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Daily Market Commentary - 4/2/2009

Discussion in 'Forex Daily News & Outlook' started by gcitrading, Feb 4, 2009.

  1. gcitrading

    gcitrading Contributing Member

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    4 February 2009, Tuesday
    Fundamental Outlook at 1500 GMT (EST + 0500)


    EURO
    The euro lost substantial ground vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2810 level and was capped around the $1.3070 level. Traders reduced long exposure to the common currency ahead of tomorrow’s European Central Bank meeting. Most dealers do not expect the ECB will reduce interest rates this month and see March as the most likely time for the next rate cut. Data released in the eurozone today saw the January PMI services survey improve to 42.2 from 42.1 in December while Germany’s PMI services reading fell to 45.2 from 46.6 in December. Also, EMU-15 December retail sales were flat m/m and off 1.6% y/y. In U.S. news, ADP data revealed private employers shed 522,000 in January, down from the revised 659,000 tally in December. These data suggest Friday’s January non-farm payrolls data may not be as bad as December’s print. Other data released today saw mortgage applications improved in the latest week. The Obama administration’s proposed fiscal stimulus is now approaching US$ 900 billion and Obama was forced to drop the protectionist “Buy American” caveat. Treasury Secretary Geithner will next week release details about the government’s plan to fix the banking system. A Group of Seven official said the G7 meeting of central bankers and finance ministers in Rome on 13-14 February “will try to send some reassuring messages about the general economic situation” and policymakers are unlikely to launch any new major initiatives. Euro bids are cited around the US$ 1.2475 level.

    JPN/CNY
    The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥89.80 level and was supported around the ¥88.80 level. Data released in Japan overnight saw the service sector decline for a thirteenth consecutive month in January with the PMI survey falling to 34.1 from 37.0 in December. These data confirm that the recession is widespread among most or all Japanese industries. Bank of Japan is expected to maintain its asset-purchase programs for the foreseeable future to keep a lid on market interest rates. The Nikkei 225 stock index climbed 2.73% to close at ¥8,038.94. 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 ¥114.20 level and was capped around the ¥117.00 figure. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥130.70 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥76.55 level. The Chinese yuan appreciated vis-à-vis the U.S. dollar today as the greenback closed at CNY 6.8335 in the over-the-counter market, down from CNY 6.8399. Data released in China today saw the January purchasing manager’s index improve to 45.3 from 41.2 in December. Twenty million rural Chinese workers have recently lost their jobs and many economists believe China must maintain at least 8% annual economic growth to avoid further problems. Other data released today saw the December corporate goods price index decline 3.1% y/y.

    STERLING
    The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4575 level and was supported around the $1.4320 level. Most traders expect Bank of England’s Monetary Policy Committee will ease interest rates by 50bps tomorrow to 1.00%. Many data were released in the U.K. today. First, the January PMI services survey improved to 42.5 from 40.2 in December. Second, U.K. annual shop price inflation rose to 1.1% in January from 0.5% in December. Third, Nationwide consumer sentiment fell to a record low last month. Fourth, REC reported demand for staff fell at its fastest pace in more than one decade. Some economists are speculating the U.K. economy may have bottomed out. NIESR is calling on the BoE to conduct quantitative easing operations such as purchasing corporate debt. NIESR believes the U.K. economy will contract 2.7% in 2008. Cable offers are cited around the $1.4720 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8840 level and was capped around the ₤0.9075 level.
     
    #1 gcitrading, Feb 4, 2009
    Last edited by a moderator: Feb 5, 2009
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