By GCI Fx Research
€
The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2815 level and was supported around the $1.2615 level. Yesterday’s strong gains in U.S. equity markets coincided with a bid in the common currency and news that Citigroup’s January and February were profitable. A report from U.S. Treasury Secretary Geithner that he plans to inject capital to help lenders reduce their exposures to distressed securities also impacted the market. Traders remain curious as to whether Citigroup and any other U.S. financial institutions will be nationalized by the Obama administration and whether or not the Fed’s new asset purchase facilities ease credit strains. Federal Reserve Chairman Bernanke yesterday reiterated that major financial institutions will not be permitted to fail and said a sustainable economic recovery will “remain out of reach” until the banking sector is stabilized.” He added 2010 will be a year of growth if the current measures being taken to support the economy result in the recession ending later this year. In eurozone news, German January factory orders were off 8% m/m and 37.9% y/y while the German January producer price index was off 1.2% m/m and up 2.0% y/y. Euro bids are cited around the US$ 1.2385 level.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥97.20 level and was capped around the ¥98.85 level. Data released in Japan overnight saw January core machinery orders off 3.2% m/m while the February domestic corporate goods price index was off 0.4% m/m and 1.1% y/y, the latest indication that deflationary pressures have not yet subsided. The yen was stronger across the board today as traders weighed the ongoing global economic problems against, yesterday’s strong gains in U.S. equity markets, and Japan’s slumping economy. Most traders expect Bank of Japan will expand its purchase of assets to keep market rates of interest restrained. The Nikkei 225 stock index climbed 4.55% to close at ¥7,376.12. 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 ¥124.10 level and was capped around the ¥125.70 level. The British pound moved lower vis-à-vis the yen as sterling tested offers around the ¥133.90 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥83.90 level. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8399 in the over-the-counter market, down from CNY 6.8410. Data released in China today saw February urban property sales up 6.9% y/y.
₤
The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.3840 level and was supported around the $1.3655 level. Bank of England purchased ₤2 billion in gilts today as the first part of its quantitative easing strategy that was announced last week. BoE is likely to purchase up to ₤75 billion in gilts and corporate debt over the next three months and this effectively means money is being printed. Prime Minister Brown will meet banking chief executives on 24 March ahead of the G20 summit it London on 2 April. Data released in the U.K. today saw the January trade deficit worsen to -₤7.7 billion from -₤7.2 billion in December. Cable bids are cited around the US$ 1.3470 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9300 figure and was supported around the ₤0.9190 level.
Daily Market Commentary provided by GCI Financial Ltd.
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