Friday June 22, 2007 - 15:37:30 GMT
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GCI Financial - www.gcitrading.com
Forex and Commodity Market Commentary and Analysis (22 June 2007)
The euro gained ground vis-Ã -vis the U.S. dollar today as the single currency tested offers around the US$ 1.3465 level and was supported around the $1.3380 level. Technically, todayâ€™s intraday high was right around the 50% retracement of the move from $1.3255 to $1.3680. Data released in the U.S. yesterday saw weekly initial jobless claims climb 10,000 to 324,000 whole continuing jobless claims were up 39,000 to 2.523 million. Also, U.S. leading economic indicators were up 0.3% in May and the Philadelphia Fed manufacturing index printed at a stronger-than-expected 18.0. In eurozone news, the German Ifo business climate indicator fell to 107.0 from 108.6 in May yet the measure remains elevated by historical standards. Also, EMU-13 April industrial orders were off 0.4% m/m and up 12.2% y/y while the Belgian National Bankâ€™s June business confidence indicator rallied to 5.5 from 3.9 in May. Most traders anticipate the European Central Bank will tighten monetary policy by about another +50bps this year. Euro bids are cited around the US$ 1.3375 level.
The yen came off vis-Ã -vis the U.S. dollar today as the greenback tested offers around the Â¥124.15 level and was supported around the Â¥123.65 level. The pair established a fresh multi-year high dating back to December 2002. Finance minister Omi verbally intervened saying currency values should reflect economic fundamentals. Data released in Japan saw May supermarket sales down 0.6% y/y, the seventeenth consecutive monthly decline. Upper house elections in Japan are scheduled for 29 July and most traders believe Bank of Japan will not raise the overnight call rate from its current 0.50% level before then. The Nikkei 225 stock index lost 0.28% to close at Â¥18,188.63. Dollar bids are cited around the Â¥123.35 level. The euro moved higher vis-Ã -vis the yen as the single currency tested offers around the Â¥166.90 level and was supported around the Â¥165.60 level. The British pound and Swiss franc gained ground vis-Ã -vis the yen as the crosses tested offers around the Â¥247.85 and Â¥100.80 levels, respectively. The Chinese yuan finished the week at CNY 7.6255 vis-Ã -vis the U.S. dollar. Some traders believe Peopleâ€™s Bank of China will tighten monetary policy imminently. Legislation was introduced in the U.S. Senate yesterday that would toughen U.S. laws against foreign exchange market manipulation.
The British pound jumped higher vis-Ã -vis the U.S. dollar today as cable tested offers around the US$ 1.9995 level and was supported around the US$ 1.9910 level. Technically, todayâ€™s intraday high was right around the 23.6% retracement of the move from $1.9545 to $2.0130 and todayâ€™s intraday low was right around the 23.6% retracement of the move from $1.9180 to $2.0130. Data released in the U.K. yesterday saw the June manufacturersâ€™ order book balance at +8%, equaling Marchâ€™s twelve-year record-high. Traders pushed sterling higher on news the U.K. government may reform the manner in which multinational workers are taxed. Dealers believe Bank of Englandâ€™s Monetary Policy Committee will tighten monetary policy by at least +50bps before the end of the year. Cable bids are cited around the US$ 1.9860 level. The euro moved higher vis-Ã -vis the British pound as the single currency tested offers around the â‚¤0.6735 level and was supported around the â‚¤0.6720 level.
The Swiss franc appreciated vis-Ã -vis the U.S. dollar today as the greenback tested bids around the CHF 1.2290 level and was capped around the CHF 1.2420 level. Technically, todayâ€™s intraday low was just above the 50% retracement of the move from CHF 1.2570 to CHF 1.1995. The Swiss government lifted its 2007 GDP forecast from 2.0% to 2.3% and sees stronger growth in 2008. The revised forecast reduced demand for using the Swiss franc as a carry trade funding vehicle. Traders are starting to price in a risk of a +50bps monetary policy tightening at the Swiss National Bank meeting in September on account of the higher one-week repo rate. Dollar offers are cited around the CHF 1.2435 level. The euro and British pound came off vis-Ã -vis the Swiss franc as the crosses tested bids around the CHF 1.6545 and CHF 2.4565 levels, respectively.
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