Friday July 31, 2009 - 20:03:43 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (31 July 2009)
The euro moved sharply higher vis-√†-vis the U.S.
dollar today as the single currency
tested offers around the US$ 1.4280 level and was supported around the $1.4065 level.
The common currency has been bid higher
from the US$ 1.40 handle since yesterday and finished the month on a strong
note, in tandem with strong gains in U.S. equity markets. Data released in the U.S. today saw
the June NAPM New York current business conditions index improve to 48.3 from
44.8 in June, down sharply from 61.3 in May.
Also, the Chicago ISM purchasing managers‚Äô index climbed to 43.4 in July
from 39.9 in June. Perhaps the most
important number of the day revealed U.S. gross domestic product shrank
1% in the second quarter, an improvement from -6.4% in the first quarter and
-5.4% in the fourth quarter. Other data saw the Q2 employment cost index
climb 0.4% q/q. Moreover, the personal
consumption expenditures index climbed 1.3% in Q2, up from -1.5% in Q1, while
the ex-food and energy component was up 2.0% in Q2, up from 1.1% in Q1. Federal Reserve Chairman Bernanke indicated
earlier this week that the U.S.
economy will begin to expand in the second half of the year. In
eurozone news, it was reported EMU-16 annual consumer price inflation was
off 0.6%, worse than June‚Äôs 0.1% decline.
Also, June EMU-16 unemployment rose to 9.4%, the highest level in a
decade but below expectations. Euro
bids are cited around the US$ 1.3900 figure.
The yen appreciated vis-√†-vis the U.S. dollar today as the
greenback tested bids around the ¬•94.50 level and was capped around the ¬•95.80
level. Data released in Japan today saw
the June jobless rate reach its highest level in six years at 5.4%. These data will not bode well for the Aso
government or the Liberal Democratic Party ahead of next month‚Äôs mandatory
general election and this could provide the opposition Democratic Party of
Japan with enough ammunition to advance further in the polls. Other data released today saw June nationwide
core consumer price inflation off 1.7% y/y, matching expectations, while the
July purchasing managers‚Äô output index printed at 54.7. Additionally, June overall housing starts
were off 32.4% y/y while June total construction orders were off 28.0%
y/y. The Nikkei 225 stock index climbed
1.89% to close at ¬•10,356.83. 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 ¬•135.55 level and was supported around the ¬•134.25 level. The
British pound moved higher vis-√†-vis the yen as sterling tested offers around
the ¬•158.55 level while the Swiss franc
moved higher vis-√†-vis the yen and tested offers around the ¬•88.80 level. In Chinese news, the U.S. dollar lost
ground vis-√†-vis the Chinese yuan as the greenback closed at CNY 6.8291 in the
over-the-counter market, down from CNY 6.8293.
Chinese officials made it clear this week that they will continue to
keep monetary policy loose and this supported international equity
markets. Traders had noted chatter
yesterday suggesting China
may begin to restrict bank lending further.
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