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The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2600 figure and was capped around the $1.2805 level. The common currency slid sharply on escalating concerns about western European banks’ exposure to problems at their Eastern European subsidiaries. There is market chatter about a pending implosion in the Eastern European banking industry following a bearish report from Moody’s Investor Service. Data released in the eurozone overnight saw the December EMU-15 trade balance print at -€700 million and for 2008 as a whole the eurozone recorded a record trade deficit of €32.1 billion. Other data saw the February ZEW economic sentiment index improve to -5.8. In U.S. news, President Obama will sign the US$ 787 billion economic stimulus bill in Denver today amid widespread criticism the emergency spending bill will do much to stimulate employment and the economy in the near-term. Data released in the U.S. today saw the February New York State Empire index worsen considerably to -34.65 from -22.2 in January while December net long-term TICS capital flows grew to US$ 34.8 billion. St. Louis Federal Reserve President Bullard speaks later in the day and trades will scrutinize his remarks to see if he talks about the Fed’s latest asset purchases. Euro bids are cited around the US$ 1.2475 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥92.75 level and was supported around the ¥91.55 level. Finance minister Nakagawa resigned his position following his embarrassing episode of slurred speech at the Group of Seven meeting in Rome this weekend. Economy minister Yosano will assume Nakagawa’s portfolio and this ordeal is the latest problem for beleaguered Prime Minister Aso who currently suffers from a favourable rating below 10% and could be forced out of office by the Liberal Democratic Party ahead of this year’s election. Data released in Japan overnight saw January total machinery orders off 48.4% m/m and 84.1% y/y. The Nikkei 225 stock index lost 1.35% to close at ¥7,645.51. 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 ¥115.65 level and was capped around the ¥117.45 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥131.70 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥78.15 level. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8355 in the over-the-counter market, up from CNY 6.8249. Government official Zhang Xiaogiang reported the U.S. dollar may strengthen to between CNY 6.95 and CNY 7.00.
₤
The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4125 level and was capped around the $1.4310 level. Bank of England Deputy Governor Bean talked about sterling’s recent depreciation saying “It is necessary to re-equilibrate the economy…and help close the current account deficit… It may be reflecting a little bit of overshooting.” Data released in the U.K. today saw January consumer price inflation fall 0.7% m/m and rise 3.0% y/y, its lowest level since March 2008. Core consumer prices fell 0.8% m/m and were up 1.3% y/y, an acceleration. Also, the January DCLG house price index fell 10.2%. Bank of England is expected to continue easing interest rates in H1, possibly as early as next month. Cable bids are cited around the US$ 1.3850 level. The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.8830 level and was capped around the ₤0.8955 level.
CHF
The Swiss franc moved lower vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1775 level and was supported around the CHF 1.1590 level. Data released in Switzerland today saw real retail sales climb 3.6% y/y in December. U.S. dollar offers are cited around the CHF 1.1815 level. The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4770 level while the British pound moved higher vis-à-vis the Swiss franc and tested offers around the CHF 1.6760 level.
Daily Market Commentary provided by GCI Financial Ltd.
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