Thursday April 12, 2007 - 15:36:53 GMT
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Forex and Commodity Market Commentary and Analysis (12 April 2007)
The euro appreciated vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3500 figure and was supported around the $1.3425 level. The common currency reached its strongest level since January 2005 and many traders are now eyeing the $1.3580 level as the pair‚Äôs next upside target. As expected, European Central Bank kept its main refinancing rate unchanged at 3.75% and comments from ECB President Trichet have many traders believing the next rate hike will be in June. Trichet noted the ECB is watching inflation ‚Äúvery closely‚ÄĚ and did not use the word ‚Äúvigilance,‚ÄĚ a term that usually results in a rate hike the following month. Data released in the eurozone today saw EMU-12 GDP expand 0.9% q/q in Q4 and +3.3% y/y. The European Commission kept its eurozone GDP forecasts for Q1 and Q3 unchanged and widened its Q2 forecast. Also, Germany‚Äôs HWWI institute lifted its German GDP forecast for 2007 to 2.3% from 1.7%. In U.S. news, weekly initial jobless claims were up 19,000 to 342,000 and continuing jobless claims were up 38,000 to 2.53 million. Also, the March import price index was up 1.7% m/m and 2.8% y/y while the March export price index was up +0.7%. Minutes from the Federal Open Market Committee‚Äôs March meeting were released yesterday in which policymakers expressed concern that elevated inflation levels and sub-par growth ‚Äúsuggested increased downside risks to economic growth and greater uncertainty that the expected gradual decline in core inflation would materialize.‚ÄĚ Euro bids are cited around the US$ 1.3400 figure.
The yen appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the ¬•118.80 level and was capped around the ¬•119.50 level. Technically, today‚Äôs intraday low was right around the 23.6% retracement of the move from ¬•116.35 to ¬•119.50. Data released in Japan overnight saw the March wholesale goods price index climb 2.0% y/y, up from +1.7% in February. Also, capital flows data confirmed foreigners purchased a net ¬•495.3 billion in Japanese equities last week. A report in the Japanese media suggests Bank of Japan envisions consumer price index growth of 0.2% to 0.3% for the year to March 2008. Many traders believe the BoJ will not lift interest rates before July and then only perhaps later in the year. The Nikkei 225 stock index lost 0.73% to close at ¬•17,540.42. Dollar bids are cited around the ¬•118.45 level. The euro moved higher vis-√†-vis the yen as the single currency tested offers around the ¬•160.85 level and was supported around the ¬•160.15 level. The British pound came off vis-√†-vis the yen as sterling tested bids around the ¬•235.20 level while the Swiss franc moved higher vis-√†-vis the yen and tested offers around the ¬•98.00 figure. The Chinese yuan came off vis-√†-vis the U.S. dollar as the greenback closed at the CNY 7.7260 level, up from CNY 7.7250. People‚Äôs Bank of China reported China‚Äôs foreign reserves totaled US$ 1.2 trillion at the end of March while the M2 money supply was up 17.27%. Also, actual foreign direct investment was up 11.56% between January and March, printing at US$ 15.89 million.
The British pound appreciated vis-√†-vis the U.S. dollar today as cable tested offers around the US$ 1.9810 level and was supported around the $1.9720 level. Data released in the U.K. today saw the February global trade in goods deficit worsen to -‚ā§6.8 billion while a British Chambers of Commerce quarterly poll reported a deceleration in business activity in the manufacturing and services sectors in Q1. Also, RICS reported its March house price balance was at +26%, the first rise in five months. Cable bids are cited around the US$ 1.9740/00 levels. The euro moved higher vis-√†-vis the British pound as the single currency tested offers around the ‚ā§0.6820 level and was supported around the ‚ā§0.6800 figure.
The Swiss franc appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2130 level and was capped around the CHF 1.2245 level. Technically, today‚Äôs intraday low was right around the 23.6% retracement of the move from CHF 1.2435 to CHF 1.2025. A UBS survey reported Swiss industrial growth decelerated in Q1. Dollar offers are cited around the CHF 1.2235/ 80 levels. The euro moved higher vis-√†-vis the British pound as the single currency tested offers around the ‚ā§0.6820 level and was supported around the ‚ā§0.6800 figure.
The Australian dollar gained ground vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8285 level and was supported around the $0.8230 level, a fresh high dating back to October 1990. Data released in Australia overnight saw the March jobless rate fall to 4.5% from 4.6%, a 30-year low. Australian dollar bids are cited around the US$ 0.8140 level.
The Canadian dollar appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.1350 level and was capped around the C$ 1.1410 level. Technically, today‚Äôs intraday low was right around the 61.8% retracement of the move from C$ 1.1030 to C$ 1.1875. Data released in Canada today saw the new housing price index gain 10% in the twelve months to February. U.S. dollar bids are cited around the C$ 1.1285 level.
Gold weakened vis-√†-vis the U.S. dollar today as the yellow metal tested bids around the US$ 671.60 level and was capped around the $679.65 level. Yesterday‚Äôs FOMC meeting minutes kept gold depressed as the Fed made it clear it is still concerned with inflationary pressures. Silver moved lower vis-√†-vis the U.S. dollar as the pair tested bids around the US$ 13.65 level and were capped around the $13.90 level.
Crude oil moved higher vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for May delivery tested offers around the US$ 63.23 level and were supported around the $61.88 level. The International Energy Agency reported global inventories are falling on account of excessive OPEC output cuts.
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