Wednesday October 14, 2009 - 21:59:16 GMT
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Forex Market Commentary and Analysis (14 October 2009)
The euro appreciated vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4945
level and was supported around the $1.4835 level. The common currency continued
its ascent towards the psychologically-important US$ 1.50 figure with the U.S.
dollar unable to gain traction from positive or negative news. U.S. equities markets notched
impressive gains with the Dow Jones closing above the psychologically-imporant
10,000 level for the first time since October 2008. Minutes from the Federal Open Market
Committee‚Äôs September interest rate deliberations also contributed to the U.S.
dollar‚Äôs sell-off as a wide range of opinions from policymakers were
published. The minutes reported ‚Äúthe
cost of the economy turning out to be weaker than anticipated could be
relatively high.‚ÄĚ Some Fed officials wanted to increase the amount of
mortgage-backed debt the Fed will purchase while other policymakers wanted to
end the program early. Data released in
the U.S. today saw September retail sales off 1.5% , a sharp decline from
August‚Äôs revised +2.2% climb, while the ex-autos component was up 0.5% , down
from the revised +1.0% reading in August.
Other data saw August business inventories off 1.5%, down from 1.1% in
July, while the September import price index was up 0.1% m/m and off 12.0% y/y.
Fed Vice Chairman Kohn yesterday
reported the U.S.
economic recovery will be subdued with low growth keeping inflation under
control. In eurozone news, August output was up 0.9% m/m and off 15.4%
y/y. European Central Bank policymaker
Bini Smaghi reported the central bank may lift interest rates ‚Äúbefore the
business cycle reaches its peak.‚ÄĚ Data
released in the eurozone overnight saw August industrial production up 0.9% m/m
and decline 15.4% y/y. Euro
bids are cited around the US$ 1.4445 level.
The yen appreciated vis-√†-vis the U.S. dollar today as the
greenback tested bids around the ¬•88.80 level and was capped around the ¬•89.90
level. As expected, Bank of Japan kept its overnight call rate target unchanged
at 0.10% and upgraded its economic assessment.
BoJ Governor Shirakawa optimistically reported ‚Äúthe environment for
corporate debt issuance is in good shape, except low-rated debt. The need for policy to support the market is
receding.‚ÄĚ Traders interpreted this as a
further indication that BoJ leadership wants to end its emergency funding
programs and is considering exit strategies from these policies. Data released in Japan overnight saw the September
corporate goods price index climb 0.1% m/m and decline 7.9% y/y. In contrast to the BoJ‚Äôs assessment, finance
minister Fujii reported ‚Äúit is correct to say the economy on the whole is in a
more severe state. We need to try to understand the BoJ‚Äôs position.‚ÄĚ The Nikkei 225 stock index lost 0.16% to
close at ¬•10,060.21. U.S. dollar offers
are cited around the ¬•94.75 level. The euro moved higher vis-√†-vis the yen
as the single currency tested offers around the ¬•133.75 level and was supported
around the ¬•132.25 level. The British pound moved higher
vis-√†-vis the yen as sterling tested offers around the ¬•143.85 level while the Swiss franc moved higher vis-√†-vis
the yen and tested offers around the ¬•88.20 level. In Chinese news, the U.S. dollar weakened vis-√†-vis the Chinese
yuan as the greenback closed at CNY 6.8219 in the over-the-counter market, down
from CNY 6.8222. Chinese officials have
recently indicated they will stimulate domestic final private demand to reduce China‚Äôs
dependence on foreign trade. Data
released in China
overnight saw September‚Äôs trade surplus decline less than forecast, off 56% y/y
to US$ 12.9 billion.
The British pound appreciated vis-√†-vis the U.S. dollar today as
cable tested offers around the US$ 1.6025 level and was supported around the
$1.5900 figure. Prime Minister Brown said the government will ‚Äúenforce‚ÄĚ banks‚Äô
lending agreements to counter claims that smaller and mid-sized companies are
finding it more difficult to access credit.
Data released in the U.K.
today saw the September claimant count remain steady at 5%. Cable bids are cited around the US$ 1.5640
level. The euro moved lower vis-√†-vis the British pound as the single
currency tested offers around the ‚ā§0.9350 level and was supported around the
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