Monday September 6, 2004 - 14:32:51 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (6 September 2004)
The euro was confined to a very narrow range vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2050 level but was unable to get above the $1.2080 level, reached during North American dealing. The U.S. Labour Day holiday saw a dearth of liquidity in the market with many players preferring to reestablish positions later in the week. Some market participants are even expected to remain on the sidelines through the testimony of Fed Chairman Greenspan on Wednesday. Additionally, the Fed’s Beige Book will be released the same day. The common currency, which has generally been confined to a $1.2000/$1.2450 range for months, will see if it can battle back from Friday’s sell-off in the wake of the U.S. August non-farm payrolls report. Data released in the eurozone today saw German manufacturing new orders gain 3% in July, nearly reversing June’s decrease. Traders await the release of Q2 GDP data from the eurozone tomorrow. Many chartists are citing the $1.1950 level as technically important if the dollar is going to add to some of its recent gains. Euro bids are cited around the $1.2010 level with stops seen below the $1.1990 level.
The yen strengthened vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥109.95 level after testing offers around the ¥110.60 level during Australasian dealing. The move lower was precipitated by stronger-than-expected Japanese corporate capital spending data that saw a +10.7% y/y gain in Q2. These data are important because they suggest the revised Q2 GDP data that will be released on Friday in Japan will also be stronger-than-expected. Many other Japanese data will be released this week including the current account, trade balance, Bank of Japan monthly report, and corporate goods price index. Chartists cite some technical resistance in the ¥110.70/80 level and any sustained move higher will need to challenge this key area. The Nikkei 225 stock index rallied 2.01% to close at ¥11,244.37 today. The euro moved higher vis-à-vis the yen today as the single currency tested bids around the ¥132.60 level after testing offers around the ¥133.50 level. The pair spiked back to the ¥133.10 level during European dealing to challenge the 100-hour moving average but soon fell to intraday lows.
The British pound gained marginal ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.7810 level and was supported around the $1.7740 level during Australasian dealing. Cable lost a net 150 points last week but has shed more than 900 points since 19 July and appears to be in a downtrend. Technical analysts note that the 21, 55, and 100-day moving average is now sloping downward in sterling and could presage additional losses in cable. The pair has been dented by recent deceleration in U.K. housing market and retail sales activity. It is too early to determine if the slowdown in these sectors will be sustained, but they open up further downside potential. Technically, a sustained break of the $1.7790 level opens up the $1.7375 level. Traders await the release of the August BRC sales monitor later in the session followed by industrial production and manufacturing production tomorrow. The euro was confined to a very narrow range vis-à-vis the British pound today as the single currency tested bids around the £0.6775 level and was capped around the £0.6800 figure. Euro offers are cited ahead of the technically-important £0.6945 level.
The Swiss franc was confined to a narrow range vis-à-vis the U.S. dollar today as the greenback was supported around the CHF 1.2695 level but failed to get above the CHF 1.2725 level. Technical dollar bids are cited around the CHF 1.2685 level with additional bids seen around the CHF 1.2640 level, near the 100-day moving average. Swiss unemployment data will be released tomorrow with SNB’s Hildebrand speaking on Wednesday and Swiss GDP data scheduled for release on Friday. The euro moved higher vis-à-vis the Swiss franc today as the single currency tested offers around the CHF 1.5345 level and was supported around the CHF 1.5310 level.
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