Thursday May 28, 2009 - 23:02:53 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (28 May 2009)
The euro strengthened vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3980
level and was supported around the US$ 1.3790 level. The common currency recovered from intraday
losses that were prompted by a decent U.S. durable goods report that saw
April headlne durable goods orders up 1.9%.
Other data saw the Chicago Midwest manufacturing index decline 1.1% in
April while April new home sales increased marginally, up 0.3% in April to an
annualized 352,000 level. On a yearly
basis, new home sales were down 34.0% y/y.
The uptick in nonthly housing sales activity represented the second time
in three months the housing market improved and could signal a reversal in the
fate of the beleaguered housing industry.
Additionally, weekly initial jobless claims fell to 623,000 while
continuing jobless claims continued to move higher. In
eurozone news, European Central Bank member Constancio said policymakers
have not made any decision about additional interest rate cuts. Data released in the eurozone today EMU-16
May economic confidence improve to 69.3 while German April plant, machinery
orders were off a real 58% y/y.
Moreover, German May unemployment ticked lower to 8.2% from 8.3% and the
April ILO unemployment rate increased to 7.7%.
Finally, the EMU-16 April leading indicator was up +1.8%. Euro
bids are cited around the US$ 1.3435 level.
The yen depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the ¬•97.25 level and was supported around the ¬•95.20
level. Today‚Äôs intraday high represented
the pair‚Äôs strongest showing since 12 May.
Traders are citing real-world money flows as one reason why the yen has
been declining as Japanese investors are said to be getting long foreign
bonds. Data released in Japan overnight
saw April retail sales decline for the eighth consecutive month, off 2.9% y/y,
while overall retail sales were off a revised 3.9% in March following
February‚Äôs 5.7% pullback. The Nikkei 225
yesterday stock index gained 0.13% to close at ¬•9,451.39. U.S. dollar offers are cited around the
¬•104.15 level. The euro moved higher vis-√†-vis the yen as the single currency tested
offers around the ¬•135.25 level and was supported around the ¬•131.70 level. The
British pound moved higher vis-√†-vis the yen as sterling tested offers around
the ¬•154.90 level while the Swiss franc
moved higher vis-√†-vis the yen and tested offers around the ¬•89.45 level. In Chinese news, U.S. Treasury
Secretary Geithner will visit China
this weekend and will meet with top Chinese officials early next week. Treasury officials said the Obama
administration is ‚Äúattuned to the
interests of our investors and plan to listen closely to what they have to
say.‚ÄĚ The Chinese government has recently been critical of the effects of U.S. policy and how they impact the value of China‚Äôs massive
foreign reserves, about 70% of which are said to be denominated in U.S.
dollars. The Treasury also said the
‚ÄúU.S. dollar will continue to play a very important role for a very long time.‚ÄĚ
British pound came off vis-√†-vis the U.S. dollar today as cable tested bids
around the US$ 1.5850 level and was capped around the $1.6015 level. Data released in the U.K. today saw April CBI
retail sales fall with the retail sales balance lower at -17 in May from +3 in
April. Bank of England Deputy
Governor Bean said the central bank is trying to improve access to financing
for small to medium-sized businesses. Cable
bids are cited around the US$ 1.5535 level.
The euro appreciated
vis-√†-vis the British pound as the single currency tested offers around the
‚ā§0.8765 level and was supported around the ‚ā§0.8655 level.
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