Wednesday May 6, 2009 - 22:45:41 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (6 May 2009)
The euro moved marginally higher vis-Ã -vis the U.S.
dollar today as the single currency
tested offers around the US$ 1.3375 level and was supported around the US$ 1.3245
level. European and North American names
lifted the common currenct to intraday highs before late-day profit-taking
ensued. The pair got a lift after it was
reported that ADP April private sector jobs were down a less-than-expected
491,000, much lower than forecast and lower than the downwardly revised 708,000
figure for March. The headline U.S. April
non-farm payrolls report will be released on Friday and many forecasts are
calling for around a 580,000 to 610,000 decline in jobs in addition to the
663,000 loss already announced for March.
Federal Reserve Chairman Bernanke yesterday reported he expects the
unemployment rate to top out at a 9% handle even after the U.S. economic
recovery has started. The big item on
tradersâ€™ radar tomorrow is the release of U.S. banksâ€™ stress tests
results. There is widespreads talk that
around ten of the nineteen largest banks â€“ including Citigroup, Bank of
America, and Wells Fargo â€“ will be asked to raise additional capital to support
their financial positions. There is talk
that Bank of America may need to raise as much as US$ 34 billion in additional
capital. In eurozone news, EMU-16 March retail sales were off 0.6% m/m and
4.2% y/y, their largest yearly decline on record. The European Central Bank is expected to
announce that it is reducing its main refinancing rate by 25bps to 1.00% tomorrow. Some dealers believe the ECB may announce
quantitative easing measures. Other data
released today saw EMU-16 April services PMI improve to 43.8 from 40.9 in
March. Also weighing heavily on the
common currency today was an announcement that Standard & Poors reduced its
ratings for five of six German rated Landesbanks, an event that increased risk
bids are cited around the US$ 1.2765 level.
The yen appreciated vis-Ã -vis the U.S. dollar today as the
greenback tested bids around the Â¥97.95 level and was capped around the Â¥99.05
level. Australian Asian names took the
pair to intraday lows and European and North American names pushed the
greenback to intraday highs before ceding gains. Bank of Japanâ€™s Policy Board convenes tonight
and is expected to keep interest rates unchanged. Some dealers believe the BoJ could soon
announce additional quantitative easing measures to counter the significant
economic pullback in Japan. The Nikkei 225 yesterday stock index will
next reopen at Â¥8,977.37. U.S. dollar
offers are cited around the Â¥104.15 level.
The euro moved lower
vis-Ã -vis the yen as the single currency tested bids around the Â¥129.85 level
and was capped around the Â¥132.40 level.
The British pound moved lower
vis-Ã -vis the yen as sterling tested bids around the Â¥146.95 level while the Swiss franc moved lower vis-Ã -vis
the yen and tested bids around the Â¥86.10 level. In Chinese news, the U.S. dollar closed at CNY 6.8180 in the
over-the-counter market, down from CNY 6.8190.
British pound depreciated vis-Ã -vis the U.S. dollar today as cable tested bids
around the US$ 1.5150 level and was supported around the $1.4990 level. Data released in the U.K. today saw the
CIPS PMI services index improve to 48.7 from 45.5 in March, much
better-than-expected. Also, Halifax April house
prices were off 1.7% m/m and off 17.7% y/y.
NIESR reported the U.K.
economy will likely contract by 4.3% in 2009, considerably worse than the
governmentâ€™s current projections. NIESR
also sees the U.K.
economy growing 0.9% in 2010 and 2.3% in 2011.
Cable bids are cited around the US$ 1.4735 level. The
euro moved lower vis-Ã -vis the British pound as the single currency tested bids
around the â‚¤0.8800 figure and was capped around the â‚¤0.8875 level.
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