Friday April 20, 2007 - 14:59:17 GMT
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GCI Financial - www.gcitrading.com
Forex and Commodity Market Commentary and Analysis (20 April 2007)
The euro came off vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3585 level and was capped around the $1.3635 level. The common currency established a fresh multi-year high today and came within 30 pips of making a new lifetime high before moving lower. European Central Bank member Weber reported the ECB‚Äôs monetary tightening cycle has not ended and Eurogroup chairman Juncker characterized the common currency‚Äôs appreciation as ‚Äúgradual‚ÄĚ and said there is ‚Äúno reason to panic.‚ÄĚ ECB‚Äôs Constancio confused the market when he indicated the ECB is watching the euro with vigilance but later said the ECB is not targeting the exchange rate. ECB‚Äôs Gonzalez-Paramo reiterated recent rises in oil prices and second-round wage increase effects are resulting in upward price pressures. Data released in the eurozone today saw French household consumption of manufacturing goods gain 0.7% m/m. In U.S. news, traders expect a quiet North American session absent any U.S. economic data. Next week‚Äôs housing data will be closely monitored by traders. Yesterday‚Äôs Philadelphia Fed survey of manufacturing activity was unchanged in April from late March, defying expectations of an improvement. Euro bids are cited around the US$ 1.3565/ 25 levels.
The yen depreciated vis-√†-vis the U.S. dollar today as the greenback tested offers around the ¬•118.95 level and was supported around the ¬•118.25 level. Technically, today‚Äôs intraday low was right around the 50% retracement of the move from ¬•114.45 to ¬•122.15. Data released in Japan overnight saw the all-industry index climb 0.9%, beating forecasts, while March convenience store sales were off 1.4% y/y. The Nikkei 225 stock index climbed 0.46% to close at ¬•17,452.62. 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 ¬•161.90 level and was supported around the ¬•161.10 level. The British pound and Swiss franc moved higher vis-√†-vis the yen as the crosses tested offers around the ¬•238.30 and ¬•98.65 levels, respectively. The Chinese yuan depreciated vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.7179 in the over-the-counter market, up from CNY 7.7165. Traders are closely monitoring a speech expected today from U.S. Treasury Secretary Paulson about China today. Chinese equity markets rebounded overnight following yesterday‚Äôs blistering Q1 GDP data. Data released in China today saw March wholesale prices up 4.2% y/y while Q1 industrial output was up 18.3% y/y.
The British pound came off vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9990 level and was capped around the $2.0070 level. Technically, today‚Äôs intraday low was just below the 23.6% retracement of the move from $1.9590 to $2.0130. Bank of England Governor King was quoted as saying ‚ÄúThe Monetary Policy Committee still expects inflation to be closer to our target figure of 2 per cent once this short term volatility, brought about by a number of factors such as energy price increases, has disappeared. We are absolutely determined to bring inflation back to 2 per cent.‚ÄĚ Traders will closely monitor comments from Bank of England Monetary Policy Committee members next week to assess when interest rates may rise again and how much further interest rates may need to rise. Data released in the U.K. today saw March retail sales climb 0.3% m/m and 4.8% y/y while IRS pay awards appreciated at an eight-year high in the first quarter, up 3.5%. Cable bids are cited around the US$ 1.9925 level. The euro came off vis-√†-vis the British pound as the single currency tested bids around the ‚ā§0.6785 level and was capped around the ‚ā§0.6805 level.
The Swiss franc lost ground vis-√†-vis the U.S. dollar today as the greenback tested offers around the CHF 1.2090 level and was supported around the CHF 1.2035 level. Technically, today‚Äôs intraday high was right around the 23.6% retracement of the move from CHF 1.2570 to CHF 1.2025. Data released in Switzerland today saw March producer and import prices climb 0.3% m/m and 2.4% y/y. Dollar offers are cited around the CHF 1.2195 level. The euro and British pound moved higher vis-√†-vis the Swiss franc as the crosses tested offers around the CHF 1.6435 and CHF 2.4195 levels, respectively.
The Australian dollar came off marginally vis-√†-vis the U.S. dollar today as the Aussie tested bids around the US$ 0.8335 level and was capped around the $0.8370 level. Technically, today‚Äôs intraday low was right around the 23.6% retracement of the move from $0.8150 to $0.8390. Australian dollar bids are cited around the US$ 0.8300 figure.
The Canadian dollar appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.1215 level and was capped around the C$ 1.1300 figure. Stops were reached below the C$ 1.1225 level, representing the 76.4% retracement of the move from C$ 1.1030 to C$ 1.1875. Data released in Canada today saw February retail sales gain 0.1% m/m while the ex-autos component was up 1.0%. U.S. dollar bids are cited around the C$ 1.1150 level.
Crude oil moved higher vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for June delivery tested offers around the US$ 63.79 level and was supported around the $62.63 level. Traders are closely monitoring presidential elections in Nigeria this weekend. Also, a report was issued this week by a private consulting firm that estimated Iraq has about 116 billion barrels of oil reserves while the U.S. Geological Survey believes there is an additional reserve base of 45 billion barrels.
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