Friday November 16, 2007 - 17:07:12 GMT
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GCI Financial - www.gcitrading.com
Forex Market Commentary and Analysis (16 November 2007)
The euro appreciated vis-Ă -vis the U.S. dollar today as the single
currency tested offers around the US$ 1.4670 level and was supported around the
$1.4580 level. Technically, todayâ€™s
intraday high was right around the 38.2% retracement of the move from $1.4520
to $1.4725. The U.S. dollar was given
today on account of data that confirmed foreign investors were wary of
investing in the U.S.
in September after the summerâ€™s credit market turmoil. TICS total net flow of foreign capital was
â€“US$ 14.7 billion in September, an improvement from the â€“US$ 150.7 billion
decline in August. September long-term
capital flows printed at US$ 5.8 billion, up from a revised â€“US$ 86.7 billion
in August. Actual net foreign purchases
(ex-foreign purchases by U.S.
investors) totaled US$ 26.4 billion, up from â€“US$ 70.6 billion in August and
below expectations. These data confirm
is not financing its current account deficit with foreign portfolio inflows and
this is pressuring the U.S. dollar.
Other data released in the U.S. today saw October industrial
production off 0.5% while capacity utilization was off 0.5% to 81.7%. Federal Reserve officials spoke yesterday and
today, offering their current economic assessments. Fed Governor Kroszner
reported â€śA sequence of data releases consistent with the rough patch for
economic activity that I expect in coming months would not, by themselves,
suggest to me that the current stance of monetary policy is inappropriate.â€ť Kroszner
added he believes economic data will continue to be â€śdownbeatâ€ť and sees home
sales â€śweakening furtherâ€ť but added developments in core inflation have been
moving in a â€śfavourable direction.â€ť Kansas City Fed President Hoenig said he
sees GDP growth of 2.0% in 2008. U.S.
Treasury Secretary Paulson reiterated the U.S. has a â€śstrong dollar
policy.â€ť In eurozone news, the EMU-13
trade surplus widened in September to â‚¬3.1 billion, above Augustâ€™s â‚¬1.9 billion
surplus. Other data released today saw
the EMU-13 Ifo business climate index fall to 90.7, its lowest reading since Q4
2006. Euro bids are cited around the US$ 1.4575/ 1.4470 levels.
The yen depreciated vis-Ă -vis the U.S.
dollar today as the greenback tested
offers around the ÂĄ110.85 level and was supported around the ÂĄ109.75
level. The pair retraced some of
yesterdayâ€™s losses and technically, todayâ€™s intraday low was right around the
76.4% retracement of the move from ÂĄ109.10 to ÂĄ111.75. Traders are paying close attention to this
weekendâ€™s G-20 summit in Cape Town
where global officials are expected to discuss exchange rates. The G-20 may call on Asian countries to
permit their currencies to appreciate faster.
Data released in Japan
today saw the September index of leading economic indicators print at +0 in
September while the coincident index was revised to +60.0 in September. Minutes from BoJâ€™s October Policy Board
meeting were released today and policymakers reiterated interest rates need to
increase â€śgradually.â€ť Many traders do not believe the central bank will lift
the overnight call rate from its current 0.50% level until after the current
fiscal year ends in March 2008. The
Nikkei 225 stock index lost 1.57% to close at ÂĄ15,154.61. Dollar bids are cited around the ÂĄ109.75
level. The euro moved higher vis-Ă -vis the yen as the single currency
tested offers around the ÂĄ162.40 level and was supported around the ÂĄ160.45
level. The British pound and Swiss franc appreciated vis-Ă -vis the yen as
the crosses tested offers around the ÂĄ226.95 and ÂĄ99.15 levels,
respectively. The Chinese yuan weakened vis-Ă -vis the U.S. dollar as the
greenback closed at CNY 7.4258 in the over-the-counter market, up from CNY
7.4228. Data released in China today saw
fixed-asset investment up 26.9% in the January â€“ October period.
The British pound gained ground
vis-Ă -vis the U.S. dollar today as cable tested offers around the US$
2.0500 figure and was supported around the $2.0350 level. Technically, todayâ€™s intraday low was right
around the 50% retracement of the move from $1.9650 to $2.1160 level. Nationwide reported house price inflation
should recede to 0% by November 2008 and this follows a week of weaker economic
data in the U.K.
and a dovish quarterly inflation report.
Funding conditions in the U.K. continue to deteriorate as the
three-month Libor is now 6.40% with the overnight market rate at 5.86%. Most traders believe the BoEâ€™s MPC will
reduce interest rates in 2008 and possibly as early as next month. Cable bids are cited around the US$ 2.0365
level. The euro moved higher vis-Ă -vis the British pound as the single
currency tested offers around the â‚¤0.7170 level and was supported around the
The Swiss franc appreciated vis-Ă -vis
the U.S. dollar today as the
greenback tested bids around the CHF 1.1165 level and was capped around the CHF
1.1245 level. Swiss National Bank
President Roth spoke today and said â€śA continued weakening of the franc versus
the euro would pose problems for us.â€ť Roth also indicated he sees a higher
inflation risk and lower growth potential.
Many traders believe the SNB will tighten monetary policy further next
month. Data released in Switzerland
today saw September retail sales up 3.0% y/y.
U.S. dollar offers are cited around the CHF 1.1355 level. The
euro and British pound depreciated vis-Ă -vis the Swiss franc as the crosses
tested bids around the CHF 1.6345 and CHF 2.2825 levels, respectively.
dollar appreciated vis-Ă -vis the U.S. dollar today as the Aussie tested offers
around the US$ 0.8940 level and was supported around the $0.8815 level. Technically, todayâ€™s intraday low was just
below the 76.4% retracement of the move from $0.8750 to $0.9070. Australian dollar bids are cited around the
US$ 0.8535 level. The New Zealand
dollar appreciated vis-Ă -vis the U.S. dollar today as the kiwi tested
offers around the US$ 0.7620 level and was supported around the $0.7520
level. New Zealand dollar bids are cited
around the US$ 0.7415 level.
dollar appreciated sharply vis-Ă -vis the U.S. dollar today as the greenback tested bids
around the C$ 0.9715 level and was capped around the C$ 0.9885 level. U.S. dollar offers are cited around the
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