Tuesday November 3, 2009 - 22:41:50 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (3 November 2009)
The euro moved lower vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4625
level and was capped around the $1.4810 level. Data released in the U.S. today saw September
factory orders climb 0.9%, a sharp reversal from the August reading of -0.8%,
with the ex-transportation component up 0.9%.
These data were just above expectations and are supportive of the view
economy expanded in the third quarter. The
big news in the market this week will be Friday‚Äôs October non-farm payrolls
report with many forecasts centering on job losses of 175,000 and an
unemployment rate around 9.9%. An
unemployment print at or above 10.0% will be attention-grabbing and could fuel
some gains in the U.S. dollar. The
Federal Open Market Committee is expected to keep borrowing costs unchanged when
its policy decision is announced tomorrow.
The Fed could amplify its view on some of its sizable credit easing
programs and some dealers believe the Federal Open Market Committee could announce
it is inching closer to unwinding some of the massive monetary stimuli it has provided
to counter the U.S.
recession. In eurozone news, the European Union‚Äôs Lisbon Treasity will take
effect on 1 December following the Czech Republic‚Äôs accession. The European Commission today reported the
European Union‚Äôs economy is likely to contract 4.1% in 2009 and expand 0.7% in
2010 and 1.6% in 2011. The European
Commission expects the eurozone economy will contract about 4% in 2009 and
register 0.7% growth in 2010 and 1.5% growth in 2011. The European Central Bank is expected to keep
interest rates unchanged when its decision is announced on Thursday. Euro
bids are cited around the US$ 1.4445 level.
The yen depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the ¬•90.55 level and was supported around the ¬•89.85
level. Traders were non-committal over the yen today
with the currency gaining on some crosses and losing on others. A mixed day for global equities also contributed
to a lack of market direction for the pair.
Yomiuri quoted Bank of Japan Governor Shirakawa as saying
the government needed to restore ‚Äúa healthy balance‚ÄĚ to its finances, adding ‚Äúif
we take inflation measures to reduce the value of government bonds, it would
cause various problems.‚ÄĚ BoJ‚Äôs Policy
Board last week predicted core consumer prices will decline 1.5% in the year
ending March 2010, decline 0.8% in the fiscal year ending March 2011, and
decline 0.4% in the fiscal year ending March 2012. Yesterday, Shirakawa reported the central
bank‚Äôs policies remain ‚Äúconducive‚ÄĚ to the economic recovery. As expected, Bank
of Japan last week reported it will stop purchasing corporate debt at the end
of 2009, a move designed to phase out one of the emergency measures it adopted
as part of its quantitative easing policies.
The central bank also indicated it will only renew one additional
emergency program one final time through 31 March. The Nikkei 225 stock index lost 2.31%
yesterday to close at ¬•9,802.95. 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 ¬•131.70 level and was capped around the ¬•134.00 figure. The
British pound moved higher vis-√†-vis the yen as sterling tested offers
around the ¬•148.55 level while the Swiss
franc moved lower vis-√†-vis the yen and tested bids around the ¬•87.10 level.
In Chinese news, the U.S. dollar strengthened
vis-√†-vis the Chinese yuan as the greenback closed at CNY 6.8215 in the
over-the-counter market, up from CNY 6.8214. China Banking Regulatory Commission instructed
banks to ‚Äúkeep their lending at a reasonable level in the fourth quarter.‚ÄĚ The Chinese media reported People‚Äôs Bank of
China is likely to adopt a tighter monetary policy. PBoC Governor Zhou on Friday reported the
central bank should maintain a ‚Äúmoderate easy monetary policy.‚ÄĚ Data released in China yesterday saw October
manufacturing expanded at its fastest pace in eighteen months and eighth
consecutive month with the CFLP Purchasing Managers‚Äô Index rallying to 55.2
from 54.3 in September. It was also
reported that PBoC is establishing a new department to manage its foreign
British pound moved higher vis-√†-vis the U.S. dollar today as cable tested offers
around the US$ 1.6455 level and was supported around the $1.6260 level. Cable
was given earlier in the Australasian session but North American dealers lifted
the pair to intraday highs. Data released in the U.K.
today saw Halifax
October house prices climb for the fourth consecutive month, up 1.2% m/m from a
revised 1.5% m/m in September. Bank of
England‚Äôs Monetary Policy Committee will announce their interest rate decision
on Thursday and while the MPC is expected to keep interest rates unchanged,
they could broaden their bond-buying program by as much as ‚ā§25 billion. The European Commission today forecast the U.K. economy
will fare better than the eurozone economy over the next two years. Cable bids
are cited around the US$ 1.6240 level. The euro moved lower vis-√†-vis the
British pound as the single currency tested bids around the ‚ā§0.8935 level and
was capped around the ‚ā§0.9060 level.
Euro bids are cited around the ‚ā§0.8780 level.
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