Tuesday June 26, 2007 - 15:00:09 GMT
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Forex and Commodity Market Commentary and Analysis (26 June 2007)
The euro was little-changed vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3430 level and was capped around the $1.3480 level. Technically, today‚Äôs intraday high was right around the 76.4% retracement of the move from $1.3550 to $1.3260. Traders await the Federal Open Market Committee‚Äôs interest rate meeting on Thursday with most Fed-watchers expecting the federal funds target rate to remain unchanged at 5.25%. Inflationary pressures remain elevated in the U.S. economy and officials will likely again mention the slumping U.S. housing market in their policy statement. Data released in the U.S. today saw May building permits upwardly revised to +4.3% m/m to an annualized rate of 1.520 million units. Also, Redbook retail sales were off 1.0% m/m in the first three weeks of June. Additionally, June consumer confidence fell to 103.9 from 108.0 in May and weaker-than-expected and May new home sales were off 1.6% to an annualized 915,000 rate. In eurozone news, European Central Bank member Ordonez reported the eurozone‚Äôs economic growth will remain ‚Äúsubstantially above potential.‚ÄĚ Data released in the eurozone saw German May import prices up 0.3% m/m and 0.6% y/y. Also, the EMU-13 current account fell back into deficit in April, registering a balance of -‚ā¨4.0 billion after March‚Äôs surplus of ‚ā¨6.7 billion. Euro bids are cited around the US$ 1.3375 level.
The yen appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the ¬•122.85 level and was capped around the ¬•123.70 level. Technically, today‚Äôs intraday low was right around the 38.2% retracement of the move from ¬•120.75 to ¬•124.15. Traders have been reassessing the yen over the past couple of days, downplaying the idea that the yen remains a ‚Äúone-way‚ÄĚ bet. The Nikkei reported Japan‚Äôs Ministry of Finance has shifted its currency stance and will chief currency spokesman Watanabe will likely be leaving his post. In contrast to previous MoF officials, Watanabe has not verbally intervened much and a change in policy at the MoF could result in much more regular verbal intervention. The Nikkei 225 stock index lost 0.12% to close at ¬•18,066.11. Dollar bids are cited around the ¬•122.60/ 05 levels. The euro came off vis-√†-vis the yen as the single currency tested bids around the ¬•165.10 level and was capped around the ¬•166.55 level. The British pound and Swiss franc depreciated vis-√†-vis the yen as the crosses tested bids around the ¬•245.20 and ¬•99.85 levels, respectively.
The British pound gained ground vis-√†-vis the U.S. dollar today as cable tested offers around the US$ 2.0015 level and was supported around the $1.9955 level. The pair reached its highest level since 1 May as traders continue to speculate Bank of England‚Äôs Monetary Policy Committee will raise interest rates by +25bps next week. Most traders believe a solid distributive trades survey from CBI tomorrow could cement next week‚Äôs monetary tightening. Cable bids are cited around the US$ 1.9910 level. The euro weakened vis-√†-vis the British pound as the single currency tested bids around the ‚ā§0.6725 level and was capped around the ‚ā§0.6740 level.
The Swiss franc was little-changed vis-√†-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2260 level and was capped around the CHF 1.2305 level. Technically, today‚Äôs intraday low was just below the 76.4% retracement of the move from CHF 1.2355 to CHF 1.1995. Data released in Switzerland today saw the May UBS private consumption index fall to 2.09 from 2.38 in May. Most traders believe Swiss National Bank will tighten monetary policy by at least +25bps in September. Dollar offers are cited around the CHF 1.2350 level. The euro came off marginally vis-√†-vis the Swiss franc as the single currency tested bids around the CHF 1.6510 level while the British pound gained ground vis-√†-vis the Swiss franc and tested offers around the CHF 2.4585 level.
The Australian dollar moved higher vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8510 level and was supported around the $0.8450 level. The pair established a fresh, multi-decade high before giving back some ground today. Data released in Australia today saw May new home sales off 4.4% m/m. Australian dollar bids are cited around the US$ 0.8430/ 0.8375 levels.
The Canadian dollar gained marginal ground vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.0670 level and was capped around the $1.0725 level. Data released in Canada today saw weekly average earnings climb 0.2% m/m and 3.0% y/y. U.S. dollar offers are cited around the C$ 1.0785 level.
Gold came off vis-√†-vis the U.S. dollar today as the yellow metal tested bids around the US$ 642.80 level and was capped around the $652.10 level. Lower oil prices resulted in decreased demand for an oil inflation hedge. Silver weakened vis-√†-vis the U.S. dollar as the pair tested bids around the US$ 12.36 level and was capped around the $12.92 level.
Crude oil depreciated vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for August delivery tested bids around the US$ 67.97 level and were capped around the US$ 69.19 level. The resolution of a general strike in Nigeria contributed to the pair‚Äôs intraday weakness as did news that Iran is inviting the International Atomic Energy Association to Tehran to review its nuclear abilities.
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