Monday June 11, 2007 - 14:37:07 GMT
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Forex and Commodity Market Commentary and Analysis (11 June 2007)
The euro weakened vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3330 level and was capped around the $ 1.3370 level. Technically, today‚Äôs intraday high was right around the 50% retracement of the move from $1.3070 to $1.3680. The common currency came off after French industrial output data came in weaker-than-expected at -0.8% m/m in April. Traders await testimony from European Central Bank President Trichet later in the North American session. Germany‚Äôs DIW institute reduced its estimate for Q2 German GDP growth to 0.4% from 0.6%. The communiqu√© issued by Group of Eight leaders in Germany over the weekend said it is ‚Äúcrucial that emerging Asian economies with large and growing current account surpluses allow their effective exchange rates to move so that necessary adjustments will occur.‚ÄĚ In U.S. news, Cleveland Federal Reserve President Pianalto said the slowdown in the U.S. housing sector has not spilled over to the consumer sector yet but added the Fed is ‚Äúwatching that very closely.‚ÄĚ Euro bids are cited around the US$ 1.3305/ 1.3215 levels.
The yen weakened marginally vis-√†-vis the U.S. dollar today as the greenback tested offers around the ¬•121.80 level and was supported around the ¬•121.50 level. Technically, today‚Äôs intraday low was right around the 23.6% retracement of the move from ¬•119.45 to ¬•122.15. Data released in Japan today saw a revision to gross domestic product growth in the January ‚Äď through ‚Äď March quarter with the economy having expanded 0.8%, up from 0.6%. On an annualized basis, the economy grew 3.3%, up from the initial 2.4%, and the GDP deflator for the quarter fell 0.3% y/y. The Nikkei 225 stock index gained 0.31% to close at ¬•17,834.48. Dollar bids are cited around the ¬•120.80 level. The euro moved lower vis-√†-vis the yen as the single currency tested bids around the ¬•162.10 level and was capped around the ¬•162.80 level. The British pound and Swiss franc came off vis-√†-vis the yen as the crosses tested bids around the ¬•238.90 and ¬•98.20 levels, respectively. The Chinese yuan depreciated vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.6632 in the over-the-counter market, up from CNY 7.6550. The government reported China‚Äôs trade surplus in May expanded 73% y/y to US$ 22.45 billion. Also, it was reported that the May producer price index was up 2.8% y/y, above People Bank of China‚Äôs perceived comfort zone.
The British pound extended recent losses vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 1.9650 level and was capped around the $1.9700 figure. Technically, today‚Äôs intraday low was just below the 50% retracement of the move from $1.9180 to $2.0130. Data released in the U.K. today saw PPI input prices rise a stronger-than-expected 1.2% m/m and 1.1% y/y. Some economists believe manufacturers may try to pass through raw materials price increases to consumers on account of higher PPI. Other data released today saw Bank of England‚Äôs measure of April house price growth up 11.3% y/y while a survey reported retail sales growth in central London decelerated to +6.3% y/y in May. Cable bids are cited around the US$ 1.9545 level. The euro came off marginally vis-√†-vis the British pound as the single currency tested bids around the ‚ā§0.6780 level and was capped around the ‚ā§0.6795 level.
The Swiss franc came off vis-√†-vis the U.S. dollar today as the greenback tested offers around the CHF 1.2390 level and was supported around the CHF 1.2345 level. Technically, today‚Äôs intraday high was just below the 38.2% retracement of the move from CHF 1.3235 to CHF 1.1875. Traders await any comments from Swiss National Bank officials regarding the franc‚Äôs weakness, particularly vis-√†-vis the euro. Dollar offers are cited around the CHF 1.2435 level. The euro and British pound gained ground vis-√†-vis the Swiss franc as the crosses tested offers around the CHF 1.6535 and CHF 2.4375 levels, respectively.
The Australian dollar weakened vis-√†-vis the U.S. dollar today as the Aussie tested bids around the US$ 0.8390 level and was capped around the $0.8445 level. The big news in the Antipodes overnight was intervention from Reserve Bank of New Zealand. May NAB business confidence data will be released in Australia overnight. Australian dollar bids are cited around the US$ 0.8355 level. The New Zealand dollar fell precipitously vis-√†-vis the U.S. dollar today as the kiwi tested bids around the US$ 0.7480 level and was capped around the $0.7630 level. The sharp sell-off was precipitated by New Zealand dollar-selling intervention by Reserve Bank of New Zealand, the first time the central bank has intervened since it free-floated its currency in 1985. Traders estimate RBNZ sold about NZ$ 1.5 billion overnight and the central bank indicated it did so on account of ‚Äúunjustified‚ÄĚ gains in the kiwi. RBNZ reported ‚ÄúAs stated in our June monetary policy statement, we regard current levels of the exchange rate as exceptional and unjustified in terms of economic fundamentals. This action does not prejudge the future direction of monetary policy, which as always will remain dependent on emerging economic trends." New Zealand dollar bids are cited around the US$ 0.7440 level.
The Canadian dollar came off marginally vis-√†-vis the U.S. dollar today as the greenback tested offers around the C$ 1.0635 level and was supported around the $1.0600 figure. Data released in Canada today saw Q1 capacity utilization rise to 83% from 82.4% in Q4. Q1 labour productivity data will be released tomorrow. U.S. dollar offers are cited around the C$ 1.0695 level.
Gold appreciated vis-√†-vis the U.S. dollar today as the yellow metal tested offers around the US$ 653.15 level and was supported around the $648.75 level. Some traders still believe gold will reach US$ 700.00 this year. Silver moved lower vis-√†-vis the U.S. dollar as the pair tested bids around the US$ 13.07 level and was capped around the $13.21 level.
Crude oil moved higher vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for July delivery tested offers around the US$ 65.37 level and were supported around the $64.57 level. Traders pushed the pair high after Iranian petroleum minister Hamaneh reported ‚Äúthere is sufficient crude oil in the market,‚ÄĚ leading many to speculate OPEC will not increase output ahead of its next production meeting in September. Traders remain concerned over the level of U.S. gasoline supplies and refinery utilization.
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