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Daily Market Commentary - 2/2/2009

Discussion in 'Forex Daily News & Outlook' started by gcitrading, Feb 2, 2009.

  1. gcitrading

    gcitrading Contributing Member

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    2 February 2009, Monday
    Fundamental Outlook at 1500 GMT (EST + 0500)


    EURO
    The euro moved marginally higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2850 level and was supported around the $1.2705 level. Traders are closely watching negotiations in the U.S. Senate on President Obama’s proposed US$ 819 billion fiscal stimulus program. Dealers are also considering the likelihood a “bad bank” will be unfurled in the U.S. to purchase toxic assets from banks’ balance sheets. Dallas Federal Reserve President Fisher warned the “Buy America” program in the proposed fiscal stimulus is too protectionist. Data released in the U.S. today saw December consumer spending fall 1.0% after declining a revised 0.8% in November while personal income was off 0.2%. The December core personal consumption expenditure prices index was unchanged in December and up 1.7% y/y. Also, the ISM January national factory activity index rose to 35.6 from 32.9 in December. In eurozone news, European Union officials reported all European countries may establish “bad banks” to absorb toxic assets. Data released in France today saw the December jobless total rise about 45,000. Also, the EMU-16 January purchasing managers’ index improved to 34.4 from 33.9 in December. EU’s Alumnia reported there is “zero chance” that any eurozone country will “leave the euro.” Most traders believe the European Central Bank will not reduce interest rates this week with next month the most likely time for a monetary easing. Euro bids are cited around the US$ 1.2475 level.

    JPN/CNY
    The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥88.80 level and was capped around the ¥90.00 figure. The yen gained ground despite Friday’s data that reinforced the notion the Japanese economy is heading deeper into a recession. It was reported then that December industrial output was off a record 9.6%. Bank of Japan purchased ¥430 billion of Japanese government bonds overnight in its latest attempt to keep longer-term interest rates low. The Nikkei 225 stock index lost 1.50% to close at ¥7,873.98. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥113.15 level and was capped around the ¥115.55 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥125.30 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥76.15 level. The Chinese yuan depreciated vis-à-vis the U.S. dollar today as the greenback closed at CNY 6.8490 in the over-the-counter market, up from CNY 6.8405. Prime Minister Wen said the government must provide “very strong and effective” fiscal stimuli to counter the recession. Data released in China overnight saw the CLSA January PMI manufacturing survey improve to 42.2 from 41.2 in December.

    STERLING
    The British pound fell sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4050 level and was capped around the $1.4485 level. Thousands of U.K. manufacturing workers went on strike today to protest the use of foreign workers at some U.K. plants. Data released in the U.K. today saw January manufacturing PMI improve to 35.8 from 34.9 in December. Manufacturing price pressures fell further last month and production and new orders sub-indices fell further. Cable offers are cited around the $1.4720 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9080 level and was supported around the ₤0.8810 level.
     
    #1 gcitrading, Feb 2, 2009
    Last edited by a moderator: Feb 2, 2009
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