Thursday September 17, 2009 - 22:43:18 GMT
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Forex Market Commentary and Analysis (17 September 2009)
The euro extended recent gains vis-Ă -vis the U.S.
dollar today as the single currency
tested offers around the US$ 1.4765 level and was supported around the $1.4685
level. Data released in the U.S.
today saw August housing starts improve to 598,000 from a revised July print of
589,000 while August building permits improved to 579,000 from a revised July
print of 564,000. Also, weekly initial
jobless claims fell to +545,000 from a revised +557,000 while continuing jobless
claims were higher than expected at 6.230 million. Moreover, the September
Philadelphia Fed survey printed at 14.1, an improvement from the August reading
of 4.2. All eyes will be on next weekâ€™s
Group of Twenty meeting in Pittsburgh
to see if policymakers make any progress on some countriesâ€™ initiative to
replace the U.S. dollar as the main international reserve currency. In
eurozone news, German finance minister Steinbrueck warned against â€śtoo much
euphoriaâ€ť with regard to economic expectations.
Steinbrueck also said there are no current initiatives to withdraw
fiscal stimuli. On a pessimistic note,
he added â€śWe have no credit
crunch in Germany
on a macroeconomic level, but on a microeconomic level we have it, and it could
intensify.â€ť Concerning the Merkel
governmentâ€™s plan to cut taxes after the 27 September general election, he
noted those plans are â€śunreal.â€ť Data
released in the eurozone today saw July construction output fall 2% m/m and
10.8% y/y. Also, the EMU-16 July trade
surplus improved to â‚¬6.8 billion. Euro
bids are cited around the US$ 1.3900 figure.
The yen depreciated vis-Ă -vis the U.S. dollar today as the
greenback tested offers around the ÂĄ91.60 level and was supported around the ÂĄ90.50
level. As expected, Bank of Japan
upgraded its assessment of the Japanese economy and noted the economy is
â€śshowing signs of recovery.â€ť The central
bank kept the unsecured overnight call rate unchanged at 0.1% and maintained
their emergency lending programs for financial institutions and companies. The â€śshowing signs of recovery statementâ€ť
represented an upgrade from last monthâ€™s â€śstopped worseningâ€ť statement. BoJ Governor Shirakawa reported that while
fiscal stimulus measures have been helpful, policymakers â€śare not confident
about the strength of private final demand after those effects fade.â€ť Shirakawa also noted BoJ officials are
monitoring the yenâ€™s recent appreciation.
Similarly, BoJ Deputy Governor Yamaguchi noted â€śHigh downside risks to the economy are continuing,
reflecting such things as the international finance and economic situation, and
medium- to long-term growth expectations of companies.â€ť Data released in Japan today saw the July tertiary
index improve while the Ministry of Financeâ€™s large company business sentiment
survey revealed Japanese manufacturers turned optimistic about the economy for
the first time in nearly two years.
Yesterday, incoming finance minister Fujii talked about recent
movements in exchange rates, reporting they â€śare not fluctuating rapidly
now.â€ť There is definitely less concern
in the market now over actual intervention than there was when the Liberal
Democratic Party was in charge. Fujii
also said it is important to respect the central bankâ€™s independence and said
the central bank should not finance spending.
The Nikkei 225 stock index climbed 1.08% to close at ÂĄ10,443.80. U.S. dollar offers are cited around the
ÂĄ94.75 level. The euro moved higher vis-Ă -vis the yen as the single currency
tested offers around the ÂĄ134.75 level and was supported around the ÂĄ133.40 level. The
British pound moved lower vis-Ă -vis the yen as sterling tested bids around
the ÂĄ149.55 level while the Swiss franc moved
higher vis-Ă -vis the yen and tested offers around the ÂĄ88.75 level. In Chinese news, the U.S. dollar gained
ground vis-Ă -vis the Chinese yuan as the greenback closed at CNY 6.8200 in the
over-the-counter market, up from CNY 6.8187.
Yesterdayâ€™s U.S. TICS investment flows data revealed China was a net buyer of U.S. government
assets last month.
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