Monday December 27, 2004 - 15:09:30 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (27 December 2004)
The euro was confined to a relatively tight range vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3555 level and was supported around the $1.3515 level. There are not a lot of fresh fundamental factors moving the markets today on account of continued holiday celebrations and the coming New Year holiday. Traders will await any comments from eurozone finance ministers or European Central Bank policymakers regarding the single currency’s latest move above the psychologically-important $1.35 figure. French finance minister Gaymard last week warned that an adverse dollar move could be “catastrophic” while Dutch finance minister characterized the euro’s range as “acceptable.” The lack of a unified script about the common currency could be the impetus the pair needs to trade higher. Traders await EMU-12 economic data on Wednesday and Chicaco PMI data in the U.S. on Thursday. Euro bids are seen around the $1.3470 level.
The yen lost some ground vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥104.10 level and was supported around the ¥103.55 level. The major dollar-buying impetus was a catastrophic earthquake and tsunami centered in Indonesia that has killed at least 20,000 people and affected people as far away as India and Africa. Dealers sold yen on news of the disaster in thin holiday trading. Data released overnight saw the MoF large companies’ business conditions index fall 2.1 index points for the October – December quarter. Recent economic data – with the exception of this month’s quarterly tankan survey – have largely been underwhelming and suggest Japan’s economy continues to recede. Traders await many economic data scheduled for released overnight including November industrial production, December Tokyo CPI, nationwide CPI for November, and the November unemployment rate. Other data released overnight saw November housing starts gain 0.2%, the tenth improvement in twelve months. Dollar offers are seen around the ¥105.00 figure. The euro grinded higher vis-à-vis the yen as the single currency tested offers around the ¥140.70 level and remained supported around the ¥140.10 level. In Chinese news, People’s Bank of China conducted its Q4 “regular meeting” and reiterated its intent to keep the yuan at “rational” and “balanced” levels.
The British pound came off marginally vis-à-vis the U.S. dollar today as cable tested bids just below the $1.9200 figure and was capped around the $1.9265 level. Data released in the U.K. today saw Hometrack house prices decline for the sixth consecutive month in December, off 0.8% this month. Hometrack also predicted U.K. house prices will fall in H1 2005 and recover in H2 2005 and its latest report is consistent with last week’s RICS report. Many traders expect cable will continue to have a softer tone given last week’s dovish December MPC meeting minutes. Cable bids are seen around the $1.9175 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7055 level and was supported around the ₤0.7020 level.
The Swiss franc weakened vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1450 level and was supported around the CHF 1.1400 figure. Traders await the release of the December KOF leading indicator on Wednesday. Dollar offers are seen around the CHF 1.1490 level. The euro gained ground vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.5500 figure and was supported around the CHF 1.5445 level.
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