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Daily Market Commentary

Discussion in 'Forex Daily News & Outlook' started by gcitrading, May 6, 2009.

  1. gcitrading

    gcitrading Contributing Member

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    EURO
    The euro moved marginally higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3375 level and was supported around the US$ 1.3245 level. European and North American names lifted the common currenct to intraday highs before late-day profit-taking ensued. The pair got a lift after it was reported that ADP April private sector jobs were down a less-than-expected 491,000, much lower than forecast and lower than the downwardly revised 708,000 figure for March. The headline U.S. April non-farm payrolls report will be released on Friday and many forecasts are calling for around a 580,000 to 610,000 decline in jobs in addition to the 663,000 loss already announced for March. Federal Reserve Chairman Bernanke yesterday reported he expects the unemployment rate to top out at a 9% handle even after the U.S. economic recovery has started. The big item on traders’ radar tomorrow is the release of U.S. banks’ stress tests results. There is widespreads talk that around ten of the nineteen largest banks – including Citigroup, Bank of America, and Wells Fargo – will be asked to raise additional capital to support their financial positions. There is talk that Bank of America may need to raise as much as US$ 34 billion in additional capital. In eurozone news, EMU-16 March retail sales were off 0.6% m/m and 4.2% y/y, their largest yearly decline on record. The European Central Bank is expected to announce that it is reducing its main refinancing rate by 25bps to 1.00% tomorrow. Some dealers believe the ECB may announce quantitative easing measures. Other data released today saw EMU-16 April services PMI improve to 43.8 from 40.9 in March. Also weighing heavily on the common currency today was an announcement that Standard & Poors reduced its ratings for five of six German rated Landesbanks, an event that increased risk aversion. Euro bids are cited around the US$ 1.2765 level.

    JPN/CNY
    The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥97.95 level and was capped around the ¥99.05 level. Australian Asian names took the pair to intraday lows and European and North American names pushed the greenback to intraday highs before ceding gains. Bank of Japan’s Policy Board convenes tonight and is expected to keep interest rates unchanged. Some dealers believe the BoJ could soon announce additional quantitative easing measures to counter the significant economic pullback in Japan. The Nikkei 225 yesterday stock index will next reopen at ¥8,977.37. 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 ¥129.85 level and was capped around the ¥132.40 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥146.95 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥86.10 level. In Chinese news, the U.S. dollar closed at CNY 6.8180 in the over-the-counter market, down from CNY 6.8190.

    STERLING
    The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5150 level and was supported around the $1.4990 level. Data released in the U.K. today saw the CIPS PMI services index improve to 48.7 from 45.5 in March, much better-than-expected. Also, Halifax April house prices were off 1.7% m/m and off 17.7% y/y. NIESR reported the U.K. economy will likely contract by 4.3% in 2009, considerably worse than the government’s current projections. NIESR also sees the U.K. economy growing 0.9% in 2010 and 2.3% in 2011. Cable bids are cited around the US$ 1.4735 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8800 figure and was capped around the ₤0.8875 level.
     
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