Friday June 1, 2007 - 16:08:48 GMT
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Forex and Commodity Market Commentary and Analysis (1 June 2007)
The euro depreciated vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3390 level and was capped around the $1.3460 level. Technically, today‚Äôs intraday high was right around the 23.6% retracement of the move from $1.3680 to $1.3390 and today‚Äôs intraday low is the pair‚Äôs weakest print since 10 April. Many data were released in the U.S. today. First, May non-farm payrolls expanded 157,000, just above most forecasts, while the unemployment rate held steady at 4.5%. At the same time, it was reported that the ex-food and energy personal consumption expenditure price index was up 0.1% in April, taking the year-over-year increase down to 2% from 2.1% in March and 2.4% in February. This means inflation is currently within the top boundary of the Fed‚Äôs perceived comfort zone but the Fed is unlikely to draw much satisfaction from today‚Äôs data given the strong possibility that inflation may pick up again. Other data released today saw April consumer spending climb 0.5% despite a 0.1% fall in personal income, the first time incomes have declined since August 2005. Moreover, the University of Michigan consumer sentiment index printed at a stronger-than-expected 88.3 at the end of May and the ISM manufacturing activity index improved to 55.0 in May ‚Äď its highest level in twelve months. It was also reported that April pending sales of existing homes fell 3.2%. In eurozone news, EMU-13 GDP rose an annualized 3.0% in Q1, a slight downward revision from the 3.1% initial estimate. European Central Bank member Liebscher reported risks to price stability ‚Äúremain on the upside‚ÄĚ and added policymakers will ‚Äúcontinue to be strongly vigilant.‚ÄĚ Also, the eurozone PMI manufacturing survey fell to 55.0 in May from 55.4 in April, a fifteen-month low. Most traders believe the ECB will tighten monetary policy by +25bps next Thursday. Other data released today saw the EMU-13 April unemployment rate print at 7.1%, down from 7.2% in March. Euro bids are cited around the US$ 1.3375/ 05 levels.
The yen depreciated vis-√†-vis the U.S. dollar today as the greenback tested offers around the ¬•122.15 level and was supported around the ¬•121.65 level. Today‚Äôs intraday high was just a couple of pips below a fresh 2007 high and nearly the highest print since December 2002. There was a dearth of news and data in Japan overnight and traders continue to focus on the short yen carry trade absent any indication Bank of Japan will be raising interest rates sooner rather than later. The Nikkei 225 stock index gained 0.47% to close at ¬•17,958.88. Dollar bids are cited around the ¬•121.05 level. The euro appreciated vis-√†-vis the yen as the single currency tested offers around the ¬•164.05 level and was supported around the ¬•163.55 level. The British pound moved higher vis-√†-vis the yen as sterling tested offers around the ¬•241.55 level while the Swiss franc moved lower vis-√†-vis the yen as the pair tested bids around the ¬•99.00 figure. The Chinese yuan depreciated marginally vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.6473 in the over-the-counter market, up from CNY 7.6466. Data released in the China saw the CLSA PMI manufacturing survey improve to 54.1 while the CFLP PMI manufacturing survey backpedaled to 55.7.
The British pound came off vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9765 level and was capped around the $1.9815 level. Technically, today‚Äôs intraday high and low were right around the 38.2% and 61.8% retracements of the move from $1.9675 to $1.9900. Data released in the U.K. today saw the May PMI manufacturing survey climb to 54.9, a four-month high. Cable bids are cited around the US$ 1.9730/ 1.9685 levels. The euro weakened vis-√†-vis the British pound as the single currency tested bids around the ‚ā§0.6770 level and was capped around the ‚ā§0.6800 figure.
The Swiss franc came off vis-√†-vis the U.S. dollar today as the greenback tested offers around the CHF 1.2330 level and was supported around the CHF 1.2245 level. Technically, today‚Äôs intraday high was right around the 50% retracement of the move from CHF 1.2770 to CHF 1.1875. Data released in Switzerland today saw the May PMI survey fall to 58.9 from 61.9 in April. Also, the May consumer price index was up 0.2% m/m and 0.5% y/y. Dollar offers are cited around the CHF 1.2395 level. The euro gained ground vis-√†-vis the Swiss franc as the single currency tested offers around the CHF 1.6530 level and was supported around the CHF 1.6475 level.
The Australian dollar moved higher vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8315 level and was supported around the $0.8270 level. Stops were reached above the $0.8305 level, representing the 61.8% retracement of the move from $0.8390 to $0.8160. Data released in Australia today saw the May performance of manufacturing index improve to 55.2. Australian dollar bids are cited around the US$ 0.8250 level.
The Canadian dollar extended recent gains vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.0600 figure and was capped around the C$ 1.0710 level. Today‚Äôs intraday low represents the pair‚Äôs weakest print since at least December 1977. The loonie gained ground on political developments in Canada as it was reported that separatist political party Parti Qu√©b√©cois will not vote to topple the current government even though it will vote against the Quebec provincial budget. U.S. dollar offers are cited around the C$ 1.0735 level.
Gold gained ground vis-√†-vis the U.S. dollar today as the yellow metal tested offers around the US $669.75 level and was supported around the $ 659.95 level. Silver moved higher vis-√†-vis the U.S. dollar as the pair tested offers around the US$ 13.62 level and was supported around the $ 13.44 level.
Crude oil climbed higher vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for July delivery tested offers around the US$ 64.79 level and were supported around the $63.85 level. Traders did not anticipate yesterday‚Äôs surprise 2.0 million barrel draw in crude oil stocks. News of fresh violence in Nigeria today underpinned prices.
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