Thursday January 1, 2009 - 15:26:32 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (1 January 2009)
moved lower vis-√†-vis the U.S. dollar yesterday as the single currency
tested bids around the US$ 1.3850 level and was capped around the $1.4145 level. The common currency lost about 3.4% against
the U.S. dollar in 2008. Slovakia joined
the euro today, taking the number of member countries to sixteen. Data released in the U.S. yesterday
saw weekly initial jobless claims fall 94,000 to 492,000 while continuing
jobless claims rose 140,000 to 4.506 million.
The Federal Reserve announced this week that it will purchase up to US$
500 billion in mortgage-backed securities by the middle of 2009 with buying
activity commencing in early January.
This is the Fed‚Äôs latest attempt to reduce mortgage borrowing costs. Most traders expect the European Central Bank
will reduce borrowing costs by 50bps as early as 15 January. Euro bids are cited around the US$ 1.3300
The yen depreciated vis-√†-vis the U.S. dollar yesterday as the
greenback tested offers around the ¬•90.90 level and was supported around the
¬•90.10 level. Yesterday‚Äôs range was
tight ahead of the New Year holiday as traders were loath to assume new market
risk, particularly at current levels where the Japanese government is clearly
uncomfortable with the yen‚Äôs recent ascent.
Most traders expect Bank of Japan will continue to provide major amounts
of liquidity to the market in Q1 to ease corporate financing pressures. The yen climbed about 19.2% against the U.S.
dollar in 2008. The Nikkei 225 stock index closed the year at ¬•8,859.56. 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 ¬•125.35 level and was capped around the ¬•127.75
level. The British pound moved higher vis-√†-vis the yen as sterling tested offers around the ¬•133.25
level while the Swiss franc lost ground
vis-√†-vis the yen and tested bids around the ¬•84.25 level. The
Chinese yuan appreciated vis-√†-vis the U.S. dollar yesterday as the
greenback closed at 6.8230 in the over-the-counter market, down from CNY 6.8353. People‚Äôs Bank of China reported it will
maintain an ‚Äúappropriately loose‚ÄĚ monetary policy in 2009 and maintain a stable
yuan at a ‚Äúreasonable and balanced level.‚ÄĚ
British pound moved sharply higher vis-√†-vis the U.S. dollar yesterday as
cable tested offers around the US$ 1.4695 level and was supported around the
US$ 1.4350 level. Sterling lost about 27.3% against the U.S.
dollar in 2008. Most traders expect Bank
of England will continue to ease monetary policy in Q1 with another rate cut
expected as early as January. BoE yesterday
offered unlimited dollars in a seven-day repo operation. Cable bids are cited around the US$ 1.3920 level. The
euro moved sharply lower vis-√†-vis the British pound as the single currency
tested bids around the ‚ā§0.9475 level and was capped around the ‚ā§0.9780 level.
franc depreciated vis-√†-vis the U.S. dollar yesterday as the greenback
tested offers around the CHF 1.0740 level and was supported around the CHF 1.0540
level. The Swiss franc gained about 5.8%
against the U.S. dollar in 2008. Most
traders expect Swiss National Bank will continue to expand monetary policy in
2009. U.S. dollar offers are cited
around the CHF 1.0975 level. The euro and British pound moved higher
vis-√†-vis the Swiss franc as the crosses tested offers around the CHF 1.4965
and CHF 1.5690 levels, respectively.
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