Wednesday December 24, 2008 - 15:24:15 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (24 December 2008)
moved higher vis-√†-vis the U.S. dollar today as the single currency tested offers
around the US$ 1.4020 level and was supported around the $1.3915 level. Many data were released in the U.S. today and
they pointed to a deepening recession. First, weekly initial jobless claims
reached a 26-year high, up 30,000 to 586,000.
Nearly two million U.S.
workers have lost their jobs this year and pushed the unemployment rate higher
to 6.7%. Second, personal spending fell
0.6% in November while personal incomes fell 0.2%. These data underscore the
fragile nature of final private demand and represented the fifth consecutive
monthly decline in spending. Third,
durable goods orders were off 1% in November, less-than-expected. Chancellor Merkel is likely to come under
more fire for not adopting greater fiscal stimulus plans. European Central Bank President Trichet
called on governments to be mindful of the amount of debt they‚Äôre assuming to
fund fiscal stimulus programs. ECB
member Nowotny today indicated additional interest rate cuts by the ECB cannot
be ruled out. Liquidity is expected to
remain light through next week. Euro
bids are cited around the US$ 1.3300 figure.
The yen appreciated vis-√†-vis the U.S. dollar today as the
greenback tested bids around the ¬•90.20 level and was capped around the ¬•90.95
level. The Japanese government formally
approved a budget totaling ¬•88.5 trillion, its largest ever and one that
encompasses a ¬•12 trillion fiscal stimulus.
A government report confirmed that big manufacturers‚Äô sentiment printed
at -44.5 in the October ‚Äď December period, considerably worse than the -10.0
reading in the July ‚Äď September period.
Prime Minister Aso reported ‚ÄúJapan cannot avoid the tsunami of
the world recession, but it can try to find a way out. The world economy is in a
once-in-a-hundred-years recession. We need extraordinary measures to deal with
an extraordinary situation." The
Nikkei 225 stock index lost 2.37% to close at ¬•8,517.10. U.S. dollar offers are cited around the ¬•104.15
level. The euro moved lower vis-√†-vis the yen as the single currency
tested bids around the ¬•126.00 figure and was capped around the ¬•126.80
level. The British pound came off vis-√†-vis the yen as sterling tested bids around the ¬•132.55
level while the Swiss franc gained
ground vis-√†-vis the yen and tested offers around the ¬•84.35 level. The
Chinese yuan appreciated vis-√†-vis the U.S. dollar as the greenback closed
at 6.8397 in the over-the-counter market, down from CNY 6.8485.
British pound moved marginally higher vis-√†-vis the U.S. dollar today as
cable tested offers around the US$ 1.4805 level and was supported around the
US$ 1.4655 level. RICS reported house
prices will fall an additional 10% in 2009.
Yesterday‚Äôs data suggested the U.K. economy shrank 0.6% in Q3 and
many traders believe Bank of England‚Äôs Monetary Policy Committee will drive
interest rates towards zero per cent in 2009.
Cable bids are cited around the US$ 1.4470 level. The
euro moved higher vis-√†-vis the British pound as the single currency tested
offers around the ‚ā§0.9535 level and was supported around the ‚ā§0.9435 level.
franc appreciated vis-√†-vis the U.S. dollar today as the greenback tested
bids around the CHF 1.0715 level and was capped around the CHF 1.0890
level. Technically, today‚Äôs intraday low
was right around the 38.2% retracement of the move from CHF 1.2465 to CHF
0.9645. Swiss National Bank published a
grim report today that indicates Swiss companies expect business conditions to
‚Äúconsiderably worsen‚ÄĚ in 2009. U.S. dollar offers are cited around the CHF
1.1160 level. The euro and British pound moved lower vis-√†-vis the Swiss franc as
the crosses tested bids around the CHF 1.5005 and CHF 1.5770 levels,
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