By GCI Fx Research
€
The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3935 level and was capped around the $1.4130 level. The common currency ended higher for the week but gave back some of yesterday’s gains. Traders cited increasing pessimism about the prospects for an economic recovery in the eurozone. European Central Bank President Trichet bearishly said the eurozone’s economic situation is still “difficult and unpredictable” but noted the central bank is maintaining price stability despite all of the stimuli in the economy and remaining “permanently alert and cautious.” The euro was also dented by weaker-than-expected April industrial production data that were off 1.9% m/m and 21.6% y/y – the steepest annual decline since at least January 1990. Also, the German May wholesale price indes was up 0.1%. The euro also came off on comments from Canadian finance minister Flaherty who indicated “more work (needs) to be done in some of the Europearn countries, with repsect to their banking system.” In U.S. news, April import prices were up 1.3% m/m, the largest monthly rise since July 2008, and were off 17.6% y/y – the largest decline since at least 1982. Additionally, the mid-June University of Michigan consumer sentiment indicator ticked higher to 69.0 from 68.7. Euro bids are cited around the US$ 1.3435 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥98.40 level and was supported around the ¥97.45 level. Japanese finance minister Yosano reported the Japanese government supports U.S. policies and the soundness of the U.S.’s debt. Group of Eight officials are not expected to discuss exchange rate issues at this weekend’s meeting of finance ministers in Italy. Data released in Japan overnight saw the May consumer sentiment index print at 35.7, up from 32.4 in April, reaching its highest level since March 2008. Also, April revised industrial output printed at +5.9% m/m. The Nikkei 225 stock index climbed 1.55% to close at ¥10,135.82. 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 ¥138.30 level and was supported around the ¥136.90 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥162.60 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥91.50 level. In Chinese news, the U.S. dollar strengthened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8344 in the over-the-counter market, up from CNY 6.8323.
₤
The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6340 level and was capped around the $1.6595 level. Cable moved higher this week but ceded some territory today as traders booked profits. Sterling was driven higher earlier in the week on rising U.K. inflation expectations. Chancellor of the Exchequer Darling will reported seek an agenda on assets and oil at this weekend’s Group of Eight meeting in Italy. Cable bids are cited around the US$ 1.6215 level. The euro appreciated vis-à-vis the British pound as the single currency tested offers around the ₤0.8540 level and was capped around the ₤0.8480 level.
Daily Market Commentary provided by GCI Financial Ltd.
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