Thursday August 20, 2009 - 20:00:27 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (20 August 2009)
The euro moved higher vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4275
level and was supported around the $1.4200 figure. European Central Bank member Bini Smaghi
reiterated the central bank expects inflation to remain low over the coming
year and will ‚Äúdo everything it takes to prevent it from rising.‚ÄĚ He also indicatyed the ECB does not expect
EMU-16 growth before the middle of 2010.
Notably, EMU-16 GDP growth was -0.1% q/q, up from the record decline of
-2.5% in the prior quarter. The euro moved higher partially on a reound in
Chinese equity markets as the Shanghai Composite was up 4.5% today following
recent flirtations with bear market territory.
Other major news today focused on a warning from Germany‚Äôs finance
ministry that the economic stabilization may not hold. It was reported last week that German GDP
improved unexpectedly in the second quarter.
In U.S. news, data released
in the U.S.
today saw the Philadelphia Fed‚Äôs manufacturing survey improve to 4.2 from -7.5
in July while July leading economic indicators were up 0.6%. Also, weekly initial jobless claims rose to
576,000 from a revised 561,000 and continuing jobless claims printed at 6.241
million, up from a revised 6.239 million.
bids are cited around the US$ 1.3900 figure.
The yen depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the ¬•94.55 level and was supported around the ¬•93.85
level. Bank of Japan Policy Board member
Mizuno warned the domestic economic recovery could decelerate in the autumn,
adding a sustained economic recovery would require ‚Äúsupport from governments
and central banks.‚ÄĚ He said the BoJ
should prepare Japan
for an extended bout with deflation, warning that ‚Äúprice declines will ease
only at a moderate pace‚ÄĚ in the year starting April 2011. He also warned the central banks lacks the
tools needed to ‚Äúprop up prices and stimulate economic growth in the short
term.‚ÄĚ The yen‚Äôs direction is uncertain
given the real possibility that economic growth may slow further. On the political front, a Democratic Party of
Japan victory at the general election on 30 August could result in upward
pressure on the yen and possibly more supply of Japanese government bonds. The Nikkei 225 stock index climbed 1.76% to
close at ¬•10,383.41. 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 ¬•134.60 level and was supported
around the ¬•133.40 level. The British pound moved higher
vis-√†-vis the yen as sterling tested offers around the ¬•156.70 level while the Swiss franc moved higher vis-√†-vis
the yen and tested offers around the ¬•88.65 level. In Chinese news, the U.S. dollar lost ground vis-√†-vis the Chinese
yuan as the greenback closed at CNY 6.8273 in the over-the-counter market, down
from CNY 6.8320.
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