Monday April 16, 2007 - 15:04:28 GMT
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GCI Financial - www.gcitrading.com
Forex and Commodity Market Commentary and Analysis (16 April 2007)
The euro gained ground vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3575 level and was supported around the $1.3540 level. Today‚Äôs intraday high represents a fresh high dating back to January 2005. There was little in the Group of Seven‚Äôs communiqu√© to alter traders‚Äô recent view that the U.S. dollar will depreciate. Data released in the U.S. today saw March headline retail sales print at +0.7%, above expectations, while the ex-autos component climbed +0.8%, also above expectations. Also, the Empire State manufacturing index climbed to 3.80 in April from 1.85 in March. Other data released today saw February net overall capital inflows climb to US$ 94.5 billion from US$ 79.6 billion in January while February business inventories were up 0.3%, their fastest pace in five months. Traders await U.S. consumer price inflation data tomorrow. In eurozone news, German CPI expanded 0.3% m/m and 1.9% y/y in March and EMU-13 CPI was up 1.9% in March from 1.8% in February. Most traders continue to expect the European Central Bank will tighten monetary policy in June. Euro bids are cited around the US$ 1.3480 level.
The yen depreciated vis-√†-vis the U.S. dollar today as the greenback tested offers around the ¬•119.65 level and was supported around the ¬•118.95 level. Technically, today‚Äôs intraday low was just below the 23.6% retracement of the move from ¬•109.00 to ¬•122.15. Finance minister Omi downplayed the role of exchange rates in adjusting global imbalances saying ‚Äútrying to adjust such imbalances exclusively through changes in exchange rates would be counterproductive‚ÄĚ and would have ‚Äúadverse effects.‚ÄĚ The Group of Seven‚Äôs communiqu√© this weekend was mostly benign with only an indirect reference to short yen carry trades. The G7 reported ‚ÄúJapan's recovery is on track and expected to continue. We remain confident that the implications of these developments will be recognized by market participants and will be incorporated in their assessment of risks." European finance ministers also did not publicly comment on the yen‚Äôs value. The government maintained its overall economic assessment unchanged this month and data released in Japan today saw revised February industrial output up 0.7% m/m. The Nikkei 225 stock index gained 1.52% to close at ¬•17,628.30. Dollar bids are cited around the ¬•118.80/ 50 levels. The euro moved higher vis-√†-vis the yen as the single currency tested offers around the ¬•162.40 level and was supported around the ¬•161.45 level. The British pound and Swiss franc gained ground vis-√†-vis the yen as the crosses tested offers around the ¬•238.25 and ¬•98.65 levels, respectively. The Chinese yuan weakened vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.7302 in the over-the-counter market, up from CNY 7.7217.
The British pound gained ground vis-√†-vis the U.S. dollar today as cable tested offers around the US$ 1.9940 level and was supported around the $1.9855 level. Cable‚Äôs intraday print represents its strongest showing since October 1992. Data released in the U.K. today saw the April Rightmove house price index climb 3.6% m/m and 15% y/y while a government report confirmed February house prices were up 12.1% y/y. Additionally, March output producer prices climbed 0.6% m/m and 2.7% y/y and input prices were up 1.2% m/m and 0.7% y/y. The gains in output prices are likely to concern Bank of England Monetary Policy Committee members and this could result in a rate hike next month. Cable bids are cited around the US$ 1.9845 level. The euro came off marginally vis-√†-vis the British pound as the single currency tested bids around the ‚ā§0.6800 figure and was capped around the ‚ā§0.6830 level.
The Swiss franc appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2115 level and was capped around the CHF 1.2145 level. Technically, the pair orbited the CHF 1.2125 level, representing the 23.6% retracement of the move from CHF 1.2435 to CHF 1.2025. Swiss National Bank Chairman Roth spoke today and reiterated the central bank has to be vigilant ‚Äúas the weak Swiss franc and falling unemployment could pose a risk to price stability.‚ÄĚ Dollar offers are cited around the CHF 1.2215 level. The euro and British pound gained marginal ground vis-√†-vis the Swiss franc as the crosses tested bids around the CHF 1.6425 and CHF 2.4175 levels, respectively.
The Australian dollar gained marginal ground vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8360 level and was supported around the $0.8310 level. The pair has not been this strong since February 1989 and Aussie bulls were encouraged by a relatively benign G7 communiqu√© that did little to dissuade traders from buying the Australian dollar in carry trades. Australian dollar bids are cited around the US$ 0.8195 level.
The Canadian dollar appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.1305 level and was capped around the C$ 1.1370 level. The pair has not been this weak since 29 November 2006. Bank of Canada‚Äôs Business Outlook Survey was released today and reported labour market conditions remain strong, input price growth is expected to decelerate, consumer price inflation expectations remain between BoC‚Äôs 1% to 3% inflation-control range, production capacity pressures remain at high levels, and all indicators of business activity have improved over the past few months. 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$ 684.40 level and was capped around the US$ 688.50 level. Silver came off vis-√†-vis the U.S. dollar as the pair tested bids around the US$ 13.85 level and was capped around the $14.10 level.
Crude oil lost ground vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for June delivery tested bids around the US$ 62.57 level and were capped around the $64.18 level. Some upward pressure was seen on prices overnight on concerns that Nigeria‚Äôs presidential election could result in some supply disruptions. Violence in the Niger Delta has lessened that country‚Äôs output by about one-fifth for over one year.
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