Forex Market Commentary and Analysis (28 June 2010)
The euro depreciated vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2330
level and was capped around the $1.2395 level.The common currency moved lower as traders were unimpressed with the
lack of commitment to reducing global deficits at the Group of Twenty meeting
in Toronto this weekend.Spanish and
Italian debt declined today on account of the lack of a global agreement on
deleveraging global output from massive fiscal spending programs and new debt
issuance.G-20 officials reported banks
needs to raise capital ‚Äúsignificantly‚ÄĚ and added countries will need to phase
in new rules by the end of 2012.German
Chancellor Merkel said the G-20 announcement ‚Äúis a success (because)
industrialized countries as a group accepted this.‚ÄĚThe G-20 noted their ‚Äúgoal‚ÄĚ is to reduce
deficits in half by 2013.Bank for
International Settlements General Manager Caruana indicated banks‚Äô stress tests
may ‚Äúpoint to the need to take action‚ÄĚ and added it will then ‚Äúbe necessary to
take action.‚ÄĚBIS Chairman Noyer noted ‚ÄúThe
main task of the public sector is to now design policies that minimize the
risks of future financial crisis and promote sustainable growth.In this regard, international cooperation
will continue to be essential.‚ÄĚData released
in the eurozone today saw May M3 money supply growth decline 0.2% y/y.Provisional June consumer price inflation
data for several German states moderated while the national June CPI figures
came in at +0.1% m/m and +0.9% y/y.On a
harmonized basis, CPI was was up 0.0% m/m and 0.8% y/y.French June consumer confidence data will be
released tomorrow.In U.S. news, data released today saw the May Chicago Fed national
activity index move lower to 0.21.Also,
May personal income ticked lower to +0.4% while May personal spending moved
higher to +0.2%.Additionally, the May
PCE deflator ticked lower to +1.9% and May core PCE was up 0.2% m/m and 1.3%
y/y.Some traders believe the
disinflationary pressures in the U.S. economy could worsen and lead to the Fed ‚Äúprint
money.‚ÄĚThe Obama administration‚Äôs plan
to overhaul financial laws was set back today at least temporarily following
the death of Senator Byrd.Euro offers
are cited around the US$ 1.2570 level.
The yen depreciated vis-√†-vis the U.S. dollar today as the
greenback tested offers around the ¬•89.45 level and was supported around
the ¬•89.25 level. Bank of Japan Deputy
Governor Nishimura reported global financial regulations need to be overhauled
but warned any ‚Äúhasty implementation‚ÄĚ may inhibit the ‚Äúfragile‚ÄĚ economic
recovery.Nishimura also said the new
global regulations need to take into account regional economic differences.Data released in Japan overnight saw May
retail trade worsen to -2.0% m/m and +2.8% y/y while May large retailers‚Äô sales
worsened to 4.0%.Data to be released in
Japan overnight include May household spending, the May jobless rate, and May
industrial production.Bank of Japan is
expected to keep monetary policy very accommodative and will continue to face
pressure from the government to ease policy further, possibly through the
purchase of additional Japanese government bonds.The Nikkei 225 stock index lost 0.45% to
close at ¬•9,693.94.U.S. dollar bids are
cited around the ¬•98.45 level.The euro
moved lower vis-√†-vis the yen as the single currency tested bids around the
¬•110.15 level and was capped around the ¬•110.80 level.The
British pound moved higher vis-√†-vis the yen as sterling tested offers
around the ¬•134.70 level while the Swiss
franc moved higher vis-√†-vis the yen and tested offers around the ¬•82.55 level.
In Chinese news, the U.S. dollar appreciated
vis-√†-vis the Chinese yuan as the greenback closed at CNY 6.7959 in the
over-the-counter market, up from CNY 6.7921. Data released in China overnight saw the May
leading index decline to 103.44 from the prior reading of 104.36.Chinese yuan forwards reversed a four-day
decline after the U.S. government predicted the yuan would appreciate
further.President Obama speculated the
yuan is ‚Äúgoing to go up significantly‚ÄĚ at the Group of Twenty meeting this
weekend.People‚Äôs Bank of China reported
it will improve the efficiency and quality of financial information.
British pound depreciated vis-√†-vis the U.S. dollar today as cable tested bids
around the US$ 1.5015 level and was capped around the US$ 1.5070 level. Data released in the U.K. today saw the June
Hometrack housing survey up 0.1% m/m and 2.1% y/y.Data to be released tomorrow include May net
consumer credit, May net lending secured on dwellings, May mortgage approvals,
and May money supply data.Former Bank
of England Monetary Policy Committee member Blanchflower warned the U.K.
economy could move into a double dip recession given its current budget.Chancellor of the Exchequer Osborne recently
reported the government plans to reduce spending significantly, reduce welfare payments,
and increase taxes on banks.Cable bids
are cited around the US$ 1.4620 level.The euro depreciated vis-√†-vis the
British pound as the single currency tested bids around the ¬£0.8185 level and
was capped around the ¬£0.8235 level.
franc appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids
around the CHF 1.0825 level and was capped around the CHF 1.0940 level. The UBS consumption indicator will be released
tomorrow followed by the June KOF leading indicator on Wednesday.SNB will publish balance of payments data for
Q1 tomorrow.Swiss National Bank member
Danthine reported deflationary pressures have ‚Äúpractically disappeared.‚ÄĚ Danthine added ‚ÄúIf the need (to raise interest
rates) was felt, the SNB would be able to react very quickly. But currently, we
can work without having to hurry.‚ÄĚSwiss
National Bank is expected to intervene considerably less in the coming months
after amassing a very large portfolio of euro reserves to prevent the franc
from appreciating too much.U.S. dollar
offers are cited around the CHF 1.1470 level.The euro depreciated
vis-√†-vis the Swiss franc as the single currency tested bids around the CHF 1.3355
level while the British pound moved lower
vis-√†-vis the Swiss franc and tested bids around the CHF 1.6295 level.
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Mon 18 Dec
10:00 EZ- final HICP Tue 19 Dec
09:00 DE- IFO Survey
13:30 US- Housing Starts/Permits
13:30 US- Current Account Wed 20 Dec
15:00 US- Existing Homes Sales
15:30 US- EIA Crude Thu 21 Dec
03:00 JP- BOJ Decision
13:30 CA- CPI & Retail Sales
13:30 US Weely Jobless
13:30 US- GDP Fri 22 Dec
09:30 US- GB- GDP
13:30 US- core PCE Deflator & Presonal Income
15:00 US- New Homes Sales
15:00 US- final University of Michigan
17:00 US- early Closes Mon 25 Dec
00:00 Christmas Holidays
Potential Trading Opportunities
POTENTIAL PRICE RISK: Medium Mon--10:00 GMT-- EZ- final November HICP. flash data are rarely changed.
POTENTIAL PRICE RISK: HIGH- Medium Tue --09:00 GMT-- DE- IFO Survey. Key report but usually not a market-mover
POTENTIAL PRICE RISK: HIGH- Medium- Tue --13:30 GMT-- US- Housing Starts and Permits. Leading indicators of activity
POTENTIAL PRICE RISK: HIGH-Medium- Wed --15:00-- US- Existing Homes Sales. Top Housing statistic
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