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Daily Market Commentary

Discussion in 'Forex Daily News & Outlook' started by gcitrading, Jun 19, 2009.

  1. gcitrading

    gcitrading Contributing Member

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    EURO
    The euro gained ground-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4010 level and was supported around the $1.3885 level. The common currency lost ground last week but was bid higher from Tuesday as traders priced in an improving global economy. European Union officials reached a deal at the end of a two-day summit that would create a European System Risk Council to monitor broad risks in the area’s financial system and intervene if required. The EU also agreed to strengthen national regulators across the EU and improve the coordinated regulation of banks, securities firms, and insurance firms. The EU overcame significant objections from the U.K. where policymakers were concened some of Bank of England’s regulatory powers would be lessened. The final agreement stipulated that new bodies would not be able to dictate how national governments appropriate money. Both Germany and France were said to be pressing for a more solution with more centralized regulatory powers. The plan also calles for the creation of a new group called the European System of Financial Supervisors to track the “quality and consistency” of national regulatory authorities. Data released in the eurozone today saw German May producer prices remain unchanged in May and decline 3.6% y/y, consistent with expectations and the first time in seven months that prices have not declined. European Central Bank policymaker Paramo was quoted as saying “there’s no reason to think we will see many more operations” like the coordinated global interest rate cuts from October 2008. In U.S. news, Treasury Secretary Geithner indicated the cost of borrowing has decreased significantly but added “we still face a very challenging period ahead.” Euro bids are cited around the US$ 1.3435 level.

    JPN/CNY
    The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥96.00 figure and was capped around the ¥97.15 level. Minutes from Bank of Japan Policy Board’s meeting on 20-21 May were released overnight and they revealed the possibility of a shift in BoJ policy toward the end of the next quarter. Policymakers indicated “whether to keep buying corporate debt from banks and providing them with unlimited loans after 30 Sept “should be determined based on close examination of developments in financial markets and corporate financing.” BoJ Governor Shirakawa said the central bank’s policy should be “in a predictable manner to market participants” Last month, the central bank raised its assessment of the economy for the first time since 2006. The Nikkei 225 stock index climbed 0.85% to close at ¥9,786.26. U.S. dollar offers are cited around the ¥104.15 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥135.15 level and was supported around the ¥134.05 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥159.60 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥89.45 level. In Chinese news, the U.S. dollar strenghtened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8353 in the over-the-counter market, up from CNY 6.8337.

    STERLING
    The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6560 level and was supported around the $1.6305 level. Bank of England reported U.K.-owned banks reduced their overseas lending for the second straight quarter in the three months that ended in March. Bank for International Settlements previously reported that banks trimmed their overseas lending by US$ 1.8 trillion in Q4 2008, the largest decline since at least 1977. Cable bids are cited around the US$ 1.6110 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8440 level and was capped around the ₤0.8530 level.
     
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