Tuesday October 27, 2009 - 21:33:20 GMT
Share This Story
GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (27 October 2009)
The euro came off vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4770
level and was capped around the $1.4925 level. Technically, today‚Äôs intraday
high was right around the 23.6% retracement of the move from $1.4480 to $1.5060
while today‚Äôs intraday low was right around the 50% of the same range. Traders reduced exposure to the common
currency after U.S.
October consumer confidence printed at 47.7, far below the revised 53.4 result
from September. Waning U.S. consumer sentiment also resulted in an
unimpressive day for U.S.
equities, further resulting in greater demand for the U.S. dollar. The employment outlook sub-index of the
consumer confidence reported worsened.
Next week‚Äôs October non-farm payrolls report will be closely scrutinized
to see if the deceleration in job losses continues. Other data released in the U.S. today saw
September building permits revised to -0.9% from -1.2. Additionally, the S&P/ Case-Shiller home
price index was off 11.32% y/y, better than July‚Äôs revised -13.26% reading, and
the October Richmond Fed manufacturing index printed at +7, down from a revised
+14 in October. Treasury Secretary
Geithner spoke today and said the U.S.
economy will become stronger the more quickly Europe
recovers. Speaking about the U.S.
dollar, Geithner added the U.S.
needs to maintain confidence in the U.S. dollar. In
eurozone news, EMU-16 September private sectoe lending fell 0.3% y/y, down
from August‚Äôs growth rate of +0.1%, and this marked the first decline in
private-sector lending since the advent of the euro. Other data released in the eurozone today saw
the M3 money supply rise 1.8% y/y. Euro
bids are cited around the US$ 1.4445 level.
The yen appreciated vis-√†-vis the U.S. dollar today as the
greenback tested bids around the ¬•91.70 level and was capped around the ¬•92.30
level. An unexpected sharp decline in U.S. consumer
confidence led to less demand for higher-yielding assets and to gains in the
yen. The possibility of a double-dip
recession could have a broad impact the yen and U.S. dollar, particularly if
global investors are less willing to continue diversifying into riskier assets
that offer more yield. Finance minister
Fujii reported he will decide in December on whether additional economic
measures are needed and said exports ‚Äúshould not drive‚ÄĚ economic policymaking.
Fujii added it is ‚Äúappropriate‚ÄĚ to have strong foreign exchange assets in its
reserves portfolio, reiterated low U.S. interest rates are behind the dollar‚Äôs
weakness, and suggested the Group of Seven ‚Äúshares the view‚ÄĚ that the U.S.
dollar is weak ‚Äď not the view that the yen is strong. Moreover, Fujii said he never voiced support
for a stronger yen and said the ‚Äúgiven state of the economy‚ÄĚ means it is too
early to discuss an exit policy from quantitative easing programs. The yen also gained ground on news that some
overseas investment trusts are maturing, possibly leading to repatriation of yen
assets. The big news involving Bank of
Japan over the past few trading sessions is that Bank of Japan believes
deflationary pressures will remain in Japan through at least 2011. The central bank now sees core consumer
prices excluding fresh food falling 0.5% in the year starting 1 April 2011 with
economic growth ramping up to 1.2%. It
remains probable the central bank will not increase interest rates anytime
soon. The discontinuation of BoJ‚Äôs emergency liquidity programs is sleighted
for the end of December and any indication of a change in that time frame could
impact the yen. It is also possible the
BoJ will indicate its schedule for these changes as early as this week. In addition, Japan‚Äôs Policy Board may release
its latest round of economic forecasts this week. The Nikkei 225 stock index lost 1.45% to close
at ¬•10,212.46. 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 ¬•135.65 level and was capped around
the ¬•137.35 level. The British pound moved lower vis-√†-vis the yen as sterling tested bids
around the ¬•149.90 level while the Swiss
franc moved lower vis-√†-vis the yen and tested bids around the ¬•89.65 level.
In Chinese news, the U.S. dollar weakened
vis-√†-vis the Chinese yuan as the greenback closed at CNY 6.8255 in the
over-the-counter market, down from CNY 6.8275. People‚Äôs Bank of China deputy
governor Yi Gang today said ‚Äúinflation is not a big risk for the nation in the
foreseeable future.‚ÄĚ Yesterday, Zhou
Hai, a division chief at People‚Äôs Bank of China in Harbin, released a report indicating the
central bank should sell dollars for euro and yen and diversify its massive
foreign reserves portfolio. While this
represented Zhou‚Äôs personal opinion and not PBoC policy, it was enough to move
the markets yesterday, especially given the size of China‚Äôs massive US$ 2.273 trillion
foreign reserve war chest. There remains
widespread speculation the central bank will accelerate the removal of monetary
stimuli and liquidity from the system, possibly resulting in further yuan
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."