Friday July 17, 2009 - 21:12:38 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (17 July 2009)
The euro lost ground vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4065
level and was capped around the $1.4150 level. Better-than-expected earnings at major U.S. financial institutions including Citigroup
and Bank of America led to a bid U.S. equity markets but the common
currency was still kept on the defensive.
Two possible terrorist attacks in Jakarta
overnight contributed to the dollar‚Äôs bid on safe haven demand. Data released in the U.S. today saw June
housing starts climb 3.6% m/m to an annualized rate of 582,000 units, the
highest level since November 2008 and above the revised May print of
562,000. Also, June building permits
improved to 563,000 from 518,000 in May.
Data to be released in the U.S. on Monday include June leading
indicators and the June Chicago Fed‚Äôs national activity index. All attention
will be focused on Federal Reserve Chairman Bernanke‚Äôs semi-annual testimony to
Congress next week. Some Fed-watchers believe Bernanke may signal an end to the
Fed‚Äôs massive credit easing policies.
Bernanke is likely to note that gross domestic product growth is not as
weak as originally reported but that the U.S. labour sector is weaker than
originally thought. U.S. economic
official Summers today reported risks to banks have been reduced over the past
six months and said he is not alarmed on inflation yet. Former Federal Reserve Governor Meyer does
not see a return to ‚Äúfull‚ÄĚ employment until 2015. An improvement in the U.S. housing
and construction industries would signal a major inflection pount in the
economy. In eurozone news, the EMU-16 May trade surplus narrowed to ‚ā¨1.9
billion from ‚ā§2.7 billion in April. Euro
bids are cited around the US$ 1.3435 level.
The yen depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the ¬•94.35 level and was supported around the ¬•93.50
level. The yen initially appreciated
overnight following two bomb blasts in Jakarta
and renewed concerns that troubled U.S. commercial lending giant CIT
Group may be forced to file for bankruptcy.
Japanese financial markets will be closed on Monday and will reopen on
Tuesday thus yen liquidity will be reduced.
Bank of Japan reported Governor Shirakawa will visit China between 21-24 July. The yen initially gained following possible
terrorist blasts overnight in Jakarta
at two U.S.-owned hotels. The Nikkei 225
stock index climbed 0.55% to close at ¬•9,395.32. 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 ¬•133.45 level and was supported around the ¬•131.70
level. The British pound moved lower vis-√†-vis the yen as sterling tested bids
around the ¬•152.40 level while the Swiss
franc moved lower vis-√†-vis the yen and tested bids around the ¬•86.60 level.
In Chinese news, the U.S. dollar strengthened
vis-√†-vis the Chinese yuan as the greenback closed at CNY 6.8304 in the
over-the-counter market, up from CNY 6.8303.
U.S. Commerce Secretary Locke reported the U.S.
to liberalize its yuan convertibility and move to a free-floating exchange rate
mechanism as quickly as possible.
British pound depreciated vis-√†-vis the U.S. dollar today as cable tested bids
around the US$ 1.6265 level and was capped around the US$ 1.6445 level. Bank of England Deputy Governor Bean said
the central bank‚Äôs quantitative easing policy is best assessed on a quarterly
basis rather than on a monthly basis.
Bean also reiterated the U.K.
economy may grow by the end of 2009. Cable
bids are cited around the US$ 1.6185 level.
The euro moved higher
vis-√†-vis the British pound as the single currency tested offers around the
‚ā§0.8655 level and was supported around the ‚ā§0.8590 level.
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