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, Feb 12, 2010.

  1. gcitrading

    gcitrading Contributing Member

    Joined:
    Dec 16, 2008
    Messages:
    329
    Likes Received:
    0
    EURO
    The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3530 level and was capped around the $1.3695 level. The common currency continues to retreat lower as risk aversion becomes heightened. Greek credit default swaps for five and ten year sovereign debt continue to widen as do the default swaps for Spain, Portugal, Italy, and Ireland. Traders generally believe yesterday’s announcement by European Union leaders lacks teeth insofar as it did not commit a specific level of capital to confront Greece’s financial difficulties. The most likely scenario, however, is that Greece will eventually receive bilateral aid from at least one eurozone country, with Germany the likely guarantor. European Central Bank President Trichet said he will work with the European Commission on proposals for additional Greek measures. ECB member Stark said a lot of ideas being suggested to help Greece are “counterproductive.” In addition to the threat of contagion to other eurozone countries, dealers are paying close attention to the resumption of escalating credit risk in the Middle East. Dubai credit default swaps are 18 bps wider today and some traders are speculating the emirate could be facing bankruptcy. There is also a fear that Dubai credit jitters could spread to other countries around the Gulf. Data released in the eurozone today saw Q4 2009 gross domestic product climb a weaker-than-expected +0.1% q/q. Also, French Q4 2009 GDP came in stronger-than-expected at +0.6% q/q and German Q4 GDP printed flat q/q, below forecasts. Additionally, it was reported that EMU-16 December industrial production was off 1.7% m/m and off 5.0% y/y. In U.S. news, January retail sales were up a stronger-than-expected 0.5% with the ex-autos component up 0.6%. Also, the preliminary February University of Michigan consumer sentiment indicator fell to 73.7 from the prior reading of 74.7. Euro bids are cited around the US$ 1.3530 level.

    JPN/CNY
    The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥90.40 level and was supported around the ¥89.60 level. Data released overnight saw January consumer confidence improve to 39.0 from 37.6 in December. Traders are awaiting Q4 2009 gross domestic product data that will be released on Monday and they are expected to show annualized growth of 3.6% for the October through December period, up from the 1.3% expansion in the third quarter. Even if output is reported to have expanded, Bank of Japan Governor Shirakawa reported this month that “there is still a long way to go.” Other data released in Japan this week saw December machinery orders up 20% m/m, defying expectations of an 8% increase. It was also reported that January producer prices declined for a thirteenth consecutive month, off 2.1% - the longest streak in six years. Even though this was better than December’s 3.9% slide, the negative print coincided with increases in commodity costs and these data simply reaffirm the deflationary pressures evident in the economy from a lack of final private demand. BoJ Deputy Governor Yamaguchi this week warned economic growth “may stall” temporarily and said “growth may be in a pretty severe state through this summer, so we can’t really expect a rapid expansion.” The Nikkei 225 stock index climbed 1.29% to close at ¥10,092.19. 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 ¥121.35 level and was capped around the ¥123.10 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥139.75 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥82.80 level. In Chinese news, the U.S. dollar depreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8333 in the over-the-counter market, down from CNY 6.8338. One day after People’s Bank of China reconfirmed it will “gradually guide monetary conditions back to normal levels from the counter-crisis mode,” the central bank lifted reserve requirements by 0.5%, effective 25 February. The central bank is clearly trying to contain inflationary pressures and avert asset bubbles. There is some speculation that the yuan has depreciated over the past couple of days ahead of the Chinese New Year as a signal that China is displeased with the U.S.’s recent military deal with Taiwan and Obama’s plans to meet the Dalai Lama.

    STERLING
    The British pound moved lower vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5580 level and was capped around the $1.5740 level. Data released in the U.K. today saw the leading economic indicator decline to +0.4% in December from +0.9% in November. These data suggest economic activity may moderate in the next several months. Bank of England Governor King this week reported the U.K. economy is “bumping along the bottom.” Bank of England released its quarterly inflation report on Wednesday and noted inflation remains low in the U.K. and added the strength of the economic recovery of the U.K. economy remains “highly uncertain.” Notably, BoE Governor King reported economic growth has decelerated from November 2009 but said Q4 GDP numbers could be upwardly revised. Specifically on the inflation front, the central bank said inflation could move above 3% this year but added it should moderate within two years. King also noted it is too early to say if the Bank will expand its quantitative easing purchase program by resuming bond and asset purchases. Cable bids are cited around the US$ 1.5340 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8655 level and was capped around the ₤0.8725 level.

    SWISS
    The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0825 level and was supported around the CHF 1.0695 level. Swiss National Bank is said to have intervened again by buying euro and selling Swiss franc over EBS, just as they reported did one week ago. Data released in Switzerland this week saw January consumer price inflation decline 0.1% m/m and climb 1% y/y, a faster-than-expected acceleration. Swiss National Bank member Jordan this week indicated it is premature to raise interest rates from their near zero per cent level. Jordan also reported the SNB will continue to prevent an “excessive” appreciate of the Swiss franc, adding the franc is seen as a “safe haven.” U.S. dollar offers are cited around the CHF 1.0810 level. The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4635 level while the British pound appreciated vis-à-vis the Swiss franc and tested offers around the CHF 1.6950 level.
     
Loading...

Share This Page