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Daily Market Commentary

Discussion in 'Forex Daily News & Outlook' started by gcitrading, Aug 14, 2009.

  1. gcitrading

    gcitrading Contributing Member

    Dec 16, 2008
    Likes Received:
    The euro came off sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4160 level and was capped around the $1.4305 level. A sharp pullback in U.S. equities lessened demand for higher-yielding assets. Data released today saw the mid-August University of Michigan consumer sentiment index fall to 63.2 from 66.0 in July, below forecasts. Also, the July headline consumer price index met expectations at 0.0% growth, down from the June reading of +0.7%, with the annualized reading off a more than expected -2.1% y/y, lower than the June reading of -1.4% y/y. On a core ex-food and energy basis, July CPI was up 0.1% n/n and 1.5% y/y. Additionally, July industral production rallied 0.5%, up from -0.4% in June, while July capacity utilization improved to 68.5%. Yesterday’s U.S. retail sales data were ugly and render a “V-shaped” recovery unlikely. In eurozone news, July consumer prices wer off 0.7% m/m and 0.7% y/y, a record low and worse than forecast. Yesterday’s economic growth data, however, were stronger than expected and suggest that Germany and France are out of a technical recession. One-month August 2009 futures implied rates are now at 0.355 with September at 0.39. Euro bids are cited around the US$ 1.3900 figure.

    The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥94.40 level and was capped around the ¥95.45 level. Minutes from Bank of Japan’s 14-15 July Policy Board meeting were released overnight in which the central bank reported it may extend its emergency credit measures into 2010 if funding conditions in the market do not improve enough. Currently, some of the bank’s credit provision measures expire at the end of December. BoJ Governor Shirakawa this week indicated demand may not increase enough to sustain economic growth. The BoJ may be forced to extend its purchase of corporate debt. Data released in Japan today saw the June tertiary industry index rise 0.1%. The Nikkei 225 stock index climbed 0.76% to close at ¥10,597.33. 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 ¥134.20 level and was capped around the ¥136.45 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥156.00 figure while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥88.00 figure. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8314 in the over-the-counter market, up from CNY 6.8306.

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