Monday December 11, 2006 - 16:24:31 GMT
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Forex and Commodity Market Commentary and Analysis (11 December 2006)
The euro came off vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3130 level and was capped around the $1.3230 level. Technically, today‚Äôs intraday low was right around the 38.2% retracement of the move from $1.2760 to $1.3365. Traders await tomorrow‚Äôs interest rate decision from the Federal Open Market Committee with most traders believing policymakers will keep the federal funds target rate unchanged at 5.25%. A Bank for International Settlements quarterly report published today reported OPEC members and Russia have reduced their U.S. dollar holdings by 2% between Q1 and Q2 in favour of the euro. In eurozone news, French October industrial output was off 0.1% m/m and Germany‚Äôs DIW research institute reported the German economy will expand a reduced 0.3% in Q4, down from 0.6% in Q3. European Central Bank member Quaden said the euro is ‚Äúnot in uncharted territory‚ÄĚ and added ‚Äúthere is no need in some European countries to get into a constant panic about exchange and interest rates.‚ÄĚ Euro bids are cited around the US$ 1.3135 level.
The yen weakened vis-√†-vis the U.S. dollar today as the greenback tested offers around the ¬•117.15 level and was supported around the ¬•116.15 level. Stops were hit above the ¬•116.90 level, representing the 61.8% retracement of the move from ¬•118.45 to ¬•114.45. A report in the Japanese press that Bank of Japan will not lift interest rates this month weakened the yen. Data released in Japan today saw the consumer confidence index improve to 48.7 in November from 48.2 in October, the second consecutive monthly improvement. Traders await the release of Friday‚Äôs quarterly tankan survey from BoJ with most economists expecting a slight improvement in business sentiment. The Nikkei 225 stock index gained 0.67% to close at ¬•16,527.99. Dollar bids are cited around the ¬•116.65 level. The euro moved higher vis-√†-vis the yen as the single currency tested offers around the ¬•154.55 level and was supported around the ¬•153.20 level. The British pound and Swiss franc appreciated vis-√†-vis the yen as the crosses tested offers around the ¬•228.50 and ¬•97.10 levels, respectively. The Chinese yuan weakened vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.8350 in the over-the-counter market, up from CNY 7.8245. U.S. Treasury Secretary Paulson and Federal Reserve Chairman Bernanke will visit China this week and there is a report that Paulson will push China to open its markets further. Data released in China today saw the consumer price index rise 1.3% y/y in the January ‚Äď November period. Also, it was reported that China registered a US$ 22.92 billion trade surplus last month. People‚Äôs Bank of China Governor Zhou reported a pick-up in inflation is a ‚Äúpossibility‚ÄĚ and it was also reported PBOC will issue a daily benchmark interest rate from 1 January.
The British pound came off marginally vis-√†-vis the U.S. dollar today as cable tested offers around the US$ 1.9565 level and was supported around the $1.9465 level. Technically, today‚Äôs intraday high was right around the 38.2% retracement of the move from $1.9725 to $1.9465. Data released in the U.K. today saw November input prices climb 0.1% m/m and 2.8% y/y, the smallest annual increase since March 2004, while November producer prices were unchanged m/m and up 1.8% y/y. Also, Righmove reported average U.S. house prices climbed at their highest rate in more than two years this month while government figures saw October house prices climb at an annual rate of 8.6%. Additionally, the October global trade in goods balance printed at -‚ā§6.3 billion, the narrowest level since April. Many U.K. data will be released this week including CPI data tomorrow. Cable bids are cited around the US$ 1.9460 level. The euro moved higher vis-√†-vis the British pound as the single currency tested offers around the ‚ā§0.6770 level and was supported around the ‚ā§0.6745 level.
The Swiss franc gained marginal ground vis-√†-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2020 level and was capped around the CHF 1.2095 level. Stops were hit below the CHF 1.2030 level, representing the 23.6% retracement of the move from CHF 1.2535 to CHF 1.1875. Traders await Swiss National Bank‚Äôs interest rate decision on Thursday along with comments from SNB Chairman Roth. Dollar offers are cited around the CHF 1.2130 level. The euro and British pound weakened vis-√†-vis the Swiss franc as the crosses tested bids around the CHF 1.5885 and CHF 2.3490 levels, respectively.
The Australian dollar came off vis-√†-vis the U.S. dollar today as the Aussie tested bids around the US$ 0.7810 level and was capped around the $0.7855 level. Australian dollar bids are cited around the $0.7755 level.
The Canadian dollar gained marginal ground vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.1475 level and was capped around the C$ 1.1505 level. Data released in Canada today saw labour productivity decline 0.1% in Q3. Traders await comments from Bank of Canada Governor Dodge later today. U.S. dollar offers are cited around the C$ 1.1570 level.
The New Zealand dollar moved higher vis-√†-vis the U.S. dollar today as the kiwi tested offers around the US$ 0.6885 level and was supported around the $0.6840 level. New Zealand dollar bids are cited around the US$ 0.6710 level.
Gold gained ground vis-√†-vis the U.S. dollar today as the yellow metal tested offers around the US$ 629.75 level and was supported around the $ 623.35 level. Silver gained ground vis-√†-vis the U.S. dollar as the pair tested offers around the $ 13.86 level and was supported around the $13.67 level.
Crude oil weakened vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for January delivery tested bids around the US$ 61.29 level and was capped around the $62.24 level. A Saudi media source quoted OPEC officials as indicating supply level would not be changed when officials convene in Nigeria on Thursday. U.S. oil inventories remain elevated and these are also keeping the price depressed.
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