Tuesday April 10, 2007 - 15:20:15 GMT
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GCI Financial - www.gcitrading.com
Forex and Commodity Market Commentary and Analysis (10 April 2007)
The euro appreciated sharply vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3440 level and was supported around the US$ 1.3350 level. The pair reached its highest level since March 2005 and traders are fixating on the psychologically-important US$ 1.3500 figure. The dollar‚Äôs shot-in-the-arm following last week‚Äôs strong March non-farms payrolls report has diminished. Dealers are contemplating to what extent this weekend‚Äôs Group of Seven meeting of central bankers and finance ministers in Washington, D.C. will focus on exchange rates and whether any market-moving statements will be made. The likely suspects include the yen and the Chinese yuan, especially as the former reaches all-time lows vis-√†-vis the euro. Data released in the U.S. today saw Redbook retail sales climb +1.0% m/m in March. In eurozone news, data released in Germany today saw the February trade surplus narrow to ‚ā¨14.2 billion from ‚ā¨16.2 billion in January. Also, French industrial output expanded 1.1% m/m in February. Many Fed officials are scheduled to speak today and this week. Euro bids are cited around the US$ 1.3300 figure.
The yen appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the ¬•118.75 level and was capped around the ¬•119.35 level. Technically, today‚Äôs intraday low was just above the 23.6% retracement of the move from ¬•116.35 to ¬•119.40. As expected, Bank of Japan‚Äôs Policy Board kept interest rates unchanged and BoJ Governor Fukui warned that core inflation may hover near zero per cent for quite some time. The central bank noted ‚ÄúJapan‚Äôs economy is expanding moderately‚ÄĚ and Fukui said there is a ‚Äúlow possibility‚ÄĚ that interest rate adjustments can be taken according to a ‚Äúpre-set schedule.‚ÄĚ Fukui also indicated the BoJ does not see short yen carry trades resuming anytime soon and said the foreign exchange market ‚Äúhas been calm recently.‚ÄĚ The Nikkei 225 stock index lost 0.45% to close at ¬•17,664.69. Dollar bids are cited around the ¬•118.45 level. The euro gained ground vis-√†-vis the yen as the single currency tested offers around the ¬•160.10 level and was supported around the ¬•159.05 level. The British pound and Swiss franc pressed higher vis-√†-vis the yen as the crosses tested offers around the ¬•235.35 and ¬•97.90 levels, respectively. The Chinese yuan depreciated vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.7350 in the over-the-counter market, up from CNY 7.7340. A trade war is brewing between the U.S. and Chin as the U.S. today filed two new complaints against China at the World Trade Organization. China indicated it is ‚Äústrongly dissatisfied‚ÄĚ with this move by the U.S. Traders are concerned China could stop purchasing U.S. assets with its massive foreign reserves war chest and this would lead to a downturn in the U.S. dollar. Data released in China today saw the March trade surplus print at US$ 6.87 billion, the lowest print since February 2007, while the Q1 trade surplus reached US$ 46.44 billion, up from Q1 2006‚Äôs US$ 23.31 billion level.
The British pound rocketed higher vis-√†-vis the U.S. dollar today as cable tested offers around the US$ 1.9750 level and was supported around the US$ 1.9610 level. Technically, today‚Äôs intraday high was just above the 76.4% retracement of the move from $1.9915 to $1.9180. Many traders continue to expect Bank of England‚Äôs Monetary Policy Committee will lift interest rates next month. Tomorrow‚Äôs BRC retail sales monitor, if firm, could bolster the likelihood of another monetary tightening in May. Traders cited significant M&A talk today. Cable bids are cited around the US$ 1.9635 level. The euro gained marginal ground vis-√†-vis the British pound as the single currency tested offers around the ‚ā§0.6820 level and was supported around the ‚ā§0.6795 level.
The Swiss franc gained significant ground vis-√†-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2145 level and was capped around the CHF 1.2270 level. Technically, today‚Äôs intraday high was just below the 61.8% retracement of the move from CHF 1.2435 to CHF 1.2025. Data released in Switzerland today saw the March unemployment rate fall to 3.0% from 3.2% in February. Dollar offers are cited around the CHF 1.2235 level. The euro and British pound depreciated vis-√†-vis the Swiss franc as the crosses tested bids around the CHF 1.6330 and CHF 2.3970 levels, respectively.
The Australian dollar moved higher vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8255 level and was supported around the US$ 0.8155 level. Today‚Äôs intraday high is the pair‚Äôs strongest showing since October 1990. Data released in Australia today saw the March NAB business confidence index fall to +10 from +12 in February. Also, ANZ March job advertisements were up 1.9% m/m and 24.7% y/y. Australian Treasurer Costello today reported ‚ÄúAustralia is now in the longest period of continuous economic expansion ever recorded, unemployment is at 30-year lows, and inflation is moderate.‚ÄĚ Australian dollar bids are cited around the US$ 0.8120 level.
The Canadian dollar appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.1455 level and was capped around the C$ 1.1530 level. Technically, today‚Äôs intraday low was right around the 50% retracement of the move from C$ 1.1030 to C$ 1.1875. March housing starts data will be released tomorrow. U.S. dollar offers are cited around the C$ 1.1510 level.
Gold gained significant ground vis-√†-vis the U.S. dollar today as the yellow metal tested offers around the US$ 681.40 level and was supported around the $671.35 level. The U.S. dollar‚Äôs downturn and a sharp 7% daily appreciation in copper pushed gold higher. Silver moved higher vis-√†-vis the U.S. dollar as the pair tested offers around the US$ 13.97 level and was supported around the $13.68 level.
Crude oil moved marginally higher vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for May delivery tested offers around the US$ 62.16 level and were supported around the $61.39 level. Traders await U.S. inventory data this week and continue to monitor geopolitical hotspots including Iran.
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