Tuesday April 24, 2007 - 14:28:04 GMT
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Forex and Commodity Market Commentary and Analysis (24 April 2007)
The euro gained marginal ground vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3585 level and was supported around the $1.3550 level. Technically, today‚Äôs intraday low was right around the 23.6% retracement of the move from $1.3255 to $1.3635. Today‚Äôs range was very thin as traders were loath to assume new risk ahead of U.S. economic data. March existing home sales were off 8.4% to 6.12 million annualized units and were off 11.3% y/y. Also, April consumer confidence fell to 104.0 from 108.2 in March. In eurozone news, the EMU-13 headline industrial orders figure saw a 0.7% m/m decline whole the ex-transportation component was up +0.5% m/m. Most traders continue to expect that European Central Bank will tighten monetary policy by +25bps in June. ECB member Tumpel-Gugerell reported eurozone growth prospects remain ‚Äúvery positive‚ÄĚ and that inflation should remain below 2% in 2007. ECB vice president Papademos spoke today and indicated he would not change the market‚Äôs expectations regarding a June interest rate hike. Euro bids are cited around the US$ 1.3490 level.
The yen came off 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 March corporate services price index rise 0.6% y/y, the fourth consecutive monthly increase. The Nikkei 225 stock index lost 0.02% to close at ¬•17,451.77. Dollar bids are cited around the ¬•118.30/ 117.50 levels. The euro appreciated vis-√†-vis the yen as the single currency tested offers around the ¬•161.50 level and was supported around the ¬•160.25 level. The British pound and Swiss franc gained ground vis-√†-vis the yen as the crosses tested offers around the ¬•238.00 figure and ¬•98.55 level, respectively. The Chinese yuan came off vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.7261, up from CNY 7.7247.
The British pound came off marginally vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9955 level and was capped around the $2.0020 level. Bank of England Governor King testified today and indicated he expects the consumer price inflation rate will recede sharply over the next 4-to-6 months. Following the 3.1% increase in March consumer price inflation, most traders believe the MPC will tighten monetary policy again in May by +25bps and many traders also believe another +25bps hike is in the card later this year. Data released in the U.K. today saw March public sector net borrowing print at ‚ā§8.5 billion in March. This means the U.K. government borrowed less in fiscal year 2006-2007 than it has for three years, underscoring improvements in the government‚Äôs fiscal position. Cable bids are cited around the US$ 1.9925 level. The euro gained ground vis-√†-vis the British pound today as the single currency tested offers around the ‚ā§0.6800 figure and was supported around the ‚ā§0/6780 level.
The Swiss franc appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2050 level and was capped around the CHF 1.2105 level. Technically, today‚Äôs intraday high was just below the 38.2% retracement of the move from CHF 1.2280 to CHF 1.2000. Data released in Switzerland today saw the March trade surplus narrow to CHF 718 million from CHF 1.381 billion in March. Also, the UBS private consumption indicator improved to 2.13 points from a revised 2.02 points in February, its highest level since July 2001. Dollar offers are cited around the CHF 1.2140 level. The euro and British pound came off vis-√†-vis the Swiss franc as the crosses tested bids around the CHF 1.6365 and CHF 2.4100 figures, respectively.
The Australian dollar pulled back further vis-√†-vis the U.S. dollar today as the Aussie tested bids around the US$ 0.8235 level and was capped around the $0.8340 level. Technically, today‚Äôs intraday high was right around the 23.6% retracement of the move from $0.8150 to $0.8390. The pair came off after Q1 CPI was up 0.1% q/q with the annual rate falling to +2.3% from +2.4%. Traders are paring their expectations that Reserve Bank of Australia will raise interest rates next month following relatively benign produce and consumer price inflation data. Australian dollar bids are cited around the US$ 0.8205 level.
The Canadian dollar lost marginal ground vis-√†-vis the U.S. dollar today as the greenback tested offers around the C$ 1.1245 level and was supported around the C$ 1.1190 level. The pair continues to orbit the C$ 1.1230 level, representing the 76.4% retracement of the move from C$ 1.1030 to $1.1875. As expected, Bank of Canada kept interest rates unchanged at 4.25% today. BoC reported there is a chance that inflation could remain elevated for longer than expected but added the risk of a further economic slowdown in the U.S. Even though the statement was generally more benign than expected, the central bank did indicate there is ‚Äúnow a slight tilt to the upside‚ÄĚ in inflation risks. U.S. dollar bids are cited around the C$ 1.1150 level.
Gold came off marginally vis-√†-vis the U.S. dollar today as the yellow metal tested bids around the US$ 684.95 level and was capped around the $691.25 level. Silver weakened vis-√†-vis the U.S. dollar as the pair tested bids around the $13.93 level and was capped around the $14.12 level.
Crude oil moved higher vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for June delivery tested offers around the US$ 66.27 level and was supported around the $65.61 level. Violence continues to erupt in Nigeria following this weekend‚Äôs presidential elections and this is driving prices higher. The European Union will resume talks with Iran on Thursday regarding Iran‚Äôs uranium enrichment programs.
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