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Daily Market Commentary

Discussion in 'Forex Daily News & Outlook' started by gcitrading, Apr 21, 2010.

  1. gcitrading

    gcitrading Contributing Member

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    EURO
    The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3355 level and was capped around the $1.3445 level. The common currency is still suffering from Greek-related problems. European Central Bank member Weber indicated this week that Greece’s financing needs could exceed €100 billion, far above early estimates. There is market talk that Greece’s financial assistance needs will also be significant in 2011 and 2012 and will require eurozone partners and the International Monetary Fund to contribute a much larger amount of cash than originally anticipated. German Chancellor Merkel is said to be the major decision-major in the multilateral Greek assistance program, and there is also talk that Greece may require assistance much earlier than previously believed on account of its inability to refinance a lot of debt in the capital markets. The common currency may likely continue to weaken as long as there is an appreciable amount of uncertainty regarding Greece’s cash needs. The IMF today warned there could be a “contagion” effect in the eurozone on account of Greece’s fiscal crisis. The IMF also reduced its German 2010 GDP growth forecast to 1.2% from 1.5% and the IMF called on the ECB to keep interest rates “exceptionally low.” PMI data will be released throughout the eurozone over the next couple of days. In U.S. news, data released today saw MBA mortgage applications improve 13.6% in the latest week. There is talk that Congressional Republicans and the Obama administration may be narrowing their differences regarding financial and regulatory reform. Some key Democratic Senators are calling for the Fed to lose its supervisory status over small banks. Euro bids are cited around the US$ 1.3175 level.

    JPN/CNY
    The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥92.95 level and was capped around the ¥93.40 level. Bank of Japan Deputy Governor Nishimura reported “Some beams of light are starting to break through a thick cloud of deflation. The effects of the pickup in the economy since the spring of 2009 can be considered to spread over to prices only from now on.” There is increasing speculation the BoJ will raise its outlook for the economy and prices next week amid positive improvements in certain economic measures including the export sector, the unemployment rate, and consumer confidence. Nishimura added the possibility of a double dip recession has diminished. The Democratic Party of Japan reported it will likely call for an inflation target for the central bank in this year’s election platform. It is likely legislators will try and prompt the central bank to seek inflation of up to two per cent. The International Monetary Fund today called on Japan to enact a “credible” medium-term fiscal plan. Data released in Japan overnight saw the February leading index improve to 98.5 while the February coincident index ticked lower to 100.5. Also, the March merchandise trade balance total expanded to ¥1.020 trillion. The Nikkei 225 stock index climbed 1.74% to close at ¥11,090.05. U.S. dollar offers are cited around the ¥96.85 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥124.25 level and was capped around the ¥125.50 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥144.15 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥86.70 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8275 in the over-the-counter market, up from CNY 6.8254. Reserve Bank of India’s Subbarao and Central Bank of Brazil’s Meirelles called on China to let the yuan appreciate. Many China-watchers believe China may allow the yuan to appreciate at any time between now and the end of the quarter.

    STERLING
    The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5440 level and was supported around the $1.5330 level. Minutes from Bank of England Monetary Policy Committee’s April meeting were released today and they revealed a unanimous vote to keep interest rates unchanged and the central bank’s asset purchase plan unchanged at £200 billion. The central bank did adopt a more hawkish view on inflation, however, noting there are “some upside risks to inflation.” Data released in the U.K. today saw March jobless claims decline by 32,900 with the claimant count rate at 4.8%. In contrast, the ILO unemployment measure rose to 8% in the three months to February. Traders are talking about a surge in the polls by the Liberal Democratic Party and the likely impact this will have on the 6 May General Election. .Many political pundits believe the contest will result in a hung Parliament and some now say the general election is too close to call with Cameron perhaps still holding a slight lead over Brown. Cable bids are cited around the US$ 1.5140 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the £0.8685 level and was capped around the £0.8750 level.

    SWISS
    The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0725 level and was supported around the CHF 1.0660 level. Dealers cited talk that Swiss National Bank bids were seen on the euro/ Swiss franc cross around CHF 1.4330 during the Australasian session. Data released in Switzerland today saw March M3 money supply growth decelerate to 5.9%. U.S. dollar offers are cited around the CHF 1.0920 level. The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4325 level while the British pound moved higher vis-à-vis the Swiss franc and tested offers around the CHF 1.6495 level.
     
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