Friday March 27, 2009 - 14:18:35 GMT
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Forex Market Commentary and Analysis (27 March 2009)
The euro fell sharply vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3290
level and was capped around the US$ 1.3590 level. Stops were reached below the $1.3435 level as the
common currency reached its lowest level this week. Italian bank Monte dei Paschi di Siena SpA
sought government aid after announcing its Q4 2008 profit plunged 47%. Data released in the eurozone today saw
January industrial new orders decline 3.4% while France reported its Q4 2008 gross
domestic product was off 1.1% q/q and 0.9% y/y.
Bank of Italy reported the EMU-16 economy contracted at a slower pace in
March. Germany reported January import
prices were off 0.5%. In U.S. news, traders will pay close
attention to the meeting in Washington,
D.C. today between President
Obama and the chief executives of several financial institutions. Some U.S. banks are now trying to return
the TARP funds they borrowed last year or withdrawing their TARP
applications. The other big news in Washington, D.C.
continues to be Treasury Secretary Geithner‚Äôs plans to enhance regulation of
derivatives and seek power to seize troubled financial institutions. Data released in the U.S. todays saw
February personal spending climb +0.2% while personal income was off 0.2%. Also, the personal consumption expenditures
core price index was up +0.2% m/m and 1.8% y/y.
Additionally, final March University of Michigan consumer sentiment
printed at 57.3, up from 56.3 at the end of February. Euro
bids are cited around the US$ 1.3245 level.
The yen appreciated vis-√†-vis the U.S. dollar today as the
greenback tested bids around the ¬•97.10 level and was capped around the ¬•98.85
level. Sentiment in global equities
markets soured overnight and the yen moved higher as risk aversion
increased. Data released in Japan overnight
saw February retail sales decline 5.8% y/y, the sharpest decline since February
2002 and the fifth consecutive monthly decline.
Also, February core consumer prices were flat y/y but most economists
expect annualized rates of inflation to turn negative soon. Core consumer price inflation for the Tokyo area softened to a
preliminary 0.4% in March. Many traders
believe Bank of Japan will soon increase its purchase of asset-backed
securities to try and ease credit strains.
fiscal year concludes on 31 March and some financial institutions may receive
subordinated loans from the central bank to bolster temporary liquidity
demand. The Nikkei 225 stock index lost 0.11% to close
at ¬•8,626.90. 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 ¬•129.35 level and was capped around
the ¬•133.85 level. The British pound moved lower vis-√†-vis the yen as sterling tested bids
around the ¬•139.00 figure while the
Swiss franc moved lower vis-√†-vis the yen and tested bids around the ¬•85.05
level. The Chinese yuan appreciated vis-√†-vis the U.S. dollar as the
greenback closed at CNY 6.8280 in the over-the-counter market, down from CNY
6.8304. People‚Äôs Bank of China called
for enhanced international financial regulation to arise from the G20 meeting
in London next
British pound weakened vis-√†-vis the U.S. dollar today as cable tested bids
around the US$ 1.4265 level and was capped around the $1.4495 level. Bank of England Chief Economist Dale reported
said the central bank may only need to purchased a ‚Äúrelatively small‚ÄĚ amount of
corporate bonds as part of its quantitative easing strategy. BoE has purchased ‚ā§13 billion in government
bonds and ‚ā§128 million in corporate bonds to date. Yields on gilts have declined 40-60 basis
points since the BoE announced it will purchase government debt. Dale also sees an economic recovery
materializing by the end of the year. Chancellor
of the Exchequer Darling said the government will likely hold a ‚Äúsignificant‚ÄĚ
stake in the U.K.
banking sector for years to come. The government
has injected ‚ā§37 billion of capital into major banks and offered insurance
against toxic assets worth hundreds of billions more. Data released in the U.K. today saw
the Q4 current account deficit narrow more than expected to ‚ā§7.6 billion. Prime Minister Brown indicated the government
will not implement a broad second fiscal stimulus next month when the Budget
statement is released. Cable bids are
cited around the US$ 1.4085 level. The euro came off vis-√†-vis the British
pound as the single currency tested bids around the ‚ā§0.9275 level and was
capped around the ‚ā§0.9420 level.
franc depreciated vis-√†-vis the U.S. dollar today as the greenback tested
offers around the CHF 1.1440 level and was supported around the CHF 1.1220
level. Data released in Switzerland
today saw the March KOF leading indicator decline to -1.79. U.S. dollar bids are cited around the CHF
1.1165 level. The euro came off vis-√†-vis the Swiss franc as the single currency
tested bids around the CHF 1.5175 level while the British pound gained ground vis-√†-vis the Swiss franc and
tested offers around the CHF 1.6385 level.
Australian dollar moved lower vis-√†-vis the U.S. dollar today as the Aussie
tested bids around the US$ 0.6900 figure and was capped around the $0.7030
level. Australian dollar bids are cited
around the US$ 0.6785 level.
Canadian dollar came off vis-√†-vis the U.S. dollar today as the greenback
tested offers around the C$ 1.2410 level and was supported around the C$ 1.2265
level. U.S. dollar bids are cited around
the C$ 1.2065 level.
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