Thursday May 24, 2007 - 15:13:40 GMT
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Forex and Commodity Market Commentary and Analysis (24 May 2007)
The euro came off vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3415 level and was capped around the $1.3460 level. Technically, today‚Äôs intraday high and low were right around the 50.0% and 61.8% retracements of the move from $1.3255 to $1.3680, respectively. Data released in the U.S. today saw April new orders for durable goods orders rise 0.6% m/m, above expectations, while March‚Äôs tally was upwardly revised to 5.0%, its strongest showing since September 2006. Excluding transportation, durable goods orders rose 1.5% and excluding aircraft orders, non-defense capital goods orders were up 1.2%, down from +4.4% in March. Other data released in the U.S. today saw weekly initial jobless claims rise 15,000 to 311,000 while the four-week moving average fell to its lowest level in more than one year and continuing jobless claims rose 58,000 to 2.53 million. Additionally, April new home sales soared 16.2%, up from a 1.4% decline in March. Traders continue to reduced their expectations that the Federal Open Market Committee will loosen interest rates this year. In eurozone news, Germany‚Äôs Ifo business climate index was unchanged in May at 108.6, just below December‚Äôs record-high print of 108.7 and these data follow this week‚Äôs strong ZEW business confidence number. It was also reported that Q1 final GDP growth expanded 0.5% the Belgian National Bank May business confidence indicator improved to 3.9 from 3.8 in April. Euro bids are cited around the US$ 1.3355 level.
The yen gained marginal ground vis-√†-vis the U.S. dollar today as the greenback tested bids around the ¬•121.25 level and was capped around the ¬•121.65 level. Technically, today‚Äôs intraday low was just below the 23.6% retracement of the move from ¬•119.45 to ¬•121.85. Traders await tonight‚Äôs April consumer price inflation data in Japan to see if core inflation has moved back above the zero per cent level. Data released in Japan today saw the April trade surplus climb 51.8%. The Nikkei 225 stock index shed 0.05% to close at ¬•17,696.97. Dollar bids are cited around the ¬•120.95 level. The euro weakened vis-√†-vis the yen as the single currency tested bids around the ¬•162.85 level and was capped around the ¬•163.70 level. The British pound and Swiss franc depreciated vis-√†-vis the yen as the crosses tested bids around the ¬•240.70 and ¬•98.65 levels, respectively. The Chinese yuan appreciated marginally vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.6519 in the over-the-counter market, down from CNY 7.6530. People‚Äôs Bank of China Governor Zhou characterized the pace of yuan exchange rate reform as ‚Äúgood‚ÄĚ and said the U.S. and China ‚Äúagree on the general direction of currency reform.‚ÄĚ Former Federal Reserve Chairman Greenspan spooked some Asian markets overnight when he warned of a ‚Äúdramatic correction‚ÄĚ in Chinese equity markets.
The British pound came off vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9835 level and was capped around the $1.9885 level. Technically, today‚Äôs intraday low was just below the 50% retracement of the move from $1.9535 to $2.0130. Data released in the U.K. today saw the CBI report that the balance of firms expecting to raise prices reached +25% in May, up from +16% in April and the highest since March 1995. These expectations reflect continued inflationary pressures in the U.K. and many traders believe the Bank of England Monetary Policy Committee will tighten interest rates by +25bps again as early as next month. Other data released in the U.K. today saw Q1 business investment decline 1.3% q/q. Cable bids are cited around the US$ 1.9770 level. The euro lost ground vis-√†-vis the British pound as the single currency tested bids around the ‚ā§0.6760 level and was capped around the ‚ā§0.6780 level.
The Swiss franc lost marginal ground vis-√†-vis the U.S. dollar today as the greenback tested offers around the CHF 1.2310 level and supported around the CHF 1.2265 level. Technically, today‚Äôs intraday low was right around the 76.4% retracement of the move from CHF 1.2355 to CHF 1.1995. Data released in Switzerland today saw the ZEW April economic expectations indicator rise to 0 from -3.5 in April. Dollar offers are cited around the CHF 1.2350 level. The euro came off marginally vis-√†-vis the Swiss franc as the pair tested bids around the CHF 1.6500 figure while the British pound moved higher vis-√†-vis the Swiss franc and tested offers around the CHF 2.4435 level.
The Australian dollar weakened vis-√†-vis the U.S. dollar today as the Aussie tested bids around the US$ 0.8200 figure and was capped around the $0.8240 level. Australian dollar bids are cited around the US$ 0.8160 level.
The Canadian dollar came off marginally vis-√†-vis the U.S. dollar today as the pair tested offers around the C$ 1.0850 level and was supported around the C$ 1.0805 level. The pair reached its weakest level since December 1977 and traders are wondering whether the market will push the pair to trade with a C$ 1.07 handle. U.S. dollar offers are cited around the C$ 1.0890 level.
Gold came off vis-√†-vis the U.S. dollar today as the yellow metal tested bids around the US$ 657.50 level and was capped around the $662.20 level. The U.S. dollar‚Äôs intraday strength contributed to gold‚Äôs intraday sell-off. Silver weakened vis-√†-vis the U.S. dollar as the pair tested bids around the US$ 12.95 level and was capped around the $13.07 level.
Crude oil lost ground vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for July delivery tested bids around the US$ 64.98 level and were capped around the $66.13 level. Weekly U.S. inventories data released yesterday confirmed that U.S. gasoline stocks have not been replenished as much as some estimated ahead of the beginning of the U.S. driving season and this is underpinning prices. Also, Nigerian oil unions are expected to strike on 28-29 May and an International Atomic Energy Agency report confirmed that Iran continues to enrich uranium in defiance of United Nations policies. The U.S. continues to conduct military maneuvers off of Iran‚Äôs coast.
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