Wednesday January 24, 2007 - 17:22:38 GMT
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GCI Financial - www.gcitrading.com
Forex and Commodity Market Commentary and Analysis (24 January 2007)
The euro came off vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2950 level and was capped around the $1.3035 level. Technically, today‚Äôs intraday high was just above the 38.2% retracement of the move from US$ 1.2480 to $1.3365. Stops were reached below the $1.2965 level, representing the 23.6% retracement of the move from $1.3295 to $1.2865. Traders await the release of the all-important German Ifo business climate survey scheduled for release tomorrow. Many traders expect the survey to improve marginally from its prior reading of 108.7. In U.S. news, traders await the release of December existing home sales data tomorrow to see if the recent marginal improvement in the U.S. housing sector is continuing. Euro bids are cited around the US$ 1.2885 level.
The yen appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the ¬•120.65 level and was capped around the ¬•121.75 level. Stops were hit below the ¬•120.90 level, representing the 23.6% retracement of the move from ¬•118.00 to ¬•121.75. Traders unwound short yen carry trades overnight, especially vis-√†-vis the British pound and Australian dollar, and this spilled over to the U.S. dollar. Bank of Japan Governor Fukui was quoted as saying higher interest rates could benefit the Japanese economy and added the central bank will ‚Äúerr of the side of caution‚ÄĚ as long as economic data are mixed. Traders await the release of December CPI data on Friday. The Nikkei 225 stock index climbed 0.57% to close at ¬•17,507.40. Dollar bids are cited around the ¬•120.30 level. The euro weakened vis-√†-vis the yen as the single currency tested bids around the ¬•156.60 level and was capped around the ¬•158.60 level. The British pound and Swiss franc weakened vis-√†-vis the yen as the crosses tested bids around the ¬•237.50 and ¬•96.75 levels, respectively. The Chinese yuan appreciated vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.7725 in the over-the-counter market, down from CNY 7.7781.
The British pound came off sharply vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9645 level after encountering selling pressure around the $1.9830 level. Stops were hit below the $1.9665 level, representing the 38.2% retracement of the move from $1.9260 to $1.9915. The sharp move lower was precipitated by comments from Bank of England Governor King who said the Monetary Policy Committee‚Äôs ‚Äúcentral view remains that inflation is likely to fall back in the second half of the year, possibly quite sharply.‚ÄĚ King, however, cited energy prices, pay growth, asset prices, and inflation expectations as factors that could push up inflation. Minutes from the January MPC meeting were released today and they evidenced a 5-to-4 vote to move rates higher. King‚Äôs comments caused sterling to fall back as traders scaled back their belief that a rate hike next month is a fait accompli. Data released in the U.K. today saw GDP expand 0.8% q/q in Q4, its most significant quarterly growth in 2 ¬Ĺ years. On an annualized basis, GDP expanded 3.0% y/y, up from Q3‚Äôs 2.9% y/y rate. Cable bids are cited around the US$ 1.9585 level. The euro moved higher vis-√†-vis the British pound as the single currency tested offers around the ‚ā§0.6605 level and was supported around the ‚ā§0.6565 level.
The Swiss franc depreciated vis-√†-vis the U.S. dollar today as the greenback tested offers around the CHF 1.2495 level and was supported around the CHF 1.2410 level. Technically, today‚Äôs intraday low was below the 23.6% retracement of the move from CHF 1.2545 to CHF 1.2375. Dollar offers are cited around the CHF 1.2545 level. The euro and British pound came off vis-√†-vis the Swiss franc as the crosses tested bids around the CHF 1.6150 and CHF 2.4515 levels, respectively.
The Australian dollar weakened sharply vis-√†-vis the U.S. dollar today as the Aussie tested bids around the US$ 0.7790 level and was capped around the $0.7925 level. Stops were reached below the $0.7840 level, representing the 38.2% retracement of the move from $0.7615 to $0.7980. Technically, today‚Äôs intraday low was right around the 50% retracement of the aforementioned range. Data released in Australia today saw the consumer price index fall 0.1% q/q in the three months to December, and climb 3.3% y/y. These data were below expectations. Traders dumped the Aussie on the premise the Reserve Bank of Australia may be less inclined to raise interest rates in the future following these data. Australian dollar bids are cited around the US$ 0.7755 level.
The Canadian dollar came off vis-√†-vis the U.S. dollar today as the greenback tested offers around the C$ 1.1835 level and was supported around the C$ 1.1760 level. Traders await remarks from Bank of Canada Governor Dodge tomorrow. U.S. dollar bids are cited around the C$ 1.1750 level.
Gold weakened vis-√†-vis the U.S. dollar today as the yellow metal tested bids around the US$ 639.70 level and was capped around the $647.10 level. Many dealers are questioning whether or not the pair has the strength to push through the psychologically-important US$ 650.00 figure. Silver moved lower vis-√†-vis the U.S. dollar as the pair tested bids around the US$ 13.07 level and was capped around the $13.31 level.
Crude oil slumped lower vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for March delivery tested bids around the US$ 53.69 level and were capped around the $55.03 level. The pair had gained ground yesterday after the United States reported it wants to double its Strategic Petroleum Reserves as part of a plan to reduce the country‚Äôs dependence on foreign oil supplies. Traders await the release of weekly EIA crude oil inventories data in the U.S. today.
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