By GCI Forex Research
Fundamental Outlook at 1400 GMT (EDT + 0400)
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The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3415 level and was capped around the $1.3495 level. The common currency pushed lower as traders speculated that more countries may ask the U.S. for information about Goldman Sachs’s business practices, particularly with regard to the manner in which Goldman structured some sub-prime mortgage securities that were sold to international investors. Germany is said to be pressing the U.S. for additional information. The common currency came off on this news on the premise that the enforcement action against Goldman may have a dampening effect on global equities, notwithstanding the fact that U.S. equities rallied today. Also, the euro moved lower as the Icelandic volcano that erupted last week continues to snarl air traffic, leading to a general disruption of business activity around the Continent. Data released in the U.S. today saw March leading indicators print at +1.4%, up from the revised prior reading of +0.4%. Outgoing Federal Reserve Vice Chairman Kohn reported regulators should improve their data analysis while Chicago Fed President Evans reiterated the economy is recovering. President Obama will be speak in New York on Thursday at Cooper Union and Treasury Secretary Geithner today noted new regulations are needed so that the U.S. financial system is not vulnerable to “the reckless choices of individual firms.” In eurozone news, EMU-16 February construction output was off 3.3% m/m and 15.2% y/y. Euro bids are cited around the US$ 1.3175 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥92.45 level and was supported around the ¥91.60 level. Data released in Japan today saw March consumer confidence print at 41.0, up from the prior reading of 40.0, while March Tokyo department store sales improved to -5.1% y/y from the prior reading of -6.5% y/y. Other data saw March Nationwide department store sales improve to -3.5% y/y. February industry index data will be released overnight followed by March machine tool orders and March convenience store sales. The Nikkei 225 stock index lost 1.74% to close at ¥10,908.77. U.S. dollar offers are cited around the ¥96.85 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥124.65 level and was supported around the ¥123.15 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥141.75 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥86.95 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8275 in the over-the-counter market, up from CNY 6.8255. China’s currency regulator today noted that China’s capital account surplus expanded to US$ 144.8 billion in 2009, up from US$ 19 billion in 2008. The perception of higher interest rates in China is likely to fuel more China-bound investment capital. Many traders believe China will revalue its yuan’s trading band imminently, possibly by widening its trading band by up to 3%.
₤
The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5190 level and was capped around the $1.5340 level. Data to be released in the U.K. tomorrow include March consumer price inflation. Prime Minister Brown and Tory leader Cameron debated last week ahead of the 6 May general election. Many political pundits believe the contest will result in a hung Parliament and some now say the general election is too close to call with Cameron perhaps still holding a slight lead over Brown. Data released in the U.K. last week saw March Nationwide consumer confidence print at 72, down from a revised +81. Cable bids are cited around the US$ 1.5140 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the £0.8840 level and was supported around the £0.8785 level.
CHF
The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0690 level and was supported around the CHF 1.0615 level. Data released in Switzerland last week saw March producer and import prices climb 0.5% m/m and 0.0% y/y. Swiss National Bank Vice Chairman Jordan last week said regulators cannot allow governments to be “blackmailed” into protecting banks from collapse during future financial crises. There was talk yesterday that the Swiss National Bank may have sold francs for euro this week in an intervention to try and support the Swiss export sector. U.S. dollar offers are cited around the CHF 1.0920 level. The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.4360 level while the British pound moved lower vis-à-vis the Swiss franc and tested bids around the CHF 1.6205 level.
Forex Daily Market Commentary provided by GCI Financial Ltd.
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