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Daily Market Commentary

Discussion in 'Forex Daily News & Outlook' started by gcitrading, Jul 29, 2010.

  1. gcitrading

    gcitrading Contributing Member

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    EURO
    The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3105 level and was supported around the $1.2975 level. The common currency traded above the $1.3100 figure today for the first time since 4 May 2010 as improving risk appetite continued to support higher-yielding currencies. Data released in the U.S. today saw weekly initial jobless claims decline to 457,000 from a revised 468,000 print last week while continuing jobless claims moved higher to 4.565 million from the revised prior tally of 4.484 million. These data support the premise that the U.S. labour market remains unsettled. July non-farm payrolls data will be closely scrutinized next week. Data to be released in the U.S. tomorrow include Q2 GDP growth, PCE numbers, July Chicago PMI, and final July University of Michigan consumer sentiment will be released tomorrow. Dallas Fed President Fisher reported the U.S. economy faces a “slow slog” and suggested “no amount of further monetary accommodation is going to do the trick.” Fisher predicted economic growth will be below 3% for a “prolonged period” and said businesses are “dispirited” by tax and regulatory changes. St. Louis Fed President Bullard said the Fed should resume purchases of Treasuries if the economy slows and the risk of deflation increases. In eurozone news, the eurozone July business climate indicator rallied to +0.66 from +0.40 with industrial confidence better at -4, consumer confidence steady at -14, economic confidence higher at 101.3, and services confidence better at +6. EMU-16 unemployment and CPI data will be released tomorrow. German July unemployment fell 20,000 to 7.6% and French June producer prices data came in at +0.0% m/m and +3.5% y/y. Euro offers are cited around the US$ 1.3265 level.

    JPN/CNY
    The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥86.55 level and was capped around the ¥87.50 level. The pair continues to find it difficult to gain enough traction to challenge the ¥90 figure as global economic growth decelerates. Bank of Japan Policy Board member Kamezaki yesterday reported the central bank “wants to make utmost efforts proactively to escape from deflation and return to a sustainable growth path under price stability,” noting a stronger yen will hurt exporters. In contrast, other BoJ officials including Governor Shirakawa have been hesitant about commenting on the strong yen. There is speculation that industrial production growth in Japan is decelerating and this may increase pressure on the BoJ to ease further. Yen gains were also prompted by weaker-than-expected Australian consumer price inflation data released yesterday, suggesting global growth continues to decelerate. Reserve Bank of Australia will likely not hike rates next week and the yen could stay bid as a result of this evolving monetary and economic landscape. While Kamezaki’s remarks may not increase the changes of yen-selling intervention by the government, traders remain fixated on the ¥85 level. Economic growth in Japan may also slow in the fourth quarter. Data released in Japan overnight saw June retail trade up 0.4% m/m and 3.2% y/y. Data to be released tonight include CPI and PMI data. The Nikkei 225 stock index lost 0.58% to close at ¥9,696.02. U.S. dollar bids are cited around the ¥86.29 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 ¥114.20 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥134.95 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥83.95 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.7761 in the over-the-counter market, down from CNY 6.7778. The July MNI business conditions survey will be released tonight.

    STERLING
    The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5660 level and was supported around the US$ 1.5580 level. Data released in the U.K. today saw July Nationwide house prices off 0.5% m/m and up 6.6% y/y while June net consumer credit was off -£100 million. June net lending secured on dwellings came in at €700 million and June mortgage approvals slowed to +47,600. The Jun3 M4 money supply was up 0.0% m/m and 3.0% y/y and the July GfK consumer confidence survey will be released tonight. Bank of England Governor King reported the U.K. economic outlook remains uncertain and warned there will likely be inflation next year. Cable bids are cited around the US$ 1.5270 level. The euro appreciated vis-à-vis the British pound as the single currency tested offers around the £0.8395 level and was supported around the £0.8320 level.

    SWISS
    The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0375 level and was capped around the CHF 1.0580 level. The July KOF Swiss leading indicator will be released tomorrow. The June UBS consumption indicator was released yesterday and improved to 1.81. There was market chatter today that Swiss National Bank has been selling some of the euro it purchased in its massive franc-selling interventions this year. U.S. dollar offers are cited around the CHF 1.0980 level. The euro depreciated vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.3580 level while the British pound moved lower vis-à-vis the Swiss franc and tested bids around the CHF 1.6185 level.
     
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