Friday January 2, 2009 - 15:55:55 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (2 January 2008)
moved lower vis-Ã -vis the U.S. dollar yesterday as the single currency
tested bids around the US$ 1.3840 level and was capped around the $1.3985
level. The common currency came off
after the EMU-15 December purchasing managersâ€™ index receded to 33.9 from 35.6
in November. European Central Bank
member Nowotny reiterated credit conditions remain tight with credit demand
quite weak. Many traders believe the ECB
will reduce interest rates further on 15 January. In U.S. news,
December ISM manufacturing fell to 32.4 from 36.2 in November. The Federal Reserve is likely to implement new
credit facilities in 2009 to support the markets. The Fedâ€™s balance sheet ballooned from about
US$ 800 billion to more than US$ 2.3 trillion in 2008, an indication the
central bank is conducting quantitative easing to shore up the weak U.S.
economy. Euro bids are cited around the
US$ 1.3300 figure.
The yen depreciated vis-Ã -vis the U.S. dollar yesterday as the
greenback tested offers around the Â¥91.45 level and was supported around the
Â¥90.65 level. Trading remained illiquid
on account of the New Year holiday. Many
traders are loath to take the pair much lower on fears that Japanese monetary
authorities could conduct yen-selling intervention. Bank of Japan is likely to expand monetary
policy further in Q1. The Nikkei 225
stock index closed the year at Â¥8,859.56.
U.S. dollar offers are cited around the Â¥104.15 level. The
euro moved higher vis-Ã -vis the yen as the single currency tested offers
around the Â¥127.35 level and was supported around the Â¥126.15 level. The
British pound moved lower vis-Ã -vis the yen as sterling tested bids around the Â¥131.35 level while the Swiss franc gained ground vis-Ã -vis
the yen and tested offers around the Â¥85.85 level. In Chinese
news, the CLSA Purchasing Managersâ€™ Index improve to 41.2 in December from
40.9 in November.
British pound moved lower vis-Ã -vis the U.S. dollar yesterday as cable
tested bids around the US$ 1.4375 level and was capped around the US$ 1.4675 level. Data released in the U.K. today saw Halifax December house prices off a record
annualized 16.2% while Bank of England data reported mortgage approvals fell to
a record low of 27,000 in November.
Additionally, the U.K.
purchasing managersâ€™ index printed at 34.9 in December, up from 34.4 in
November. These PMI data represent the
eighth consecutive month the U.K.
manufacturing sector has contracted.
Collectively, todayâ€™s economic data reinforce expectations that Bank of
Englandâ€™s Monetary Policy Committee will ease rates at least 50bps next
Thursday from the current 2.0% level. Cable
bids are cited around the US$ 1.3920 level.
The euro moved higher
vis-Ã -vis the British pound as the single currency tested offers around the â‚¤0.9645
level and was supported around the â‚¤0.9435 level.
franc depreciated vis-Ã -vis the U.S. dollar yesterday as the greenback
tested offers around the CHF 1.0775 level and was supported around the CHF 1.0615
level. Some traders believe Swiss
National Bank will ease monetary policy further later in Q1 to shore up the
slowing domestic economy, particularly given Germanyâ€™s sharp economic
slowdown. U.S. dollar offers are cited
around the CHF 1.0975 level. The euro and British pound moved lower
vis-Ã -vis the Swiss franc as the crosses tested bids around the CHF 1.4815 and
CHF 1.5360 levels, respectively.
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