Friday May 1, 2009 - 20:01:20 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (1 May 2009)
The euro moved higher vis-Ã -vis the U.S. dollar today as the single currency tested offers around the US$ 1.3325
level and was supported around the US$ 1.3220 level. Risk
appetite returned to the market ahead of Mondayâ€™s release of banksâ€™ stress
tests results in the U.S. There is speculation that Citigroup and Bank
of America will be strongly encouraged to raise additional capital by the U.S.
Treasury and there are whispers that four other U.S. banks may be forced to seek
additional capital. Data released in the
today saw the April ISM manufacturing index print at 40.1, up from 36.3 in
March and above expectations. The prices
and employment sub-indices also improved.
Additionally, March factory orders were off 0.9%, March building permits
were upwardly revised to -8.5%, and final April University of Michigan consumer
sentiment improved to 65.1 from 57.3 in March.
In eurozone news, European
markets were closed for the May Day holiday.
The European Central Bank is largely expected to reduce its main
refinancing rate target by 25bps next Thursday and may announce some
quantitative easing measures. Euro
bids are cited around the US$ 1.2765 level.
The yen depreciated vis-Ã -vis the U.S. dollar today as the
greenback tested offers around the Â¥99.55 level and was supported around the Â¥98.50
level. Data released in Japan overnight evidenced a
dramatically weakening economy. First, unemployment
climbed to its highest level in four years, printing at 4.8%. Second, the March core consumer price index
fell 0.1%, the first year-over-year decline since late 2007 and these data
evidence a greater potential of a deflationary spiral. Collectively, these data suggest Bank of
Japan may need to provide additional monetary stimuli and this will likely
increase pressure on the government to provide more fiscal stimuli. The Nikkei 225 yesterday stock index climbed
1.69% to close at Â¥8,977.37. 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¥132.35 level
and was supported around the Â¥130.30 level.
The British pound moved higher
vis-Ã -vis the yen as sterling bstested offers around the Â¥148.30 level while the Swiss franc moved higher vis-Ã -vis
the yen and tested offers around the Â¥87.60 level. In
Chinese news, the U.S. dollar ended at CNY 6.8230 in the over-the-counter
British pound appreciated vis-Ã -vis the U.S. dollar today as cable tested
offers around the US$ 1.4935 level and was supported around the $1.4750
level. U.K. markets were opened today
during the May Day holiday but will be closed on Monday. Data released in the U.K. today saw
the April CIPS manufacturing survey rally to 42.9 from 39.5 in March, an
indication the manufacturing sectorâ€™s weakness may be abating. Other data saw March total consumer lending
growth reach a new all-time low as the increase in mortgage lending nearly
halved from Februaryâ€™s level. In
contrast, however, mortgage approvals increased for the fourth consecutive
month. Total consumer lending expanded
by â‚¤885 million in March and mortgage lending expanded by â‚¤757 million. Also, March M4 money supply growth printed at
0.2% m/m and 17.8% y/y. Cable bids are
cited around the US$ 1.4735 level. The euro moved lower vis-Ã -vis the
British pound as the single currency tested bids around the â‚¤0.8885 level and
was capped around the â‚¤0.8985 level.
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