By GCI Fx Research
€
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2555 level and was capped around the $1.2725 level. European Central Bank President Trichet spoke at the Bank for International Settlements meeting today and said the global economy is “approaching” a point where it will be improving because some positive aspects have not been priced in by the markets including corporate bond issuance activity and the “…very, very strong commitment of authorities…not to let any systemic institutions go under.” Trichet also cited lower commodities prices and fiscal stimuli as positives. Notably, he added central bankers will not depart from current growth forecasts that see economic growth at or below 0% this year. Data released in the U.S. today the February employment trends index decline 3.2% to 91.0, the latest indication that the U.S. employment trend is substantially weakening. These data follow Friday’s significant February non-farm payrolls decline of 651,000 and increase in the unemployment rate to 8.1%. The big debate in the markets remains the possibility that some U.S. financial institutions may become nationalized. In eurozone news, Bank of France reported its sees Q1 2009 GDP growth of -0.6% q/q. Euro bids are cited around the US$ 1.2385 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥99.20 level and was supported around the ¥97.90 level. Data released in Japan overnight saw the first monthly current account deficit in thirteen years last month, the latest indication that Japanese business activity is suffering on account of the yen’s relative strength. The January current account balance printed at -¥172.8 billion, considerably worse than expected. Other data released overnight saw total bank lending climb 3.8% m/m in February while February corporate bankruptcy cases were up 21.0% y/y. The Nikkei 225 stock index lost 1.21% to close at ¥7,086.03. 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 ¥125.45 level and was supported around the ¥123.95 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥136.00 figure while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥85.40 level. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8398 in the over-the-counter market, up from CNY 6.8395.
₤
The British pound depreciated sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.3740 level and was capped around the $1.4180 level. Traders sold sterling after it was announced the government may assume control of up to 65% of Lloyds Bank in its second rescue attempt. Chancellor Darling said this is a “vital step” to restoring bank lending. Barclays submitted a ₤50 billion portfolio that is being assessed this week for the government’s asset protection scheme. Cable bids are cited around the US$ 1.3530 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9185 level and was supported around the ₤0.8950 level.
Daily Market Commentary provided by GCI Financial Ltd.
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