Thursday March 29, 2007 - 15:14:09 GMT
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Forex and Commodity Market Commentary and Analysis (29 March 2007)
The euro gained marginal ground vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3350 level and was supported around the $1.3300 figure. Technically, today‚Äôs intraday high was right around the 61.8% retracement of the move from $1.3410 to $1.3255. Federal Reserve Chairman Bernanke testified yesterday and indicated he does not yet see an end to the expansion of the U.S. economy and reiterated inflationary pressures remain for the U.S. economy. Data released in the U.S, today saw final Q4 GDP print at 2.5%, up from previous estimates, while the GDP deflator came in at 1.6% and the PCE price index was off 1.0%. Also, weekly initial jobless claims fell 10,000 to 308,000. In eurozone news, Germany‚Äôs February jobless number fell 65,000 while the unemployment rate ticked down to 9.2%. The European Commission reported the eurozone‚Äôs growth outlook remains ‚Äúfavourable‚ÄĚ and estimated GDP growth will be 2.4% in 2007, down from 2.6% in 2006. Euro bids are cited around the US$ 1.3285/ 45 levels.
The yen depreciated vis-√†-vis the U.S. dollar today as the greenback tested offers around the ¬•117.85 level and was supported around the ¬•116.65 level. Technically, today‚Äôs intraday low was right around the 61.8% retracement of the move from ¬•121.40 to ¬•109.00. Data released in Japan overnight saw February retail sales decline 0.2% y/y, the fourth consecutive monthly decline, and foreign investors were net buyers of Japanese equities for the first time in four weeks. Vice finance minister Fujii said ‚ÄúI believe that foreign exchange rates should reflect economic fundamentals and that chaotic fluctuations in share prices and foreign exchange rates are undesirable.‚ÄĚ Fujii also indicated Japan has ‚Äúhave no plans to make a drastic change in the portfolio of currencies in Japan's foreign reserves,‚ÄĚ a war chest that now totals some US$ 905.05 billion. Tomorrow is the final business day of Japan‚Äôs fiscal year and many economic data will be released overnight including consumer prices, household spending, and employment numbers. The Nikkei 225 stock index climbed 0.05% to close at ¬•17,263.94. Dollar bids are cited around the ¬•116.80 level. The euro appreciated vis-√†-vis the yen as the single currency tested offers around the ¬•157.25 level and was supported around the ¬•155.35 level. The British pound and Swiss franc gained ground vis-√†-vis the yen as the crosses tested offers around the ¬•231.40 and ¬•96.80 levels, respectively. The Chinese yuan appreciated vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.7270 in the over-the-counter market, down from CNY 7.7295. China rebuffed the latest pressure from the U.S. Congress to liberalize its currency regime further saying ‚ÄúChina has adopted an exchange rate policy that is decided by the market. Both sides need to observe the principle of mutual respect... rather than using pressure or threatening to use pressure.‚ÄĚ
The British pound climbed higher vis-√†-vis the U.S. dollar today as cable tested offers around the US$ 1.9655 level and was supported around the $1.9610 level. Technically, today‚Äôs intraday high was right around the 23.6% retracement of the move from $1.8835 to $1.9845. Data released in the U.K. today saw the Q4 productivity rate decelerate to 1.9% from 2.3% in Q3 while the final February M4 money supply expanded 0.9% m/m and 12.7% y/y. Also, U.K. services sector output was up 0.8% in the three months to January and Bank of England reported February net mortgage lending came in at ‚ā§10.3 billion, the second highest level on record. Moreover, CBI reported the balance of U.K. retailers that reported sales volume growth over last year was +32%, the fourth consecutive positive balance and the highest level since December 2004. Cable bids are cited around the US$ 1.9535 level. The euro moved higher vis-√†-vis the British pound as the single currency tested offers around the ‚ā§0.6795 level and was supported around the ‚ā§0.6775 level.
The Swiss franc came off vis-√†-vis the U.S. dollar today as the greenback tested offers around the CHF 1.2185 level and was supported around the CHF 1.2135 level. Technically, today‚Äôs intraday high was just above the 23.6% retracement of the move from CHF 1.2025 to CHF 1.2225. The Swiss government today lifted its GDP forecast for 2007 to 2.0% from 1.7% and reaffirmed its 2008 forecast of 1.7%. Dollar offers are cited around the CHF 1.2215 level. The euro and British pound moved higher vis-√†-vis the Swiss franc as the crosses tested offers around the CHF 1.6245 and CHF 2.3915 levels, respectively.
The Australian dollar gained ground vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8100 figure and was supported around the $0.8045 level. Data released in Australia today saw job vacancies fall 2.3% in the three months to February and were up 11.3% y/y. Australian dollar bids are cited around the US$ 0.8035/ 0.7990 levels.
The Canadian dollar gained marginal ground vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.1565 level and was capped around the C$ 1.1610 level. January GDP data will be released tomorrow. U.S. dollar bids are cited around the US$ 1.1510 level.
Gold depreciated vis-√†-vis the U.S. dollar today as the yellow metal tested bids around the US$ 658.90 level and was capped around the $666.60 level. Silver shed ground vis-√†-vis the U.S. dollar as the pair tested bids around the US$ 13.17 level and was capped around the $13.38 level.
Crude oil extended recent gains vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for May delivery tested offers around the US$ 64.95 level and was supported around the $63.50 level. Data released in the U.S. yesterday saw gasoline stocks decline by 300,000 in the week ending 23 March while crude oil stocks were off 900,000 barrels to 328.4 million barrels. News that a second U.S. aircraft carrier arrived in the Sea of Oman has traders nervous that tensions between Iran and the U.K. could escalate. Iran continues to hold fifteen U.K. navy personnel it kidnapped last Friday.
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