Wednesday January 28, 2009 - 13:54:06 GMT
Share This Story
GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (28 January 2009)
moved higher vis-√†-vis the U.S. dollar today as the single currency tested offers
around the US$ 1.3315 level and was supported around the $1.3160 level. Euro bulls are talking about pushing the
common currency to the $1.3475 level.
Traders await today‚Äôs Federal Open Market Committee interest rate
decision with most expecting the Fed to announce some new measures to ease
credit strains. It is possible but not
probable that the FOMC will talk more about paying the long end of the Treasury
curve or even shorter maturities. A more
realistic scenario entails the Fed announcing mortgage restructuring
initiatives, especially after the Fed submitted a new proposal to Congress to
reduce home foreclosures. In eurozone
news, provisional January German consumer price inflation for three German
states came in less-than-expected, suggesting price pressures continue to abate
in the eurozone‚Äôs largest economy. This
would offer the European Central Bank additional scope to ease monetary policy
with less fear of engendering inflation.
French January consumer confidence improved to -41, its best level since
April 2008. Additionally, German
February GfK consumer sentiment was unchanged at 2.2 from January‚Äôs revised
print of 2.2. ECB member Gonzalez-Paramo
reported ‚ÄúHaving been able to anchor inflation expectations gives us room to
act in an appropriate way; that is, go in the other direction, in the direction
of cutting interest rates, which is what we have done.‚ÄĚ Bank of Spain today predicted EMU-16
inflation would approach 0% by the middle of the year. Euro
bids are cited around the US$ 1.2475 level.
The yen depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the ¬•89.45 level and was supported around the ¬•88.90
level. Prime Minister Aso vowed to
create 1.6 million new jobs and rescue Japan from its economic recession.
The government yesterday initiated a ¬•1.5 trillion plan to purchase shares in
companies threatened by the financial crisis. Shoko Chukin Bank‚Äôs December business
sentiment index for small and medium-sized companies declined for a fifth
consecutive month to a record low of 24.8.
Most traders believe Bank of Japan‚Äôs Policy Board will continue to
attempt to ease credit strains by purchasing corporate assets. The Nikkei 225 stock index climbed 0.56% to
close at ¬•8,106.29 today. U.S. dollar offers are cited around the ¬•104.15 level.
euro moved higher vis-√†-vis the yen as the single currency tested bids
around the ¬•118.80 level and was supported around the ¬•117.05 level. The
British pound moved higher vis-√†-vis the yen as sterling tested offers
around the ¬•127.95 level while the Swiss
franc moved higher vis-√†-vis the yen and tested offers around the ¬•78.70
level. The Chinese yuan weakened vis-√†-vis the U.S. dollar today as the
greenback closed at CNY 6.8402 in the over-the-counter market, up from CNY
6.8392. People‚Äôs Bank of China advisor
Fan Gang said GDP growth could fall below 7% annually if the government does
not stimulate domestic consumption.
The British pound moved higher vis-√†-vis the U.S. dollar today as
cable tested offers around the US$ 1.4345 level and was supported around the
$1.4125 level. A government poll
public inflation expectations for the next twelve months edged up to 1.1% in
January from December‚Äôs record low of 0.8%.
Data released in the U.K.
today saw October average earnings up 3.4% y/y.
Most dealers believe Bank of England‚Äôs Monetary Policy Committee will
continue to drive interest rates lower. Cable
offers are cited around the US$ 1.4615 level. The euro moved lower vis-√†-vis the British pound as the single
currency tested bids around the ‚ā§0.9260 level and was capped around the ‚ā§0.9350
The Swiss franc came off vis-√†-vis the U.S. dollar today as the
greenback tested offers around the CHF 1.1440 level and was supported around
the CHF 1.1330 level. Swiss National
Bank President Roth today said he does not yet see any ‚Äúevidence the Swiss
economy will recover in 2010.‚ÄĚ Data
released in Switzerland
today saw the January KOF leading indicator fall to -0.87 from -0.39 in
December. U.S. dollar offers are cited
around the CHF 1.1550 level. The euro moved higher vis-√†-vis the
Swiss franc as the single currency tested offers around the CHF 1.5175 level
while the British pound moved higher
vis-√†-vis the Swiss franc and tested offers around the CHF 1.6360 level.
The Australian dollar appreciated vis-√†-vis the U.S. dollar today
as the Aussie tested offers around the US$ 0.6710 level and was supported
around the $0.6610 level. The Australian
government is likely to announce additional fiscal stimulus measures. Reserve Bank of Australia will convene on 3
February and is expected to reduce its benchmark rate by 75bps to 100bps. Treasurer Swan reported ‚ÄúWhile the annual
inflation rate remains high, this reflects inflationary pressures from earlier
in 2008. Inflation is expected to continue to ease over the next 6-12 months,
as the full effect of weaker world economic conditions flows through.‚ÄĚ Data
released in Australia
saw the Q4 consumer price index decline 0.3% while core inflation was up 0.75%
and took the annual pace lower to 4.35%.
Additionally, the January skilled vacancies index printed at -7.7%. Australian dollar bids are cited around the
US$ 0.6520 level.
The Canadian dollar appreciated sharply vis-√†-vis the U.S. dollar today
as the greenback tested bids around the C$ 1.2065 level and was capped around
the C$ 1.2305 level. Finance minister
Flaherty said Canada‚Äôs
economic difficulties require a significant budgetary response. Prime Minister Harper‚Äôs minority Conservative
government delivered a budget yesterday that offered a C$ 40 billion two-year
stimulus package. The government is predicting a C$ 85 billion budget deficit
over five years. U.S. dollar bids are
cited around the C$ 1.1815 level.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."