Tuesday August 21, 2007 - 14:10:29 GMT
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GCI Financial - www.gcitrading.com
Forex and Commodity Market Commentary and Analysis (21 August 2007)
The euro gained ground vis-Ã -vis the U.S. dollar today as the single currency today as the single currency tested offers around the US$ 1.3520 level and was supported around the $1.3450 level. The common currency moved higher on widespread speculation the Federal Reserve will orchestrate an intermeeting rate cut to counter the ongoing liquidity problems in the U.S. credit markets. Fed Chairman Bernanke and Treasury Secretary Paulson meet with Senate Banking Committee Chairman Dodd today to discuss these ongoing problems. Also, Richmond Fed President Lacker will speak later today and his comments will be closely scrutinized to see if he retains his hawkish outlook on the economy. Data released in the U.S. today saw retail sales off 0.7% m/m in the first two weeks of August. Other data released in the U.S. today saw foreclosure filings rise 9% m/m and 93% y/y in July. In eurozone news, the August Belgian National Bank consumer confidence index printed at -2 from -1 in July. Also, the German ZEW economic expectations index fell to -6.9 from +10.4 in July, below forecast. Additionally, the EMU-13 June trade surplus rose to â‚¬7.8 billion from â‚¬1.7 billion. Euro bids are cited around the US$ 1.3400 figure.
The yen appreciated vis-Ã -vis the U.S. dollar today as the greenback tested bids around the Â¥114.00 figure and was capped around the Â¥115.25 level. Bank of Japan injected Â¥800 billion into the banking system to counter a rise in short-term interest rates. Most traders believe BoJ will not raise interest rates this week when policymakers convene and will pay close attention to BoJ Governor Fukuiâ€™s comments. The markets still believe the BoJ will lift the overnight call rate by +25bps to +0.75% by the end of the year. Data released in Japan today saw the June all-industries index up 0.2% m/m. The Nikkei 225 stock index gained 1.07% to close at Â¥15,901.34. Dollar bids are cited around the Â¥112.00 figure. The euro moved lower vis-Ã -vis the yen as the single currency tested bids around the Â¥153.50 level and was capped around the Â¥155.35 level. The British pound and Swiss franc weakened vis-Ã -vis the yen as the crosses tested bids around the Â¥225.35 and Â¥94.70 levels, respectively. The Chinese yuan weakened vis-Ã -vis the U.S. dollar as the greenback closed at CNY 7.5906 in the over-the-counter market, up from CNY 7.5871. Peopleâ€™s Bank of China tightened monetary policy for the fourth time this year, raising its lending base rate to 7.02% from 6.84% and its deposit rate to 3.6%.
The British pound moved lower vis-Ã -vis the U.S. dollar today as cable tested bids around the US$ 1.9745 level and was capped around the $1.9905 level. Sterling moved lower after Bank of England confirmed it lent â‚¤314 million from its credit standing facility yesterday, precipitating fears that the credit crisis contagion could be spreading to the robust U.K. housing sector. Cable bids are cited around the US$ 1.9530 level. The euro moved higher vis-Ã -vis the British pound as the single currency tested offers around the â‚¤0.6815 level and was supported around the â‚¤0.6775 level.
The Swiss franc appreciated vis-Ã -vis the U.S. dollar today as the greenback tested bids around the CHF 1.2010 level and was capped around the CHF 1.2070 level. Data released in Switzerland today saw the July trade surplus narrow to CHF 1.57 billion from CHF 1.65 billion in June. Dollar offers are cited around the CHF 1.2140 level. The euro and British pound came off vis-Ã -vis the Swiss franc as the crosses tested bids around the CHF 1.6205 and CHF 2.3785 levels, respectively.
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