Monday May 14, 2007 - 15:52:15 GMT
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Forex and Commodity Market Commentary and Analysis (14 May 2007)
The euro gained ground vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3560 level and was supported around the $1.3525 level. Technically, today‚Äôs intraday low was right around the 38.2% retracement of the move from $1.3625 to $1.3465. Traders pushed the common currency higher after EMU-13 March industrial production climbed 0.4% m/m and 3.7% y/y, exceeding forecasts. The dollar has been on the defensive since Friday‚Äôs weak U.S. retail sales figure was released. Traders await the release of U.S. April consumer price inflation data tomorrow followed by housing starts on Wednesday. These data could provide more of a clue as to when the Federal Reserve will move closer to neutral with regard to its monetary policy bias. Additionally, Fed Chairman Bernanke will speak tomorrow and Thursday and his comments could drive the dollar also. Euro bids are cited around the US$ 1.3490 level.
The yen depreciated vis-√†-vis the U.S. dollar today as the greenback tested offers around the ¬•120.45 level and was supported around the ¬•120.00 figure. Stops were reached above the ¬•120.35 level, representing the 23.6% retracement of the move from ¬•114.45 to ¬•122.15. Short yen carry trades were said to have increased overnight after New Zealand‚Äôs March retail sales number came in much stronger-than-expected at +1.3% m/m. Data released in Japan overnight saw the April wholesale goods price index climb 2.2% y/y, the 27th consecutive monthly increase. Also, the March current account surplus was up 36.9% y/y to ¬•3.317 trillion and April corporate failures were off 10.8% m/m. Many traders believe the yen could appreciate this week, especially if GDP for the January ‚Äď March quarter prints stronger than the 0.7% that is expected this week. European Central Bank President Trichet verbally intervene on the yen today saying ‚ÄúI will also repeat that I have noted that the Japanese authorities have said they believe the Japanese economy to be on a sustainable path of recovery and the exchange rates should reflect these economic fundamentals.‚ÄĚ The Nikkei 225 stock index climbed 0.71% to close at ¬•17,677.94. Dollar bids are cited around the ¬•119.85 level. The euro moved higher vis-√†-vis the yen as the single currency tested offers around the ¬•163.20 level and was supported around the ¬•162.50 level. The British pound weakened vis-√†-vis the yen as sterling tested bids around the ¬•238.05 level while the Swiss franc moved higher vis-√†-vis the yen and tested offers around the ¬•98.80 level. The Chinese yuan weakened vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.6803 in the over-the-counter market, up from CNY 7.6766. Data released in China today saw April wholesale prices up 4.6% y/y while April consumer prices were up 3.0% y/y, down from 3.3% y/y in March. The China Banking Regulatory Commission announced it will permit domestic banks to invest in overseas equity markets for the first time.
The British pound lost ground vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9790 level and was capped around the $ 1.9845 level. Technically, today‚Äôs intraday high and low were right around the 50% and 61.8% retracements of the move from $1.9590 to $2.0130, respectively. Sterling moved lower after April input prices expanded a weaker-than-expected +0.7% m/m while the core output prices were weaker-than-expected at +2.4% y/y. Also, core output prices were up a mere +0.1% m/m, the weakest showing since December 2006. These data suggest that factory gate inflation is ebbing and this could also slow inflationary pressures at the retail level, leading to less of a need for Bank of England‚Äôs Monetary Policy Committee to tighten interest rates further. It was also reported that DCLG house prices printed at +10.9% y/y in March, below forecasts. Additionally, BRC‚Äôs London Retail Sales Monitor noted retail sales in London decelerated to +4.5% y/y. Cable bids are cited around the US$ 1.9740 level. The euro moved higher vis-√†-vis the British pound as the single currency tested offers around the ‚ā§0.6845 level and was supported around the ‚ā§0.6820 level.
The Swiss franc came off vis-√†-vis the U.S. dollar today as the greenback tested offers around the CHF 1.2205 level and was supported around the CHF 1.2170 level. Technically, today‚Äôs intraday high was just below the 38.2% retracement of the move from CHF 1.2570 to CHF 1.1995. Swiss National Bank directorate member Jordan hawkishly reported ‚ÄúIn the past four years we have regularly hiked rates. From today's vantage point the stage in which further interest rates hikes are needed appears not yet to have come to a full close. (A weaker Swiss franc) tends to stimulate demand and the domestic economy and raises inflation through higher import prices. If that is the case, we must react.‚ÄĚ The SNB last hiked rates in March, lifting them by +25bp. Dollar offers are cited around the CHF 1.2280 level. The euro gained ground vis-√†-vis the British pound as the single currency tested offers around the ‚ā§0.6845 level and was supported around the ‚ā§0.6820 level.
The Australian dollar gained ground vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8350 level and was supported around the $0.8310 level. Stops were hit above the $0.8340 level, representing the 76.4% retracement of the move from $0.8390 to $0.8170. Data released in Australia today saw March housing finance climb 1.3% m/m. Australian dollar bids are cited around the US$ 0.8300 figure.
The Canadian dollar appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.1065 level and was capped around the C$ 1.1125 level. Technically, today‚Äôs intraday low was right around the 61.8% retracement of the move from C$ 1.1005 to C$ 1.1170. March manufacturing data will be released in Canada tomorrow. Dollar offers are cited around the C$ 1.1155 level.
Gold came off vis-√†-vis the U.S. dollar today as the yellow metal tested bids around the US$ 665.40 level and was capped around the $674.65 level. Silver moved lower vis-√†-vis the U.S. dollar as the pair tested bids around the US$ 13.04 level and was capped around the $13.29 level.
Crude oil gained ground vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for June delivery tested offers around the US$ 63.05 level and were supported around the $ 62.28 level. Traders pushed energy prices higher after additional U.S. refineries reported problems with operations. Also, rumours of a pending strike in Nigeria underpinned prices.
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