By GCI Fx Research
€
The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4140 level and was supported around the $1.4050 level. The common currency moved higher after the Central Bank of the Russian Federation Deputy Chairman Ulyukayev said the central bank is reducing its holdings of gold and U.S. Treasury bonds in favour of bonds issued by the International Monetary Fund. There is a Sino-Russian movement afoot to develop a new international reserve currency to reduce dependence on the U.S. dollar and this will have a negative impact on the greenback. In eurozone news, German April industrial production was off 1.9% m/m while French industrial production was off 1.4% m/m. Group of Seven finance ministers will convene in Italy later this week to discuss their exit strategies from the ongoing economic and financial crisis. Other data released today saw German May consumer price inflation off 0.1% m/m and flat y/y. European Central Bank member Quaden said eurozone interest rates are at “appropriate” levels now, adding the ECB does not need an “accommodating” monetary policy in the long term. Euro bids are cited around the US$ 1.3435 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥98.10 level and was supported around the ¥97.10 level. The yen was given across the board as the global equities rally continued and investors moved into higher-yielding currencies. Data released in Japan overnight saw the May domestic corporate goods price index decline 0.4% m/m and 5.4% y/y. Also, April core machinery orders were off 5.4% m/m, the second consecutive monthly decline, and were off 32.8% y/y. The Nikkei 225 stock index climbed 2.09% to close at ¥9,991.49. 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 ¥138.35 level and was supported around the ¥136.65 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥159.15 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥90.45 level. In Chinese news, the U.S. dollar weakened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8323 in the over-the-counter market, down from CNY 6.8344. Data released in China overnight saw May consumer prices off 0.3% m/m and 1.4% y/y while May producer prices were off 7.2%.
Daily Market Commentary provided by GCI Financial Ltd.
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