Friday March 16, 2007 - 16:42:15 GMT
Share This Story
GCI Financial - www.gcitrading.com
Forex and Commodity Market Commentary and Analysis (16 March 2007)
The euro appreciated sharply vis-Ă -vis the U.S. dollar today as the single currency tested offers around the US$ 1.3340 level and was supported around the $1.3235 level. Technically, todayâ€™s intraday low was just below the 23.6% retracement of the move from $1.3365 to $1.2865. Todayâ€™s intraday high represents the pairâ€™s strongest showing since 8 December 2006. Data released in the U.S. today saw mid-March University of Michigan consumer sentiment fall to 88.8 from Februaryâ€™s 91.3, below expectations. Also, February industrial output was up 1.0%, the largest gain since November 2005, while capacity utilization rose to 82.0%, the highest level since September. On an annualized basis, industrial production was up 2.3% over the past twelve months. Additionally, February consumer price inflation was up more-than-expected at 0.4% with core prices up 0.2%, down from Januaryâ€™s 0.3% gain. Notably, however, core inflation has risen at a three-month annualized pace of 2.7%. Todayâ€™s data will probably not result in a monetary tightening next Wednesday when the Federal Open Market Committeeâ€™s interest rate decision is announced. The Fed, however, will likely retain some language regarding elevated price pressures on account of this weekâ€™s relatively strong producer and consumer price inflation data. The key question in tradersâ€™ minds is how the Fed will respond if the fallout in the U.S. sub-prime mortgage market worsens. Some traders are already speculating the FOMC may orchestrate a rate cut within a few months to support the troubled mortgage market but lingering price pressures make it difficult for the Fed to move now. Former Fed Chairman Greenspan last night said there could be â€śspillover effectsâ€ť from the sub-prime market fallout. Data released in the U.S. yesterday saw the Philadelphia Fed March manufacturing survey fall to 0.2 from 0.6 in February while the prices paid and prices received sub-indices both moved higher. Euro bids are cited around the US$ 1.3235/ 05 levels.
The yen appreciated vis-Ă -vis the U.S. dollar today as the greenback tested bids around the ÂĄ116.50 level and was capped around the ÂĄ117.55 level. Technically, todayâ€™s intraday low was just above the 61.8% retracement of the move from ÂĄ115.15 to ÂĄ118.50. Data released in Japan today saw the January tertiary index up 1.6% m/m, the first improvement in three months, while the January leading index was upwardly revised to 40.9 from 35.0. The yenâ€™s intraday performance vis-Ă -vis other crosses remains was mixed so while some of the yenâ€™s strength today may reflect unwindings of short yen carry trades, most of the moves in the market today reflect the weakness of the U.S. dollar. One factor on tradersâ€™ minds remains the upcoming tankan survey of corporate sentiment. A strong reading could bolster the likelihood that Bank of Japan will raise interest rates again this year and lead to additional yen strength. The Nikkei 225 stock index lost 0.69% to close at ÂĄ16,744.15. Dollar bids are cited around the ÂĄ116.25/ 115.60 levels. The euro moved lower vis-Ă -vis the yen as the single currency tested bids around the ÂĄ155.25 level and was capped around the ÂĄ155.85 level. The British pound came off vis-Ă -vis the yen as sterling tested bids around the ÂĄ226.35 level while the Swiss franc moved higher vis-Ă -vis the yen and tested offers around the ÂĄ96.95 level. The Chinese yuan appreciated vis-Ă -vis the U.S. dollar as the greenback closed at CNY 7.7360 in the over-the-counter market, down from CNY 7.7440, a post yuan revaluation low. Peopleâ€™s Bank of China reported that it will continue pursuing yuan convertibility on Chinaâ€™s capital account and noted it will let foreign banks trade gold soon. PBOC also indicated its FX reserve holdings include the U.S. dollar, yen, euro, and British pound.
The British pound gained ground vis-Ă -vis the U.S. dollar today as cable tested bids around the US$ 1.9505 level and was supported around the $1.9355 level. Technically, todayâ€™s intraday high was right around the 38.2% retracement of the move from $1.8835 to $1.9845. Data released in the U.K. today saw IRS pay awards remain unchanged at 3.5% in the three months to February, the same rate as in January. Traders expect Chancellor of the Exchequer Brownâ€™s Budget next week to include optimistic forecasts for the U.K. economy. Cable bids are cited around the US$ 1.9340 level. The euro gained ground vis-Ă -vis the British pound as the single currency tested offers around the â‚¤0.6865 level and was supported around the â‚¤0.6830 level.
The Swiss franc appreciated sharply vis-Ă -vis the U.S. dollar today as the greenback tested bids around the CHF 1.2025 level and was capped around the CHF 1.2175 level. The pair reached levels not seen since 13 December 2006. Data released in Switzerland today saw January retail sales climb 5.1% y/y. Dollar offers are cited around the CHF 1.2185 level. The euro and British pound weakened vis-Ă -vis the Swiss franc as the crosses tested bids around the CHF 1.6035 and CHF 2.3430 levels, respectively.
The Australian dollar gained ground vis-Ă -vis the U.S. dollar today as the Aussie tested offers around the US$ 0.7975 level and was supported around the $0.7875 level. Technically, todayâ€™s intraday low was right around the 76.4% retracement of the move from $0.7945 to $0.7680. Reserve Bank of Australia Assistant Governor Edey today reported that underlying inflation is expected to moderate over the next two years to about 2.75% but that this is â€śmore likely to be too high than too low.â€ť Australian dollar bids are cited around the US$ 0.7870 level.
The Canadian dollar appreciated vis-Ă -vis the U.S. dollar today as the greenback tested bids around the C$ 1.1710 level and was capped around the C$ 1.1770 level. Canada will release its federal budget for the 2007 â€“ 2008 fiscal year on Monday. U.S. dollar bids are cited around the C$ 1.1655 level.
Gold gained ground vis-Ă -vis the U.S. dollar today as the yellow metal tested offers around the US$ 655.30 level and was supported around the $645.95 level. The U.S. dollarâ€™s intraday weakness contributed to the pairâ€™s gains but they were also limited by relatively strong U.S. inflation data. Silver moved higher vis-Ă -vis the U.S. dollar as the pair tested offers around the US$ 13.19 level and was supported around the $12.90 level.
Crude oil moved higher vis-Ă -vis the U.S. dollar today as light, sweet NYMEX crude oil futures for May delivery tested offers around the US$ 60.97 level and was supported around the $59.63 level. As expected, OPEC did not change output when policymakers convened in Vienna yesterday.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."