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Daily Market Commentary

Discussion in 'Forex Daily News & Outlook' started by gcitrading, Dec 15, 2009.

  1. gcitrading

    gcitrading Contributing Member

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    EURO
    The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4520 level and was capped around the $1.4660 level. Traders dumped the common currency on news that Oesterreichische Volksbanken AG, Austria’s fourth largest bank, has been placed on a “watch list” by the central bank and financial market regulator. Additionally, the Austrian government yesterday agreed to nationalized troubled lender Hypo Group Alpe Adria. Moreover, Greek Prime Minister Papandreou spoke yesterday and pledged to reduce the country’s deficit from 12.7% of GDP to 3% in 2013. Data released in the U.S. today saw the New York Empire State manufacturing index decline to 2.55 in December from 23.51 in November. Also, the November producer price index was up 1.8% m/m and 2.4% y/y at the headline level and up 0.5% m/m and 1.2% y/y at the ex-food and energy level. Also, November industrial production printed at +0.8% and capacity utilization printed at 71.3%. Additionally, net long-term TICS flows fell to US$ 20.7 billion in October from US$ 40.7 billion while October total net TICS flows came in at –US$ 13.9 billion, a shar reversal from US$ 133.5 billion. In eurozone news, the German government reported it needs to consolidate €25-30 billion in spending in 2011 to meet budgetary requirements. Traders are now citing growing growth differentials between the U.S. and eurozone that favour the U.S. dollar. Data released in the eurozone today saw the German ZEW December economic sentiment index fall to 50.4 from 51.1 in November. Also, French November consumer price inflation was up 0.1% m/m and +0.4% y/y. Euro bids are cited around the US$ 1.4505 level.

    JPN/CNY
    The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥89.70 level and was supported around the ¥88.55 level. Finance minister Fukii reported the government must keep bond issuance below ¥44 trillion for the fiscal year that begins in April 2010. The Bank of Japan December quarterly Tankan survey was released yesterday 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. The Nikkei 225 stock index lost 0.22% to close at ¥10,083.48. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥130.45 level and was supported around the ¥129.50 level. The British pound moved lower vis-à-vis the yen as sterling tested offers around the ¥145.50 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥86.25 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8270 in the over-the-counter market, down from CNY 6.8292. 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.
     
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