Tuesday November 11, 2008 - 10:53:30 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (11 November 2008)
The euro moved lower vis-√†-vis the U.S. dollar today as the single
currency tested bids around the US$ 1.2675 level and was capped around the $1.2800
figure. Traders are deliberating the
likelihood of additional monetary easing from both the European Central Bank
and Federal Reserve before the end of the year and again in Q1 2009. ECB President Trichet and other ECB members
have made it abundantly clear that they have not prejudged monetary policy but
that it is possible rates could come down in December. At the Fed, policymakers continue to
implement multiple liquidity provision facilities to support commercial banks,
investment banks, primary dealers, and the commercial paper market. Data released in Germany today saw the November ZEW
survey‚Äôs economic sentiment indicator rise to -53 from -63 in October. In U.S. news, the regulator of Fannie
Mae and Freddie Mac will today announce new initiatives to reduce home
foreclosures. September trade data will
be released on Thursday. Euro bids are
cited around the US$ 1.2135 level.
The yen appreciated vis-√†-vis the U.S.
dollar today as the greenback tested
bids around the ¬•97.50 level and was capped around the ¬•98.30 level. Traders paid close attention to comments from
Bank of Japan Deputy
Governor Yamaguchi in Japan‚Äôs
parliament overnight. Many dealers are
wondering if the BoJ will be easing monetary policy further, particularly if
other central banks continue to reduce borrowing costs to contend with the
ongoing credit crisis. Data released in Japan overnight
saw the October service sector sentiment index print at 22.6 while October
outstanding bank loans were up 2.2% y/y.
Also, the October M3 money supply was up 0.6%
y/y while the September current account surplus was off 48.8% y/y. Additionally, October corporate bankruptcies
were up 13.4% y/y. The Nikkei 225 stock
index lost 3.00% to close at ¬•8,809.30. U.S. dollar offers are cited around the
¬•104.15 level. The euro moved lower
vis-√†-vis the yen as the single currency tested offers around the ¬•123.80 level
and was capped around the ¬•125.50 level.
The British pound moved lower
vis-√†-vis the yen as sterling tested bids around the ¬•151.90 level while the Swiss franc gained ground vis-√†-vis
the yen and tested offers around the ¬•83.50 level. The
Chinese yuan appreciated vis-√†-vis the U.S. dollar as the greenback closed
at CNY 6.8251 in the over-the-counter market, down from CNY 6.8266. The government yesterday announced a major
US$ 586 billion economic stimulus package and People‚Äôs Bank of China Governor
Zhou reported the central bank‚Äôs monetary policy is being shifted to
‚Äúmoderately easy‚ÄĚ from ‚Äúprudent and flexible.‚ÄĚ
Data released in China
saw the October trade surplus reach a record US$ 35.24 billion while consumer
price inflation receded to a seventeen-month low of +4.0% y/y in October as
domestic demand lessened.
British pound came off vis-√†-vis the U.S. dollar today as cable tested bids
around the US$ 1.5545 level and was capped around the $1.5700 figure. Many data were released in the U.K. today.
First, BRC reported October retail sales were off 0.1% y/y, their first decline
since August 2005. Second, the U.K.‚Äôs global
goods trade deficit narrowed to ‚ā§7.5 billion in September from a revised ‚ā§8.0
billion in August. Third, U.K. home sales
reached their lowest level in at least 30 years in October. Economists are concerned with these data
because they portend a weak holiday shopping period for retailers and evidence
the weak state of final private demand.
U.K. Prime Minister Brown has suggested the government may reduce taxes
to help stimulate the economy. Cable
bids are cited around the US$ 1.5275 level.
The euro moved higher
vis-√†-vis the British pound as the single currency tested offers around the
‚ā§0.8205 level and was supported around the ‚ā§0.8110 level.
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