Monday April 30, 2007 - 15:04:13 GMT
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GCI Financial - www.gcitrading.com
Forex and Commodity Market Commentary and Analysis (30 April 2007)
The euro lost ground vis-Ã -vis the U.S. dollar today as the single currency tested bids around the US$ 1.3590 level that was capped around the $1.3650 level. Technically, today's intraday low was right around the 61.8% retracement level of the move from $1.3540 to $1.3680. The common currency erased some intraday losses after the release of U.S. economic data that saw March personal spending increase +0.3%, the slowest pace since October 2006. Adjusted for inflation, personal spending fell 0.2%, the lowest reading since September 2005. March personal income gained +0.7% while the all-important core personal consumption expenditure price index was flat, taking the year-over-year reading lower to +2.1% from February's +2.4% reading. The pullback in core PCE will provide the Federal Reserve with a little bit of satisfaction but the reading remains above the Fedâ€™s perceived +2.0% comfort level. Last weekâ€™s U.S. GDP data printed weaker-than-expected and if this Fridayâ€™s April non-farm payrolls report is on the weak side, the U.S. dollar could be pressured. The Chicago PMI survey came in on the soft side at 52.9, down from 61.7, and March construction spending was up +0.2%, down from Februaryâ€™s +1.5% gain. In eurozone news, EMU-13 April provisional harmonized consumer price inflation fell to +1.8% y/y from +1.9% y/y in March. Most traders, however, are speculating the European Central Bank will raise interest rates by +25bps in June. Additionally, German March retail sales were off 0.7% m/m and up 0.5% y/y while March new orders for plant and machinery gained 47% y/y. Also, EMU-13 April industrial confidence improved, consumer confidence was unchanged, and the overall economic sentiment index ticked down marginally. It was also reported that the EMU-13 March M3 money supply expanded +10.9% y/y, up from +10.0% in February. Euro bids are cited around the 1.3575 level.
The yen appreciated marginally vis-Ã -vis the U.S. dollar today as the greenback tested bids around the Â¥119.15 level and was capped around the Â¥119.75 level. Liquidity was reduced during the Asian session on account of the Japanese market holiday and will be lower all week on account of other Japanese and Chinese market holidays. Technically, today's intraday low was right around the 38.2% retracement level of the move from Â¥114.45 to Â¥122.15. The yen gained some ground as traders reduced exposure to short yen carry trades after political tensions mounted in Turkey between the government and military concerning the countryâ€™s next president. Spreads in the emerging markets widened on account of this tension and some traders are concerned that growing risk aversion could result in reduced demand for yen carry trades. Dollar bids are cited around the Â¥118.75 level. The euro came off vis-Ã -vis the yen as the single currency tested bids around the Â¥162.40 level and was capped around the Â¥163.05 level. The British pound and Swiss franc weakened vis-Ã -vis the yen as the crosses tested bids around the Â¥237.75 and Â¥98.80 levels, respectively. The Chinese yuan appreciated sharply vis-Ã -vis the U.S. dollar as the greenback closed at CNY 7.7039 in the over-the-counter market, down from CNY 7.7135 â€“ a fresh post-revaluation closing low. Peopleâ€™s Bank of China announced that it is raising commercial banksâ€™ reserve requirements by 50bps to 11.0% as of 15 May. Many traders believe the central bank will continue to tighten monetary policy throughout the year. Chinese financial markets will be closed for the next several days.
The British pound weakened vis-Ã -vis the U.S. dollar today as cable tested bids around the US$1.9890 level and was capped around the $1.9970 level. Technically, today's intraday high was right around the 38.2% retracement level of the move from $2.0130 to $1.9865. Data released in the U.K. today saw Hometrack April house prices climb +0.7% m/m, a deceleration in residential real estate prices. Also, BBA reported that March mortgage approvals fell to 75,098 from 85,098 one year ago. Also, the GfK/ NOP April headline U.K. consumer confidence index improved to -6 from -8 in March. Most traders believe Bank of England's Monetary Policy Committee will raise interest rates in May. Cable bids are cited around the US$ 1.9860 level. The euro came off marginally vis-Ã -vis the British pound as the single currency tested bids around the â‚¤0.6815 level and was capped around the â‚¤0.6835 level.
The Swiss franc lost ground vis-Ã -vis the U.S. dollar today as the greenback tested offers around the CHF 1.2100 level and was supported around the CHF 1.2030 level. Technically, today's intraday high was right around the 38.2% retracement level of the move from CHF 1.2280 to CHF 1.1995. Swiss April PMI data will be released on Wednesday. Dollar offers are cited around the CHF 1.2155 level. The euro and British pound depreciated vis-Ã -vis the Swiss franc as the crosses tested bids around the CHF 1.6415 and CHF 2.4020 levels, respectively.
The Australian dollar gained marginal ground vis-Ã -vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8305 level and was supported around the US$ 0.8255 level. Technically, today's intraday high was just above the 38.2% retracement level of the move from $0.8150 to $0.8390. Data released in Australia today saw March private sector credit growth up +1.1% m/m and +14.8% y/y. Also, the April TD Securities inflation gauge rose +0.1% m/m and +3.0% y/y. Australian dollar bids are cited around the US$ 0.8240 level.
The Canadian dollar extended recent gains vis-Ã -vis the U.S. dollar today as the greenback tested bids around the C$ 1.1090 level and was capped around the C$ 1.1195 level. Today's intraday low was the pairâ€™s weakest showing since 28 September 2006. Data released in Canada today saw GDP growth of +0.4% m/m, up from +0.1% in January. U.S. dollar offers are cited around the C$1.1230 level.
Gold came off vis-Ã -vis the U.S. dollar today as the yellow metal tested bids around the US$676.10 level and was capped around the US$ 682.30 level. Some traders believe the Golden Week holidays in Asia will reduce short-term demand for gold. Silver backed off vis-Ã -vis the U.S. dollar as the greenback tested bids around the US$ 13.40 level and was capped around the $13.56 level.
Crude oil moved lower visit is the U.S. dollar today as light, sweet NYMEX crude oil futures for June delivery tested bids around the US$ 65.60 level and was capped around the $66.62 level. News that Saudi officials arrested 172 militants on Friday who were preparing to launch a major terrorist attack contributed to price volatility. Prices are generally supported by lower U.S. crude oil and gasoline inventories.
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