GCI FX Research
€
The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2830 level and was supported around the $1.2660 level. Traders paid close attention to testimony from Federal Reserve Chairman Bernanke who reported the economy is suffering a “severe contraction” and said the Fed and Obama administration must normalize the banking and credit markets. Bernanke added “Only if that is the case, in my view there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery… To break that adverse feedback loop, it is essential that we continue to complement fiscal stimulus with strong government action to stabilize financial institutions and financial markets.” The Fed will soon operationalize its program to enhance the availability of consumer loans. Bernanke also noted “significant stresses persist in many markets. Notably most securitization markets remain shut…and some financial institutions remain under pressure.” The Fed Chairman also said the government’s possible plan to purchase a significant minority interest in some U.S. financial institutions does not amount to nationalization. Data released in the U.S. today saw the February Richmond Fed’s manufacturing index worsen to -51 while the February consumer confidence index fell to 25 from 37.7 in January. Other data saw Q4 2008 U.S. house prices decline a record 3.4%, the largest decline in at least eighteen years, while the December S&P/ Case-Shiller home price index was off 18.5%. In eurozone news, French President Sarkozy warned the banking crisis in central and Eastern Europe will “probably worsen.” EMU-15 December new industrial orders were off 5.2% m/m and 22.3% y/y. Also, it was reported that the German Ifo business climate index fell to 82.6 from 83.0 in January. Additionally, the EMU-15 December current account deficit printed at -€7.3 billion, up from -€13.9 billion in November. Euro bids are cited around the US$ 1.2475 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥96.90 level and was supported around the ¥94.25 level. Minutes from Bank of Japan Policy Board’s meeting on 21-22 January were released today in which some officials concluded “Members agreed that it would be appropriate to maintain the current guidelines and that the bank encourage the uncollateralized overnight call rate to be around 0.1%.” Some officials, however, were skeptical about whether or not easing measures would have an appreciable impact on the economy. BoJ officials are now focusing their attention on the significant chance that deflationary pressures have taken root in the Japanese economy. Many BoJ-watchers believe the central bank will expand its asset purchasing programs and steer market rates lower. Data released in Japan overnight saw the January corporate services price index decline 0.9% m/m and 2.2% y/y. The Nikkei 225 stock index lost 1.46% to close at ¥7,268.56. U.S. dollar offers are cited around the ¥104.15 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥123.85 level and was supported around the ¥119.35 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥139.90 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥83.15 level. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8368 in the over-the-counter market, up from CNY 6.8355.
₤
The British pound gained marginal ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4575 level and was supported around the $1.4375 level. Surprisingly, the CBI’s retail sales balance improved again this month, rising to -25 from -47 in January – the strongest level since June 2008. Other data saw Q4 business investment off 3.9% q/q and 7.7% y/y while January net mortgage lending printed at ₤2.9 billion. Cable bids are cited around the US$ 1.4245 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8885 level and was supported around the ₤0.8725 level.
Daily Market Commentary provided by GCI Financial Ltd.
GCI Financial Ltd (“GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (“Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (“CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.
DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.
