1. This site uses cookies. By continuing to use this site, you are agreeing to our use of cookies. Learn More.

Daily Market Commentary

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

  1. gcitrading

    gcitrading Contributing Member

    Dec 16, 2008
    Likes Received:
    The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4685 level and was supported around the $1.4595 level. The common currency moved higher after Abu Dhabi paid US$ 10 billion to assist Dubai in paying its debts, alleviating some concerns about sovereign debt defaults. This news added a bid to global equities including U.S. equities and was bearish for the dollar. Notably, the U.S. dollar rallied on Friday following positive economic U.S. data but shifted back to a “good global news is bad news for the U.S. dollar” paradigm today. The U.S. dollar, in recent months, has been a safe haven play along with the Japanese yen. Most traders do not expect any significant changes to monetary policy at the Federal Opem Market Committee meeting tomorrow and Wednesday. While interest rate policy is expected to remain unchanged, the FOMC is likely to acknowledge recent improvements in U.S. economic data and could spotlight some probable changes to some of its emergency lending programs over the next few months. Data to be released in the U.S. tomorrow include November producer price inflation data with a core increase of 0.9% y/y expected. U.S. fed funds futures are predicting at least an 88% chance the U.S. will lift interest rates in 2010, up from 78% on 24 November. There is about a 46% chance the Fed will hike by June, up from 30% on 30 November. In eurozone news, EMU-16 employment fell by 712,000 in Q3, the fifth consecutive quarter of declines. Also, EMU-16 industrial production was off 0.6% m/m and 11.1% y/y, the eighteenth consecutive year-on-year decline. Euro bids are cited around the US$ 1.4505 level.

    The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥88.30 level and was capped around the ¥89.30 level. As expected, the Bank of Japan December quarterly Tankan survey was released overnight and evidenced an improvement in corporate sentiment among large manufacturers. The headline diffusion index improved to -24 from -33 in the September quarterly survey, marking the third consecutive quarterly improvement. Sentiment among large non-manufacturers improved to -22 in December from -24. On a negative note, it was reported that large firms plan to reduce capital spending by 13.8% in the fiscal year ending in March, a downward revision from the 10.8% decline expected in the September tankan. Collectively, these data paint a mixed picture that evidences some improvement in current sentiment but a less-than-sanguine outlook for the future. Traders cite an increasing chance of actual yen-selling intervention by Japanese monetary authorities if the yen remains at elevated levels. Japanese officials reconfirmed overnight that the Hatoyama administration plans to cap Japanese government bond sales at ¥44 trillion in fiscal year 2010. The Nikkei 225 stock index lost 0.02% to close at ¥10,105.68. U.S. dollar offers are cited around the ¥94.75 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥129.15 level and was capped around the ¥130.65 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥143.10 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥85.35 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8292 in the over-the-counter market, up from CNY 6.8277. People’s Bank of China official Zhu Min last week reported China can experience more than 8% economic growth. Zhu added China had “good reason” to devalue its currency during the global financial crisis but instead decided to “stabilize the renminbi exchange rate.” The State Administration for Foreign Exchange said China will continue to implement foreign exchange reforms and PBoC indicated it will “improve” policy flexibility. Data released in China on Friday saw November industrial production up 19%. Also, November consumer price inflation was up +0.6% m/m.

    The British pound gained ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6325 level and was supported around the $1.6190 level. Bank of England Monetary Policy Committee member Spencer reported employment has not decreased as much as expected and suggested unemployment may not surpass the psychologically-important three million level. Other data released in the U.K. today saw Rightmove December house prices decline 2.2% m/m and climb 1.7% y/y. Cable bids are cited around the US$ 1.6155 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8975 level and was capped around the ₤0.9050 level.
  2. Rider

    Rider New Member

    Nov 24, 2009
    Likes Received:
    The euro hit a 2-1/2-month low against the dollar on Tuesday, stung by concerns about the health of euro zone banks, while a slip in German economic sentiment also prompted traders to dump the single currency.

    The dollar rallied to its highest versus a currency basket since the start of October, as questions surrounding the fiscal positions of euro zone states also curbed risk demand and prompted short covering in the U.S. currency.

Share This Page