Monday December 18, 2006 - 14:33:25 GMT
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GCI Financial - www.gcitrading.com
Forex and Commodity Market Commentary and Analysis (18 December 2006)
The euro appreciated vis-Ã -vis the U.S. dollar today as the single currency tested offers around the US$ 1.3120 level and was supported around the $ 1.3075 level. Todayâ€™s intraday range was thin especially after the common currency gave back about three big figures at the end of last week. Data released in the U.S. today saw the Q3 current account deficit print at â€“US$ 225.55 billion, right around expectations and wider than the â€“US$ 218.4 billion deficit in Q2. Other data released to be released today include the December NAHB index. In eurozone news, the EMU-12 October trade surplus expanded to â‚¬2.4 billion from â‚¬2.1 billion in September. European Central Bank President Trichet was quoted as reiterating the ECB would do what is necessary to maintain price stability and characterized interest rates as accommodative. Most trades believe the ECB will tighten monetary policy at least one more time in 2007. The European Commissionâ€™s quarterly economic report noted EMU-12 economic growth has slowed in Q3. Traders await the release of Germanyâ€™s Ifo business expectations survey tomorrow. Euro bids are cited around the US$ 1.3030 level.
The yen appreciated vis-Ã -vis the U.S. dollar today as the greenback tested bids around the Â¥117.70 level and was capped around the Â¥118.10 level. Technically, todayâ€™s intraday low was right around the 38.2% retracement of the move from Â¥116.65 to Â¥118.30. Traders await the conclusion of Bank of Japanâ€™s two-day Policy Board meeting overnight followed by comments from BoJ Governor Fukui. Most dealers do not expect BoJ to lift overnight rates from +0.25% and Fukuiâ€™s comments will be closely scrutinized to see when the central bank will change policy. Data released in Japan today saw November department store sales decline for the second consecutive month, off 0.2% y/y to Â¥687.3 billion. The Nikkei 225 stock index climbed 0.28% to close at Â¥16,692.11. Dollar bids are cited around the Â¥117.40/ Â¥116.85 levels. The euro came off vis-Ã -vis the yen as the single currency tested bids around the Â¥154.10 level and was capped around the Â¥154.65 level. The British pound and Swiss franc weakened vis-Ã -vis the yen as the crosses tested bids around the Â¥229.40 and Â¥96.35 levels, respectively. The Chinese yuan appreciated vis-Ã -vis the U.S. dollar as the greenback closed at CNY 7.8202 in the over-the-counter market, down from CNY 7.8275, and at CNY 7.8201 in the exchange-traded market. The Chinese media reported Chinaâ€™s consumer price index is expected to be up 1.5% for all of 2006 and the media also reported urban fixed-asset investment growth is likely to recede in 2007 to about 22%.
The British pound weakened vis-Ã -vis the U.S. dollar today as cable tested bids around the US$ 1.9485 level and was capped around the $ 1.9580 level. Traders await the release of the Bank of England Monetary Policy Committeeâ€™s December meeting minutes on Wednesday. Traders are now fully pricing in one +25bps of MPC tightening in 2007 along with the possibility of a second +25bps hike. Cable bids are cited around the US$ 1.9460/ 1.9340 levels. The euro moved higher vis-Ã -vis the British pound as the single currency tested offers around the â‚¤0.6720 level and was supported around the â‚¤0.6695 level.
The Swiss franc came off marginally vis-Ã -vis the U.S. dollar today as the greenback tested offers around the CHF 1.2220 level and was supported around the CHF 1.2185 level. Technically, todayâ€™s intraday high was right around the 38.2% retracement of the move from CHF 1.2770 to CHF 1.1875. Data released in Switzerland today saw Q3 industrial production expand 8.2% y/y. Dollar offers are cited around the CHF 1.2285/ 1.2325 levels. The euro moved higher vis-Ã -vis the Swiss franc as the single currency tested offers around the CHF 1.6005 level while the British pound moved lower vis-Ã -vis the Swiss franc as sterling tested bids around the CHF 2.3790 level.
The Australian dollar came off vis-Ã -vis the U.S. dollar today as the Aussie tested bids around the US$ 0.7800 figure and was capped around the $0.7835 level. The Australian Bureau of Agricultural and Resource Economics predicted commodity export earnings are expected to rise 13% to A$ 140 billion over the year to June 2007. Australian dollar bids are cited around the US$ 0.7755 level.
The Canadian dollar appreciated vis-Ã -vis the U.S. dollar today as the greenback tested bids around the C$ 1.1535 level and was capped around the C$ 1.1585 level. Data released in Canada today saw the November leading indicator rise 0.5%. U.S. dollar offers are cited around the C$ 1.1615/ 55 levels.
The New Zealand dollar gained marginal ground vis-Ã -vis the U.S. dollar today as the kiwi tested offers around the US$ 0.6920 level and was supported around the $0.6880 level. New Zealand dollar bids are cited around the US$ 0.6805 level.
Gold came off vis-Ã -vis the U.S. dollar today as the yellow metal tested bids around the US$ 615.35 level and was capped around the $618.55 level. The pair has been on the defensive for a couple of sessions after relatively robust U.S. economic data decreased the possibility in tradersâ€™ minds that the Federal Open Market Committee would lower interest rates next year. Silver moved lower vis-Ã -vis the U.S. dollar as the pair tested bids around the US$ 12.63 level and was capped around the $12.99 level.
Crude oil weakened vis-Ã -vis the U.S. dollar today as light, sweet NYMEX crude oil futures for February delivery tested bids around the US$ 63.50 level and were capped around the $64.07 level. An OPEC report released today foresees global oil demand expending by 1.3 million barrels per day in 2007. OPEC decided last week to reduce global output by 500,000 barrels per day as of 1 February 2007.
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