Friday June 15, 2007 - 15:06:05 GMT
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Forex and Commodity Market Commentary and Analysis (15 June 2007)
The euro appreciated vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3360 level and was supported around the $1.3305 level. Technically, today‚Äôs intraday low was right around the 61.8% retracement of the move from $1.3070 to $1.3680. Many data were released in the U.S. today. First, May headline consumer price inflation rose 0.7%, the largest gain since September 2005, while the core rate was up a mere +0.1%, below forecasts. These data are likely to provide Federal Reserve policymakers with some satisfaction. Second, April net foreign capital inflows to the U.S. rose US$ 71.7 billion to US$ 118.7 billion with net foreign acquisition of long-term securities at US$ 76.5 billion. Third, the New York Fed‚Äôs Empire manufacturing activity index improved to 25.75 in June from 8.03 in May. Fourth, the U.S. current account balance printed at ‚ÄďUS$ 192.6 billion in Q1, better-than-expected. The U.S.‚Äôs current account deficit is now 5.7% of U.S. GDP. Fifth, the University of Michigan mid-June consumer sentiment index came in weaker-than-expected at 83.7. Sixth, May industrial output was unchanged with capacity utilization at 81.3%. Federal Reserve Chairman Bernanke today warned the markets may be underestimating the impact of the slowing housing market. In eurozone news, the EMU-13 April trade surplus fell to ‚ā¨1.8 billion from March‚Äôs ‚ā¨7.6 billion level. Euro bids are cited around the US$ 1.3215 level.
The yen extended recent losses vis-√†-vis the U.S. dollar today as the greenback tested offers around the ¬•123.50 level and was supported around the ¬•122.85 level. Traders lifted the pair to its highest level since December 2002 after Bank of Japan‚Äôs Policy Board unanimously decided to keep the overnight call rate unchanged at 0.50%, as expected. Moreover, BoJ Governor Fukui reiterated his pledge to adjust interest rates gradually, incentivizing short yen carry traders who do not believe the central bank will lift rates anytime soon. BoJ‚Äôs monthly report released today indicated ‚ÄúJapan's economy is expanding moderately‚Ä¶The three-month rate of change in domestic corporate goods prices index (CGPI) has been positive mainly due to the rise in international commodity prices.‚ÄĚ Data released in Japan today saw the April leading index revised to 18.2 from the provisional print of 20.0 while the April tertiary index rose 1.7% m/m, the third improvement in four months. The Nikkei 225 stock index gained 0.72% to close at ¬•17,971.49. Dollar bids are cited around the ¬•122.35 level. The euro moved higher vis-√†-vis the yen as the single currency tested offers around the ¬•164.95 level and was supported around the ¬•163.55 level. The British pound and Swiss franc appreciated vis-√†-vis the yen as the crosses tested offers around the ¬•244.30 and ¬•99.35 levels, respectively. The Chinese yuan appreciated vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.6254 in the over-the-counter market, down from CNY 7.6430, the pair‚Äôs lowest closing price since the yuan‚Äôs revaluation of July 2005. Data released in Chian today saw urban fixed-asset investment up 25.9% in the January ‚Äď May period.
The British pound appreciated vis-√†-vis the U.S. dollar today as cable tested offers around the US$ 1.9765 level and was supported around the $1.9685 level. Technically, today‚Äôs intraday low was right around the 76.4% retracement of the move from $1.9545 to $2.0130 while today‚Äôs intraday high was right around the 38.2% retracement of the move from $1.9180 to $2.0130. Data released in the U.K. today saw IRS pay deals remain benign in the three months to May. Bank of England Monetary Policy Committee member Tucker today said the members of the MPC should not have their individual views published when the minutes of meetings are released. Cable bids are cited around the US$ 1.9715/ 1.9685 levels. The euro came off marginally vis-√†-vis the British pound as the single currency tested bids around the ‚ā§0.6750 level and was capped around the ‚ā§0.6765 level.
The Swiss franc appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2420 level and was capped around the CHF 1.2465 level. Technically, today‚Äôs intraday low was right around the 61.8% retracement of the move from CHF 1.2770 to CHF 1.1875. Data released in Switzerland today saw April retail sales climb 3.2% y/y. Swiss National Bank tightened monetary policy yesterday by +25bps, largely to counter weakness in the franc. Dollar offers are cited around the CHF 1.2555 level. The euro and British pound gained ground vis-√†-vis the Swiss franc as the crosses tested offers around the CHF 1.6610 and CHF 2.4585 levels, respectively.
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