Wednesday May 30, 2007 - 16:18:54 GMT
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Forex and Commodity Market Commentary and Analysis (30 May 2007)
The euro lost ground vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3405 level and was capped around the $1.3455 level. Today‚Äôs intraday low is the pair‚Äôs weakest showing since 10 April. The greenback gained ground after ADP reported May private-sector employment increased by 97,000 from a revised 61,000 in April. ADP is estimating that total non-farm payrolls expanded 121,000 this month and traders await the government‚Äôs non-farm payrolls report on Friday. Notably, ADP‚Äôs estimates have been highly accurate as of late and if the U.S. economy expanded by that amount of jobs, it would be around the consensus estimates of many economists. Traders await the release of the minutes from the Federal Open Market Committee‚Äôs most recent interest rate deliberations this afternoon. In eurozone news, the common currency also sold off after growth in the EMU-13 M3 money supply aggregate decelerate to +10.4% in April from +10.9% in March. European Central Bank member Garganas hawkishly said inflation could be stronger than the 1.8% estimate the ECB issued in March. German economic institutes HWWM and DIW are said to be planning to raise their GDP growth forecasts above 2.5% this week. French President-elect Sarkozy again verbally intervened against the euro‚Äôs strength today saying ‚ÄúI want to do the same thing with the euro as the Chinese do with the Yuan.‚ÄĚ Euro bids are cited around the US$ 1.3355 level.
The yen appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the ¬•121.30 level and was capped around the ¬•121.75 level. Technically, today‚Äôs intraday low was right around the 23.6% retracement of the move from ¬•119.45 to ¬•121.85. Data released in Japan today saw April industrial production fall 0.1%, lower than the +0.5% gain that was expected. Traders are curious to see how the announcement of a higher transaction tax in Chinese capital markets will impact Japanese markets and the yen. The Nikkei 225 stock index lost 0.48% to close at ¬•17,588.26. Dollar bids are cited around the ¬•120.85/ 40 levels. The euro lost ground vis-√†-vis the yen as the single currency tested bids around the ¬•163.05 level and was capped around the ¬•163.70 level. The British pound and Swiss franc came off vis-√†-vis the yen as the crosses tested bids around the ¬•239.90 and ¬•99.00 figures, respectively. The Chinese yuan appreciated vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.6471 in the over-the-counter market, down from CNY 7.6497. The Chinese government announced it is tripling the stamp duty on equity market transactions overnight to 0.3% and this resulted in a 6.5% slide in the Shanghai Composite Index. The Chinese government continues to attempt to slow the asset bubble in many Chinese markets.
The British pound lost ground vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9730 level and was capped around the $1.9830 level. Technically, today‚Äôs intraday low was right around the 76.4% retracement of the move from $1.9675 to $1.9900. A poll from YouGov that was released today saw unchanged median inflation expectations among consumers over the year ahead at 2.5%, the same rate as one year ago. The median estimate for longer-term inflation fell to 3.4% in May from 3.5% in April, the lowest showing since September 2006. These data suggest Bank of England‚Äôs most recent monetary tightening may have anchored inflation expectations more solidly and may reduce the need to lift interest rates further in the future. Many traders believe the BoE will lift rates by another +25bps no later than August. Other data released today saw Land Registry report that house prices climbed +0.6% m/m in April in England and Wales. Cable bids are cited around the US$ 1.9685 level. The euro moved higher vis-√†-vis the British pound as the single currency tested offers around the ‚ā§0.6800 figure and was supported around the ‚ā§0.6780 level.
The Swiss franc gained marginal ground vis-√†-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2235 level and was capped around the CHF 1.2275 level. Technically, today‚Äôs intraday high was right around the 50% retracement of the move from CHF 1.2570 to CHF 1.1995. Q1 GDP data will be released tomorrow. Dollar offers are cited around the CHF 1.2325 level. The euro and British pound weakened vis-√†-vis the Swiss franc as the crosses tested bids around the CHF 1.6440 and CHF 2.4180 levels, respectively.
The Australian dollar moved higher vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8225 level and was supported around the $0.8170 level. Technically, today‚Äôs intraday high was right around the 23.6% retracement of the move from US$ 0.7680 to $0.8390. Data released in Australia today saw March quarterly construction work by value up 8.9% y/y while April retail sales were up 0.1% m/m. Australian dollar bids are cited around the US$ 0.8120 level.
The Canadian dollar weakened vis-√†-vis the U.S. dollar today as the greenback tested offers around the C$ 1.0755 level and was supported around the $1.0685 level. The pair reached its lowest level in 30 years and is now off more than 300 pips in May. Data released in Canada today saw the industrial product price index climb 0.2% m/m and 3.7% y/y while the raw materials price index improved 3.3%, its third consecutive monthly increase. Other data released today saw Canada‚Äôs current account surplus print at C$ 6.49 billion in Q1. U.S. dollar offers are cited around the C$ 1.0800 figure.
Gold lost ground vis-√†-vis the U.S. dollar today as the yellow metal tested bids around the US$ 651.80 level and was capped around the US$ 658.00 figure. The pair came off as traders speculated the minutes of the most recent FOMC meeting would be more hawkish than expected and lead to gains in the U.S. dollar. Also, European Central Bank reported higher-than-expected central bank sales of gold. Silver moved lower vis-√†-vis the U.S. dollar as the pair tested bids around the US$ 13.01 level and was capped around the $13.19 level.
Crude oil gained marginal ground vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for July delivery tested offers around the US$ 63.86 level and were supported around the $62.94 level. Iran again reported that it will not suspend its uranium enrichment activities and this kept the market bid. Traders await weekly EIA energy data tomorrow.
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