By GCI Fx Research
€
The euro weakened vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3225 level and was capped around the US$ 1.3380 level. Technically, today’s intraday low was just above the 23.6% retracement of the move from $1.6040 to $1.2330. The common currency retraced some of its intraday losses after the release of U.S. March producer price inflation data that saw the headline index decline 1.2% m/m after climbed 0.1% in February. The core PPI index fell to 0.0% m/m from +0.2% in February. These data indicate pricing power at the factory gates remains quite weak, particularly with the headline index off 3.5% y/y. Other data released today saw March retail sales decline 1.1% m/m, defying expectations of a 0.3% increase, while February’s tally was upwardly revised to +0.3%. Traders await remarks from President Obama and Federal Reserve Chairman Bernanke during the North American session. Goldman Sachs’s confirmation that it earned about US$ 1.6 billion in profit in Q1 was received in a lukewarm fashion by dealers. Attention now focuses on Citigroup’s, JPMorgan Chase’s, and Morgan Stanley’s earnings. In eurozone news, the German government will decide on 21 April whether or not it will establish a “bad bank” to absorb banks’ illiquid assets to restart lending activity and help remove toxic assets from banks’ balance sheets. Data released in France saw the February current account deficit narrow to €2.2 billion. Euro bids are cited around the US$ 1.3100 figure.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥98.95 level and was capped around the ¥100.40 level. The yen was stronger across the board as traders reduced their risk appetites overnight despite a decent earnings report from Goldman Sachs. Traders are still slow to add riskier asset plays to their portfolio following yesterday’s strong indication the Obama administration is likely pushing General Motors to file for bankruptcy. Rumours that Delphi may be forced to liquidate led to more yen demand. The Nikkei 225 stock index lost 0.92% to close at ¥8,842.68. 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 ¥131.25 level and was capped around the ¥134.30 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥147.25 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥86.70 level. The Chinese yuan depreciated vis-à-vis the U.S. dollar today as the greenback closed at CNY 6.8320 in the over-the-counter market, up from CNY 6.8318.
₤
The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4930 level and was supported around the $1.4820 level. Bank of England reported it wants to enhance payment and settlement systems so that it can further reduce systemic risk. Traders are also examining possible fallout from the political row involving Prime Minister Brown and Labour. Cable bids are cited around the US$ 1.4515 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8890 level and was capped around the ₤0.9005 level.
CHF
The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1445 level and was supported around the CHF 1.1320 level. Swiss National Bank allocated €13.2 billion in a euro/ Swiss franc swap today as part of its quantitative easing framework to weaken the franc. U.S. dollar bids are cited around the CHF 1.1275 level. The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.5105 level while the British pound gained ground vis-à-vis the Swiss franc and tested offers around the CHF 1.7060 level.
Daily Market Commentary provided by GCI Financial Ltd.
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