Tuesday February 13, 2007 - 16:47:26 GMT
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Forex and Commodity Market Commentary and Analysis (13 February 2007)
The euro appreciated vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3040 level and was supported around the $1.2955 level. Technically, today‚Äôs intraday high was right around the 76.4% retracement of the move from $1.3480 to $1.1640. The common currency moved to intraday highs after the release of U.S. December trade balance data that saw the U.S. trade gap print at ‚ÄďUS$ 61.18, the first widening of the deficit in four months. Notably, December‚Äôs result took the 2006 trade deficit to a record ‚ÄďUS$ 763.59 billion. Traders await the release of the Treasury international capital flows data in a couple of days to see if the U.S. financed its trade gap through international portfolio inflows. Other data released in the U.S. today saw Redbook national chain store sales fall 1.4% m/m in the first week of February. In eurozone news, EMU-12 GDP growth expanded 0.9% q/q, above estimates and at an annualized 3.3%. It was also reported that the German ZEW expectations index improved to 2.9 in February from -3.6 in January while EMU-12 industrial production gained 1.0% m/m and 4.0% y/y in December. Luxembourg finance minister Juncker predicted the EMU-13 economy will expand 2.0% to 2.3% this year. Traders await testimony from Federal Reserve Chairman Bernanke tomorrow. Euro bids are cited around the US$ 1.2925 level.
The yen appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the ¬•121.10 level and was capped around the ¬•121.95 level. Technically, today‚Äôs intraday low was right around the 50% retracement of the move from ¬•122.15 to ¬•119.95. Data released in Japan overnight saw the January wholesale goods price index climb 2.2% y/y, the slowest pace since December 2005, while the January consumer confidence index climbed to 48.1 from 45.9 in December, the first improvement in two months. Also, it was reported that corporate failures were off 6.0% m/m in December. European Union official Alumnia played down the yen‚Äôs value vis-√†-vis the euro saying exchange rates ‚Äúare no problem for the (eurozone) economy‚ÄĚ at current levels while Luxembourg finance minister Juncker called it a ‚Äúproblem.‚ÄĚ The Nikkei 225 stock index gained 0.67% to close at ¬•17,621.45. Dollar bids are cited around the ¬•120.55 levels. The euro weakened vis-√†-vis the yen as the single currency tested bids around the ¬•157.25 levels and was capped around the ¬•158.10 levels. The British pound and Swiss franc came off vis-√†-vis the yen as the crosses tested bids around the ¬•235.40 and ¬•96.80 levels, respectively. The Chinese yuan depreciated vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.7662 in the over-the-counter market, up from CNY 7.7570. People‚Äôs Bank of China Assistant Governor Yi Gang indicated GDP growth will ‚Äúdefinitely‚ÄĚ exceed 8.0% this year. Yi also said PBOC has a ‚Äústrong determination‚ÄĚ to counter any spike in inflation. Data released in China today saw the January producer price index up climb 3.3% y/y.
The British pound extended recent losses vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9400 figure after encountering selling pressure around the $1.9520 level. Technically, today‚Äôs intraday high was just below the 23.6% retracement of the move from $1.8515 to $1.9845. Data released in the U.K. today saw the January annual consumer price index print at 2.7%, down from 3.0% in December and the largest fall since January 2003. RPI inflation growth decelerated to 4.2% from 4.4% and this is important because these data are utilized in wage negotiations. Other data released today saw CML December gross mortgage lending fall 14% m/m to ‚ā§28.6 billion. Traders await tomorrow‚Äôs quarterly Bank of England inflation report and labour market data. Cable bids are cited around the US$ 1.9340 level. The euro moved higher vis-√†-vis the British pound as the single currency tested offers around the ‚ā§0.6700 figure and was supported around the ‚ā§0.6645 level.
The Swiss franc appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2440 level and was capped around the CHF 1.2535 level. Technically, today‚Äôs intraday low was just above the 61.8% retracement of the move from CHF 1.2770 to CHF 1.1875. Dealers await the release of February ZEW survey data on Thursday. Dollar offers are cited around the CHF 1.2555 level. The euro gained ground vis-√†-vis the Swiss franc as the single currency tested offers around the CHF 1.6265 level while the British pound weakened vis-√†-vis the Swiss franc as sterling tested bids around the CHF 2.4210 level.
The Australian dollar gained significant ground vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.7770 level and was supported around the $0.7710 level. The pair retraced most of the losses it incurred after the release of Reserve Bank of Australia‚Äôs quarterly monetary policy statement. Data released in Australia today saw the January NAB business confidence index improve to 6.5 from 4.0 in December. Australian dollar bids are cited around the US$ 0.7695 level.
The Canadian dollar appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.1675 level and was capped around the C$ 1.1765 level. Technically, today‚Äôs intraday high was right around the 23.6% retracement of the move from C$ 1.1430 to C$ 1.1875. Data released in Canada today saw the December trade deficit print at ‚ÄďC$ 5 billion while the deficit for 2006 as a whole was at its lowest level since 1999. U.S. dollar bids are cited around the C$ 1.1620 level.
Gold appreciated vis-√†-vis the U.S. dollar today as the yellow metal tested offers around the US$ 668.85 level and was supported around the $661.35 level. The U.S. dollar‚Äôs broad sell-off led to gold‚Äôs gains today as did repeated talk of physical demand in China and India. Silver moved higher vis-√†-vis the U.S. dollar as the pair tested offers around the US$ 13.95 level and was supported around the $13.57 level.
Crude oil appreciated vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for March delivery tested offers around the US$ 58.80 level and were supported around the $57.27 level. The International Energy Agency lifted its 2007 demand forecast and reported oil market fundamentals seem to be tightening. The IEA is now predicting global oil consumption will increase 1.55 million barrels per day in 2007, up from the 1.39 million barrels that were forecast one month ago. OPEC is not expected to change output levels when officials convene in Vienna on 17 March.
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