Monday May 28, 2007 - 15:19:09 GMT
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GCI Financial - www.gcitrading.com
Forex and Commodity Market Commentary and Analysis (28 May 2007)
The euro appreciated marginally vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3455 level and was supported around the $1.3445 level. The common currency‚Äôs range was extremely tight today on account of the Memorial Day holiday in the U.S. and the Spring Bank holiday in the U.K. Traders will pay very close attention to the release of the minutes from the May Federal Open Market Committee meeting on Wednesday. Any indication that policymakers view inflationary pressures as subsiding could result in U.S. dollar weakness. Dealers, however, have recently been pricing in less of a chance the Federal Reserve will loosen monetary policy this year and this has keep the U.S. dollar relatively stable as of late. Following Wednesday‚Äôs data, the all-important May non-farm payrolls data will be released on Friday. Many estimates are focusing on jobs creation of about 125,000. Tomorrow‚Äôs consumer confidence figure and Thursday‚Äôs Q1 GDP data will also be scrutinized. Euro bids are cited around the US$ 1.3415 level.
The yen appreciated marginally vis-√†-vis the U.S. dollar today as the greenback tested bids around the ¬•121.60 level and was capped around the ¬•121.80 level. Today‚Äôs range was very limited on account of holidays in Europe and the United States. Data released in Japan today saw the April corporate services price index climb 1.1% y/y, the fifth consecutive monthly improvement. Traders are monitoring political developments in Japan where support for Prime Minister Abe‚Äôs cabinet ahead of July parliamentary elections is waning. The Nikkei 225 stock index climbed +0.61% to close at ¬•17,587.59. Dollar bids are cited around the ¬•120.85 level. The euro came off marginally vis-√†-vis the yen as the single currency tested bids around the ¬•163.60 level and was capped around the ¬•163.80 level. The British pound and Swiss franc sank vis-√†-vis the yen as the crosses tested bids around the ¬•241.15 and ¬•99.00 figure, respectively. The Chinese yuan appreciated vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.6450 in the over-the-counter market, down from CNY 7.6527, an post-revaluation closing low. People‚Äôs Bank of China Governor Zhou was quoted as saying ‚Äú(People‚Äôs Bank of China)( have taken some contractionary policies, and (we) need time to observe the feedback,‚ÄĚ suggesting another monetary tightening from the central bank is not in the works now. Traders continue to monitor trade developments between the U.S. and China after extensive meetings between the two countries failed to reach any significant breakthroughs. Protectionist trade legislation could advance in the U.S. Congress and strain relations between the two countries.
The British pound came off marginally vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9825 level and was capped around the $1.9850 level. Today‚Äôs range was limited on account of market holidays in Europe and the U.S. Hometrack reported that house price growth in England and Wales slowed in May while KPMG reported that confidence among small and medium-sized companies is at its highest level since 2004. Cable bids are cited around the US$ 1.9740 level. The euro gained marginal ground vis-√†-vis the British pound as the single currency tested offers around the ‚ā§0.6785 level and was supported around the ‚ā§0.6775 level.
The Swiss franc appreciated marginally vis-√†-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2265 level and was capped around the CHF 1.2280 level. Liquidity was reduced in Switzerland today on account of the Whit Monday holiday. The Swiss April trade balance and UBS consumption indicator will be released tomorrow. Dollar offers are cited around the CHF 1.2325 level. The euro appreciated vis-√†-vis the Swiss franc as the single currency tested offers around the CHF 1.6525 level while the British pound moved lower vis-√†-vis the Swiss franc and tested bids around the CHF 2.4330 level.
The Australian dollar gained ground vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8200 figure and was supported around the $0.8180 level. April retail sales data will be released on Wednesday. Australian dollar bids are cited around the US$ 0.8120 level.
The Canadian dollar was little-changed vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.0785 level and was capped around the $1.0810 level. Traders await Bank of Canada‚Äôs interest rate decision tomorrow with most expecting the central bank to keep the key overnight target rate unchanged at 4.25%. BoC‚Äôs policy statement, however, is expected to be more hawkish than recent statements on account of strong economic activity and increasing inflationary pressures. U.S. dollar offers are cited around the C$ 1.0870 level.
Gold weakened vis-√†-vis the U.S. dollar today as the yellow metal tested bids around the US$ 654.15 level and was capped around the $655.75 level. Today‚Äôs market holidays in Europe and the U.S. resulted in tight ranges. Silver came off vis-√†-vis the U.S. dollar as the pair tested bids around the US$ 12.86 level and was capped around the $12.95 level.
Crude oil moved lower vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for July delivery tested bids around the US$ 64.32 level and were capped around the $65.22 level. News that workers at Nigeria‚Äôs national oil company ended a two-day strike on Saturday added to the pair‚Äôs sell-off. Approximately 25% of Nigeria‚Äôs national oil output remains blocked on account of attacks by militants. Additionally, news that the U.S. and Iran agreed on a broad framework regarding security issues in Iraq led to weaker energy prices.
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