufacturing orders fall
1.7% m/m in July, the eighth consecutive monthly decline. ECBâ€™s Wellink said the current financial
crisis will likely last a couple of years.
In U.S. news, the ISM
services index printed at 50.6 in August, up from 49.5 in July with the prices
paid sub-index lower at 72.9. Also, weekly initial jobless claims rose 15,000
to 444,000 and continuing jobless claims were up 6,000 to 3.44 million.
Additionally, non-farm productivity rose a revised 4.3% annualized rate in Q2
with unit labour costs off 0.5% q/q, revised down from +1.3%. Also, ADP August private sector job losses
totaled 33,000. The Fedâ€™s Beige Book was
released yesterday and reported economic activity continues to sloe in most
parts of the U.S.
on account of weaker consumer spending and higher prices. Euro bids are cited around
the US$ 1.3840 level.
The yen appreciated
vis-Ã -vis the U.S. dollar today as the greenback tested bids around the
Â¥107.65 level and was capped around the Â¥108.55 level. The pair reached its lowest level since 4
August as traders continued to unwind short yen carry trades. The major focus in Japan continues to be the political
vacuum created by this weekâ€™s resignation of Prime Minister Fukuda. LDP heavyweight Taro Aso is seen as the
likely successor but others have tossed their hats into the electoral ring and
a decision is expected around 22 September.
Many major central banks are reducing interest rates and this is
decreasing the incentive to sell the lower-yielding yen in the market. The Nikkei 225 stock index lost 1.04% to
close at Â¥12,557.66. Dollar bids are cited
around the Â¥106.40 level. The euro moved sharply lower vis-Ã -vis
the yen as the single currency tested bids around the Â¥154.35 and was capped
around the Â¥157.75 level. The British pound and Swiss franc weakened
vis-Ã -vis the yen as the crosses tested bids around the Â¥189.95 and Â¥96.80
levels, respectively. The Chinese yuan appreciated vis-Ã -vis
the U.S. dollar as the greenback closed at CNY 6.8365 in the over-the-counter
market, down from CNY 6.8434.
The British pound depreciated
vis-Ã -vis the U.S. dollar today as cable tested bids around the US$ 1.7625
level and was capped around the $1.7860 level.
Cable reached its lowest level since April 2006 as traders continued to
speculate Bank of Englandâ€™s Monetary Policy Committee will be forced to reduce
interest rates to counter a slowing economy.
The MPC today voted to keep the main repo rate unchanged at 5.0%. MPC policymakers are trapped between high
inflation and rapidly slowing economic growth.
Data released in the U.K.
today saw Halifax
August house prices fall 12.7% y/y, the seventh consecutive monthly
decline. Cable bids are cited around the
$1.7420 level. The euro came off vis-Ã -vis the British pound as the single
currency tested bids around the â‚¤0.8100 figure and was capped around the
The Swiss franc depreciated vis-Ã -vis the U.S. dollar today as the
greenback tested offers around the CHF 1.1130 level and was supported around
the CHF 1.1010 level. U.S. dollar offers
are cited around the CHF 1.1390 level. The euro and British pound weakened
vis-Ã -vis the Swiss franc as the crosses tested bids around the CHF 1.5925 and
CHF 1.9565 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."