Tuesday January 13, 2009 - 15:45:32 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (13 January 2009)
moved lower vis-√†-vis the U.S. dollar today as the single currency tested bids
around the US$ 1.31905 level and was capped around the $1.3370 level. Federal Reserve Chairman Bernanke spoke today
and said the incoming Obama administration‚Äôs proposed fiscal stimulus ‚Äúcould
provide a significant boost to economic activity.‚ÄĚ Obama yesterday asked the outgoing Bush
administration to formally request the second US$ 350 billion tranche of
bailout funds under the Troubled Asset Relief Program. Bernanke also indicated
the current expansion of the Fed‚Äôs balance sheet is not technically
quantitative easing and intimated the Fed will continue its various liquidity
enhancement schemes. Traders sold the
common currency on increasing speculation that Standard & Poors will
downgrade the sovereign credit ratings of Spain
and Greece. Germany formally announced its
second fiscal stimulus package with this one valued at ‚ā¨50 billion. France may provide more than the
‚ā¨26 billion it has already committed to its stimulus program. Some traders believe the European Central
Bank will cut its main interest rate by more than 50bps on Thursday. ECB President Trichet reported ‚ÄúThis is no
time for complacency, current challenges are pressing and new challenges shall
arise.‚ÄĚ Eurozone data released today saw
German wholesale December prices fall 3.3% y/y, the sharpest decline since
March 1999. Notably, German consumer price inflation fell in December for a
fifth consecutive month to its lowest level in two years. In
U.S. news, the U.S.
November trade deficit narrowed to US$ 40.44 billion, its largest contraction
in twelve years, while the U.S.
deficit with China
shrank to its lowest level in five months.
Euro bids are cited around the US$ 1.3055 level.
The yen depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the ¬•89.85 level and was supported around the ¬•88.80
level. Finance minister Nakagawa
verbally intervened against the yen, saying ‚Äúrapid movies are undesirable.‚ÄĚ The lower house of Parliament today passed a
supplementary budget valued at ¬•4.79 trillion to counter the ongoing recession
but the legislation could face a delay in the upper house. Data released in Japan today saw December
outstanding bank lending increase a record 3.7% y/y, an indication that
companies are still having difficulty raising funds in the asset-backed
commercial paper market. Other data
released in Japan
today saw the November current account surplus off 65.9% y/y while the December
M3 money supply was up +0.8% y/y.
Standard & Poors affirmed Japan‚Äôs sovereign debt ratings
overnight. Other data released in Japan overnight
saw December corporate bankruptcies up 24% y/y. The Nikkei 225 stock index lost
4.79% to close at ¬•8,413.91. 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 ¬•117.70 level and was capped around the ¬•119.55 level. The
British pound moved lower vis-√†-vis the yen as sterling tested bids around the ¬•129.70 level while the Swiss franc moved lower vis-√†-vis
the yen and tested bids around the ¬•79.30 level. The
Chinese yuan strengthened vis-√†-vis the U.S. dollar as the greenback closed
at CNY 6.8341 in the over-the-counter market, down from CNY 6.8370. Data released in China overnight saw the country‚Äôs
foreign reserves rise to US$ 1.95 trillion at the end of 2008 while the 2008
trade surplus printed at US$ 295.46 billion, up from US$ 262.2 billion in 2007.
British pound moved sharply lower vis-√†-vis the U.S. dollar today as cable
tested bids around the US$ 1.4535 level and was capped around the US$ 1.4825
level. Cable was lower for the third
consecutive day as traders reacted to very weak U.K. economic data. First, BRC reported U.K. retail
sales registered their worst record on performance in December, the latest
indication that final private demand remains weak. Second, the government reported November
house prices were off 8.6% y/y. Third, November U.K. exports fell 6% despite
the recent fall in sterling. Fourth,
RICS December house sales reached a record low and the proportion of unsold
houses rose to its highest level since 1992.
Fifth, BCC reported its quarterly survey of nearly 6,000 firms evidenced
a ‚Äúfrightening deterioration‚ÄĚ in late Q4 business activity. Most traders expected Bank of England to
continue easing monetary policy in Q1. The
Brown government is expected to announce new measures to provide financing
assistance to small and medium-sized businesses. Cable bids are cited around the US$ 1.3920 level. The
euro moved higher vis-√†-vis the British pound as the single currency tested
offers around the ‚ā§0.9120 level and was supported around the ‚ā§0.8980 level.
franc depreciated vis-√†-vis the U.S.
dollar today as the greenback tested offers around the CHF 1.1255 level and
was supported around the CHF 1.1135 level.
Swiss National Bank is expected to keep monetary policy easy in
2008. U.S. dollar offers are cited
around the CHF 1.1330 level. The euro moved lower vis-√†-vis the
Swiss franc as the single currency tested bids around the CHF 1.4810 level
while the British pound lost ground vis-√†-vis
the Swiss franc as sterling tested bids around the CHF 1.6265 level.
Australian dollar came off sharply vis-√†-vis the U.S. dollar today as the
Aussie tested bids around the US$ 0.6665 level and was capped around the $0.6820
figure. The Q4 NAB business conditions
survey and lending data will be released overnight. Australian dollar bids are cited around the
US$ 0.6600 figure.
Canadian dollar depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the C$ 1.2315 level and was supported around the
C$ 1.2150 level. Data released in Canada today
saw the November trade surplus narrow to C$ 1.28 billion, its lowest level
since October 1997, while October‚Äôs surplus was downwardly revised to C$ 2.25
billion from C$ 3.78 billion. U.S.
dollar offers are cited around the C$ 1.2400 figure.
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