Monday October 29, 2007 - 14:43:12 GMT
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Forex and Commodity Market Commentary and Analysis (29 October 2007)
The euro depreciated vis-√†-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4440 level and was supported around the $1.4385 level. Today‚Äôs intraday high represented a new lifetime high and was right around an upside technical target. The big event on traders‚Äô radar this week is Wednesday‚Äôs interest rate decision from the FOMC. The market are fully discounting at 25bps rate cut by Fed policymakers while a minority believe the FOMC will move rates lower by 50bps. The FOMC‚Äôs policy statement will be closely watched to see if officials yield any clues about their likely policy course in December. The big question on traders‚Äô minds is whether last month‚Äôs rate cut was a one-off move or if it will represent the first in a series of monetary easings. Regarding the impact of the credit market turmoil on the financial markets, Fed Governor Mishkin on Friday reported ‚Äúfunctioning has not yet returned to normal.‚ÄĚ U.S. Treasury Secretary today reported ‚ÄúI believe that a strong dollar is in our nation's interest and also that currency values should be set in a competitive marketplace based upon underlying economic fundamentals.‚ÄĚ In eurozone news, Eurogroup president Juncker this weekend offered some bullish comments about the euro. Euro bids are cited around the US$ 1.4220 level.
The yen depreciated vis-√†-vis the U.S. dollar today as the greenback tested offers around the ¬•114.80 level and was supported around the ¬•114.00 figure. Technically, today‚Äôs intraday high was right around the 61.8% retracement of the move from ¬•109.00 to ¬•124.15. Data released in Japan overnight saw September retail sales rise 0.5% y/y, the second consecutive monthly increase. Traders await Bank of Japan Policy Board‚Äôs interest rate decision this week with most not expecting any change in rates before the end of 2007 at the earliest. Also, comments from BoJ boss Fukui will be closely scrutinized. The Nikkei 225 stock index climbed 1.17% to close at ¬•16,698.08. Dollar bids are cited around the ¬•113.85/ ¬•112.55 levels. The euro moved higher vis-√†-vis the yen as the single currency tested offers around the ¬•165.45 level and was supported around the ¬•164.25 level. The British pound and Swiss franc appreciated vis-√†-vis the yen as the crosses tested offers around the ¬•236.75 and ¬•98.70 levels, respectively. The Chinese yuan appreciated vis-√†-vis the U.S. dollar as the greenback closed at CNY 7.4745 in the over-the-counter market, down from CNY 7.4872. PBOC official Liu Shiyu reported China will ‚Äúcontinue to pursue exchange rate reform.‚ÄĚ
The British pound strengthened vis-√†-vis the U.S. dollar today as cable tested offers around the US$ 2.0625 level and was supported around the $2.0525 level. The pair reached its strongest level since 25 July after many economic data were released in the U.K. First, BoE reported consumer lending increased ‚ā§11.2 billion in September, much higher than August‚Äôs ‚ā§9.6 billion level. Second, September mortgage approvals totaled 102,000, down from 108,000 in August. Third, September consumer credit reached ‚ā§1.4 billion from ‚ā§1.1 billion in August. Fourth, M4 money supply growth decelerated in September, up 1.0% m/m and 12.8% y/y. Notably, net mortgage lending soared to its highest level in seven months in September, reaching ‚ā§9.8 billion from August‚Äôs ‚ā§8.5 billion level. Fifth, Hometrack reported October house prices fell for the first time in two years, off 0.1%. Cable reached its strongest level since 25 July and came within 90 pips of a fresh multi-decade high. Cable bids are cited around the US$ 2.0420 level. The euro weakened vis-√†-vis the British pound as the single currency tested bids around the ‚ā§0.6985 level and was capped around the ‚ā§0.7020 level.
The Swiss franc depreciated vis-√†-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1670 level and was supported around the CHF 1.1605 level. Today‚Äôs intraday low was just above a multi-year low dating back to March 2005. Dollar offers are cited around the CHF 1.1805 level. The euro and British pound moved higher vis-√†-vis the Swiss franc as the crosses tested offers around the CHF 1.6785 and CHF 2.4020 levels, respectively.
The Australian dollar appreciated vis-√†-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.9270 level and was supported around the $0.9185 level. Data released in Australia today saw the NAB Q4 business conditions index off two index points. Australian dollar bids are cited around the US$ 0.9145 level. The New Zealand dollar gained ground vis-√†-vis the U.S. dollar as the kiwi tested offers around the US$ 0.7740 level and was supported around the $0.7665 level. New Zealand dollar bids are cited around the US$ 0.7595 level.
The Canadian dollar appreciated vis-√†-vis the U.S. dollar today as the greenback tested bids around the C$ 0.9575 level and was capped around the C$ 0.9625 level. September industrial product prices and raw materials data will be released tomorrow. U.S. dollar offers are cited around the C$ 0.9735 level.
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