Friday September 24, 2004 - 17:14:13 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (24 September 2004)
The euro could not sustain its earlier gains vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2235 level after spiking to the $1.2365 level earlier in the session. The pair was under water during early North American dealing when it was reported that new order for manufactured durable goods in August decreased US$0.9 billion, or 0.5%, to US$ 195.4 billion. This followed July’s 1.8% increase and the “core” ex-transportation rate improved 2.3% while the ex-defense rate was off 0.6%. Other data released today saw sales of existing single-family homes fall 2.7% in August to 6.54 million units. Together, these data did not impress dollar bulls but are consistent with the recent mixed economic data in the U.S. Data released in the eurozone today saw German preliminary September HICP at -0.3% m/m and +2.0% y/y compared with the final August reading of +0.2% m/m and +2.1% y/y. These data suggest the EMU-12 September rate will fall from August’s 2.3% y/y rate and traders will pay close attention to Italian and Spanish data due for release on 30 September. Other data released today saw Italy’s July trade surplus register its best performance since January 2000. Euro bids are seen around the $1.2225 level.
The yen gained some ground vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥ 110.85 level before moving lower to the ¥110.30 level. Traders squared their positions ahead of the weekend. The yen scored gains despite the released of relatively weak Japanese economic data that saw the July tertiary activity index fall 0.8% m/m in July while the all-industries activity index came off 0.6% m/m. Also, August sales at department stores receded 4.8% m/m while supermarket sales were off 4.6% y/y. Traders are also watching the JGB market as yields are currently trading at a four-month low. Japan’s fiscal half-year will end next week but most market participants do not expect the yen-selling to materialize that has preceded other half-year ends in the past. The Nikkei 225 stock index came off 1.13% to close at ¥10,895.16 – its lowest level in one month – while the TOPIX was off 1.05% to ¥1,102.37. The euro moved higher vis-à-vis the yen today as the single currency tested offers around the ¥ 136.50 level and was supported around the ¥ 135.55 level. In Chinese news, a government official was quoted as saying China is unlikely to raise rates in the next couple of months. Another media report today suggested China’s CPI is likely to rise 5.2% y/y in Q3 but simmer down in 2005.
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