Wednesday June 6, 2007 - 14:50:01 GMT
Share This Story
GCI Financial - www.gcitrading.com
Forex and Commodity Market Commentary and Analysis (6 June 2007)
The euro depreciated vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3495 level and was capped around the $1.3540 level. Technically, today‚Äôs intraday high was right around the 50% retracement of the move from $1.3680 to $1.3390. As expected, the European Central Bank raised its main refinancing rate by +25bps to 4.00% but traders drove the common currency lower absent any firm indication from ECB President Trichet about additional monetary tightening. Trichet noted rates are still ‚Äúmoderate‚ÄĚ and added there is ‚Äúno pre-commitment‚ÄĚ regarding future policy decisions. He added ‚Äúoverall financing conditions are favourable, money and credit growth is vigorous, and liquidity in the euro area is ample.‚ÄĚ Traders must now weigh an ECB that retains a tightening bias and could hike again this year against a Federal Reserve that also maintains a tightening bias but isn‚Äôt expected to lift rates again this year. Notably, the ECB also raised its 2007 inflation forecast and if core U.S. personal consumption expenditures moderate to near or below 2.0%, the euro may hold the upper hand. Data released in the eurozone today saw German manufacturing orders fall 1.2% m/m in April, more-than-expected. In U.S. news, Q1 non-farm productivity was downwardly revised to 1% from a provisional 1.7% while unit labour costs were upwardly revised to 1.8% from 1.4%. Euro bids are cited around the US$ 1.3465 level.
The yen appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the ¬•120.85 level and was capped around the ¬•121.45 level. Technically, today‚Äôs intraday high was just below the 23.6% retracement of the move from ¬•119.45 to ¬•122.15. Data released in Japan today saw the April leading index fall to 20.0 from a revised 33.3 in March while the coincident index improved to 66.7 from 9.1. Dealers cited some talk that traders were unwinding short yen carry trades overnight. Most traders expect Bank of Japan will not raise interest rates until after the July parliamentary elections. The Nikkei 225 stock index lost 0.07% to close at ¬•18,040.93. Dollar bids are cited around the ¬•120.80/ 50 levels. The euro lost ground vis-√†-vis the yen as the single currency tested bids around the ¬•163.40 level and was capped around the ¬•164.35 level. The British pound and Swiss franc came off vis-√†-vis the yen as the crosses tested bids around the ¬•240.95 and ¬•99.35 levels, respectively. The Chinese yuan appreciated vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.6342 in the over-the-counter market, down from CNY 7.6412 and a fresh post-revaluation low. A Chinese government report predicts 2007 retail sales growth will come in around 14% y/y to CNY 8.7 trillion.
The British pound gained marginal ground vis-√†-vis the U.S. dollar today as cable tested offers around the US$ 1.9955 level and was supported around the $1.9905 level. Technically, today‚Äôs intraday low was right around the 38.2% retracement of the move from $1.9545 to $2.0130. BRC reported that shop prices were up 0.4% y/y, down from 0.8% y/y in April, and were unchanged m/m. Also, Voca reported that U.K. pay growth rose to an 83-month high last month. Bank of England‚Äôs Monetary Policy Committee is expected to keep interest rates unchanged tomorrow. Cable bids are cited around the US$ 1.9860 level. 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§0.6790 level.
The Swiss franc appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2145 level and was capped around the CHF 1.2185 level. Stops were hit below the CHF 1.2160 level, representing the 50% retracement of the move from CHF 1.1995 to CHF 1.2330. May unemployment data will be released tomorrow. Dollar offers are cited around the CHF 1.2215 level. The euro and British pound moved lower vis-√†-vis the Swiss franc as the crosses tested bids around the CHF 1.6425 and CHF 2.4220 levels, respectively.
The Australian dollar extended recent gains vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8435 level and was supported around the $0.8365 level. Today‚Äôs intraday high represents a fresh high dating back to February 1989. As expected, Reserve Bank of Australia kept its official cash rate unchanged at 6.25% for the seventh consecutive month. Traders, however, drove the paid high after GDP was reported up 1.6% q/q in the three months to March and up 3.6% y/y. Australian dollar bids are cited around the US$ 0.8370/ 30 levels.
The Canadian dollar appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.0570 level and was capped around the C$ 1.0635 level. Data released in Canada today saw April building permits off 8.4%, down from March‚Äôs revised gain of 26.5%, while the May Ivey manufacturing PMI survey printed at 62.7. U.S. dollar offers are cited around the C$ 1.0695 level.
Gold weakened vis-√†-vis the U.S. dollar today as the yellow metal tested bids around the US$ 666.30 level and was capped around the $667.20 level. The U.S. dollar‚Äôs intraday gains led to a sell-off in gold. Silver moved lower vis-√†-vis the U.S. dollar as the pair tested bids around the US$ 13.64 level and was capped around the $13.86 level.
Crude oil moved lower vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for July delivery tested bids around the US$ 65.39 level and were capped around the $65.90 level. Traders await the release of weekly EIA crude oil data today.
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."