Thursday September 24, 2009 - 21:18:31 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (24 September 2009)
The euro weakened vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4625
level and was capped around the $1.4800 figure. The Federal Reserve, European Central Bank,
Bank of England, Bank of Japan, and Swiss National Bank today announced they
will extend their liquidity-providing facilities and operations through January
2010. The common currency was partially
dragged lower by comments from Bank of England Governor King who said the weaker
sterling has been ‚Äúhelpful‚ÄĚ in reducing economic and financial imbalances. News that BoE would meet with London-based
economists on Tuesday to discuss economic policies. Data released in the eurozone today saw the
French number of unemployed rise 0.7% m/m to 2.553 million. Also, the German Ifo business confidence
index rose to 91.3 in September from 90.5 in August, the sixth consecutive
improvement but below expectations. The
German economy, however, could suffer from political uncertainty, difficult
credit conditions, and a weakening labour market. The ECB‚Äôs September monthly bulletin reported
the EMU-16 economy is stabilizing. ECB
member Quaden reported the worst of the financial crisis is over but said
business may not return to normal. In U.S. news, data released in the U.S.
today saw August existing home sales off 2.7% to an annualized 5.10 million
rate. Weekly initial jobless claims fell to 530,000 from a revised 551,000
while continuing claims fell to 6.138 million from a revised 6.261
bids are cited around the US$ 1.3900 figure.
The yen appreciated vis-√†-vis the U.S. dollar today as the
greenback tested bids around the ¬•90.35 level and was supported around the ¬•91.60
level. Bank of Japan announced it will extend
liquidity provision measures through January 2010 to cushion money markets in
concert with other central banks. Yen
borrowing costs declined to a three-year low with three-month Libor at 0.34750,
the lowest level since June 2006.
Similarly, U.S. dollar three-month Libor printed at a record low of
0.28500. U.S. dollar rates have been
below Japanese dollar rates since 24 August and that has resulted in the U.S.
dollar being used as a carry trade funding currency. Data released in Japanese overnight saw the
July all industry activity index climb +0.5% with industrial production up 2.1%
m/m and the tertiary index up +0.6% m/m.
Additionally, the August trade surplus came in stronger-than-expected at
¬•187.5 billion. The Nikkei 225 stock
index gained 1.67% to close at ¬•10,544.22.
U.S. dollar offers are cited around the ¬•94.75 level. The
euro moved lower vis-√†-vis the yen as the single currency tested bids around
the ¬•133.35 level and was capped around the ¬•134.65 level. The
British pound moved lower vis-√†-vis the yen as sterling tested bids around
the ¬•146.30 level while the Swiss franc moved
lower vis-√†-vis the yen and tested bids around the ¬•88.15 level. In Chinese news, the U.S. dollar lost ground
vis-√†-vis the Chinese yuan as the greenback closed at CNY 6.8218 in the
over-the-counter market, down from CNY 6.8256.
People‚Äôs Bank of China
Deputy Governor Hu yesterday reported G20 nations should consider establishing
an international wealth fund to invest a portion of members‚Äô current account
surpluses. There is continued
speculation among dealers that Chinese monetary authorities may allow the yuan
to appreciate further vis-√†-vis the U.S. dollar.
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