Thursday July 5, 2007 - 14:31:21 GMT
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Forex and Commodity Market Commentary and Analysis (5 July 2007)
The euro depreciated vis-√†-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3605 level and was capped around the $1.3660 level. The common currency spiked to its highest level since 1 May today ahead of European Central Bank‚Äôs decision to keep its main refinancing rate unchanged at 4.0%. ECB President Trichet said policymakers are ‚Äúclosely‚ÄĚ monitoring price risks, disappointing some euro bulls who wanted him to indicate risks were being ‚Äúvery closely‚ÄĚ monitored. Trichet also added rates remain ‚Äúaccommodative‚ÄĚ and many traders believe the ECB could move rates higher by +25bps in November. Data released in the U.S. today saw the ADP jobs report confirm 150,000 new jobs were created last month, above estimates and possibly an indication that tomorrow‚Äôs June non-farm payrolls report will be on the strong side. Many economists now estimate some 125,000 new jobs were created last month. Other data released today saw weekly initial jobless claims climb 2,000 while continuing jobless claims were up 84,000 to 2.57 million. Moreover, the June ISM non-manufacturing index improved to 60.7 from 59.7 in May. Euro bids are cited around the US$ 1.3565 level.
The yen depreciated marginally vis-√†-vis the U.S. dollar today as the greenback tested offers around the ¬•122.85 level and was supported around the ¬•122.30 level. Technically, today‚Äôs intraday high was right around the 38.2% retracement of the move from ¬•120.75 to ¬•124.15. Bank of Japan‚Äôs Policy Board will convene next week and is expected to leave the overnight call rate unchanged at 0.50%. If next week‚Äôs likely decision to keep rates unchanged is not unanimous, it could result in a strengthening of the yen on the premise that rates could move higher sooner rather than later. Data released in Japan today saw foreigners sell a net ¬•396.6 billion in Japanese bonds last week. Also, the May leading index improved to 30.0 from 18.2 in April. The Nikkei 225 stock index climbed 0.29% to close at ¬•18,221.48. Dollar bids are cited around the ¬•122.00 figure. The euro gained ground vis-√†-vis the yen as the single currency tested offers around the ¬•167.25 level and was supported around the ¬•166.90 level. The British pound and Swiss franc weakened vis-√†-vis the yen as the crosses tested bids around the ¬•246.55 level and ¬•100.70 levels, respectively. In Chinese news, the U.S. dollar‚Äôs central parity rate vis-√†-vis the yuan was set at CNY 7.6060 today, up from CNY 7.6007. China and the European Union are meeting to discuss global imbalances and trade issues.
The British pound weakened vis-√†-vis the U.S. dollar today as cable tested bids around the US$ 2.0120 level and was capped around the US$ 2.0200 figure. Sterling gave back recent gains after Bank of England‚Äôs Monetary Policy Committee lifted its repo rate by +25bps to 5.75%. Firm consumer price inflation, resilient house prices, and strong business survey data all contributed to the decision. The MPC reported ‚Äúthe balance of risks to the outlook for inflation in the medium term continued to lie to the upside.‚ÄĚ Data released in the U.K. today saw IDS median pay settlements remain at 3.5% in the three months to the end of June. Cable bids are cited around the US$ 2.0090 level. The euro climbed higher vis-√†-vis the British pound today as the single currency tested offers around the ‚ā§0.6780 level and was supported around the ‚ā§0.6745 level.
The Swiss franc weakened vis-√†-vis the U.S. dollar today as the greenback tested offers around the CHF 1.2185 level and was supported around the CHF 1.2100 figure. Technically, today‚Äôs intraday high was right around the 23.6% retracement of the move from CHF 1.2475 to CHF 1.2090. Dollar offers are cited around the CHF 1.2245 level. The euro and British pound appreciated further vis-√†-vis the Swiss franc as the crosses tested offers around the CHF 1.6575 and CHF 2.4550 levels, respectively.
The Australian dollar gained marginal ground vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8610 level and was supported around the $0.8565 level. The pair reached its highest level in a couple of decades today. Australian dollar bids are cited around the US$ 0.8525 level. The New Zealand dollar gained ground vis-√†-vis the U.S. dollar today as the kiwi tested offers around the US$ 0.7880 level and was supported around the US$ 0.7810 level. The New Zealand June world commodity price index rose 6.1% m/m and 29.6% y/y. New Zealand dollar bids are cited around the US$ 0.7760 level.
The Canadian dollar lost ground vis-√†-vis the U.S. dollar today as the greenback tested offers around the C$ 1.0590 level and was supported around the C$ 1.0560 level. Data released in Canada today saw May building permits up 21.4% m/m. Also, the June Ivey PMI survey improved to 67.4 from 62.7 in May. U.S. dollar offers are cited around the US$ 1.0735 level.
Gold came off vis-√†-vis the U.S. dollar today as the yellow metal tested bids around the US$ 648.45 level and was capped around the $656.65 level. The U.S. dollar‚Äôs intraday gains contributed to gold‚Äôs sell-off. Silver weakened vis-√†-vis the U.S. dollar as the pair tested bids around the US$ 12.48 level and was capped around the $12.68 level.
Crude oil moved higher vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil futures for August delivery tested offers around the US$ 72.26 level and were supported around the $71.25 level. Traders await weekly U.S. inventories data to determine if crude stocks declined last week as expected.
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