Tuesday July 17, 2007 - 14:58:24 GMT
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GCI Financial - www.gcitrading.com
Forex and Commodity Market Commentary and Analysis (17 July 2007)
The euro gained ground vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3800 figure and was supported around the US$ 1.3755 level. Technically, today‚Äôs intraday low was right around the 23.6% retracement of the move from $1.3565 to $1.3815. Many data were released in the U.S. today. First, headline producer price inflation was off 0.2% m/m in June, the first decline since January. These data were countered by a 0.3% rise in core PPI, more-than-expected. Traders await the release of tomorrow‚Äôs consumer price inflation data to see if any core factory gate price pressures are moving to the retail level. Second, June capacity utilization improved to 81.7% from a revised 81.4% in May. Third, June industrial production rose 0.5% m/m from a revised -0.1% in May. Fourth, May Treasury International Capital portfolio inflows data were released and evidenced net foreign capital inflows of US$ 105.9 billion, exceeding expectations and up from April‚Äôs revised US$ 83.6 billion tally. Net long-term securities purchases rose to US$ 126.1 billion from a revised US$ 80.3 billion in April. Traders await testimony from Federal Reserve Chairman Bernanke tomorrow and Thursday. In eurozone news, the German July ZEW economic sentiment came in much weaker-than-expected, falling to +10.4 from +20.3 in June, the second consecutive monthly decline. European Central Bank member Garganas today saw that inflation risks are increasing. Euro bids are cited around the US$ 1.3680 level.
The yen came off vis-√†-vis the U.S. dollar today as the greenback tested offers around the ¬•122.20 level and was supported around the ¬•121.70 level. Technically, today‚Äôs intraday low was above the 76.4% retracement of the move from ¬•120.75 to ¬•124.15. Data released in Japan overnight saw the May tertiary index off 0.1% m/m, the second decline in five months. The government kept its economic assessment unchanged in July, noting there is ongoing weakness in some industrial production sectors. Most traders believe Bank of Japan will lift the overnight call rate by +25bps to +0.75% in August. The Nikkei 225 stock index lost 0.12% to close at ¬•18,217.27. Dollar bids are cited around the ¬•120.70 level. The euro moved higher vis-√†-vis the yen as the single currency tested offers around the ¬•168.50 level and was supported around the ¬•167.70 level. The British pound and Swiss franc gained ground vis-√†-vis the yen as the crosses tested offers around the ¬•250.20 and ¬•101.70 levels, respectively. In Chinese news, the yuan‚Äôs central parity rate vis-√†-vis the U.S. dollar was set at CNY 7.5651, down from CNY 7.5681. The Chinese media reported the Financial and Economic Affairs Committee of the National People‚Äôs Congress released a report that indicates ‚ÄúThe economic overheating trend is even clearer. Inflationary pressure continues to increase, especially food and house prices. "The government is highly concerned about the overly rapid rise of food prices and will closely watch domestic and overseas price movements to reasonably guide rising prices.‚ÄĚ Q2 GDP data will be released on Thursday and is expected to print around 11%.
The British pound extended recent gains vis-√†-vis the U.S. dollar today as cable tested offers around the US$ 2.0475 level and was supported around the $2.0345 level. Today‚Äôs intraday high represented a new multi-decade high. Sterling was pushed higher by stronger-than-expected June consumer inflation that saw a print of 2.4%, down from 2.5% in May but above forecasts. Core CPI escalated to a ten-year high of 2% and the retail price index rose to 4.4% in June from 4.3% in May. These data suggest Bank of England‚Äôs Monetary Policy Committee will likely remain hawkish and many traders believe the MPC may take the repo rate up to 6.25% before the end of the year. Dealers await the release of the MPC‚Äôs most recent meeting minutes tomorrow. Cable bids are cited around the US$ 2.0375 level. The euro came off vis-√†-vis the British pound as the single currency tested bids around the ‚ā§0.6730 level and was capped around the ‚ā§0.6770 level.
The Swiss franc appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1970 level and was capped around the CHF 1.2035 level. Data released in Switzerland today saw May retail sales up 3.1% y/y. Dollar offers are cited around the CHF 1.2100 figure. The euro came off vis-√†-vis the Swiss franc as the single currency tested bids around the CHF 1.6525 level while the British pound gained ground vis-√†-vis the Swiss franc and tested offers around the CHF 2.4615 level.
The Australian dollar moved higher vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8750 level and was supported around the $0.8705 level. Australian dollar bids are cited around the $0.8665 level. The New Zealand dollar weakened vis-√†-vis the U.S. dollar as the kiwi tested bids around the US$ 0.7900 figure and was capped around the $0.7940 level.
The Canadian dollar gained marginal ground vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 1.0420 level and was capped around the C$ 1.0450 level. Traders await the release of tomorrow‚Äôs June consumer price index data along with the June leading economic. On Thursday, wholesale trade and international securities data will be released. U.S. dollar offers are cited around the C$ 1.0615 level.
Gold appreciated vis-√†-vis the U.S. dollar today as the yellow metal tested offers around the US$ 667.10 level and was supported around the $662.40 level. The U.S. dollar‚Äôs intraday losses and intraday gains in energy prices pushed gold higher, as did higher-than-expected U.S. core PPI data. Silver moved higher vis-√†-vis the U.S. dollar as the pair tested offers around the US$ 13.07 level and was supported around the $12.86 level.
Crude oil gained ground vis-√†-vis the U.S. dollar today as light, sweet NYMEX crude oil for August delivery tested offers around the US$ 75.20 level and was supported around the $73.75 level. Traders continue to drive the price higher on account of ongoing maintenance in the North Sea, a tight supply of U.S. gasoline during the summer driving season, and geopolitical tensions in Iran and Nigeria. Dealers are also paying close attention to any possible tropical storms or hurricanes that could develop in the U.S. Gulf.
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