By GCI Fx Research
€
The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3155 level and was supported around the US$ 1.2985 level. Traders are awaiting the outcome of today’s Federal Open Market Committee meeting with most traders expecting no dramatic announcements. Fed officials may use the opportunity to expound upon their recently-launched Term Asset-Backed Securities Loan Facility (TALF) program to stimulate consumer and business lending in the asset-backed securities market. Fed officials may also give some colour about the current state of the economy and could indicate that recent economic data suggest there are nascent signs of an economic recovery, notwithstanding the labour market. Data released in the U.S. today saw the Q4 2008 current account deficit narrow to –US$ 132.8 billion between October and December from an upwardly revised deficit of –US$ 181.3 billion in Q3 2008. Also, the February consumer price index rose 0.4% m/m and +0.2% y/y. In eurozone news, the European Union may appropriate an additional €10 billion in emergency loans available to non-eurozone members. This would be in addition to the €25 billion facility already in place. 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 ¥97.70 level and was capped around the ¥98.85 level. As expected, Bank of Japan’s Policy Board voted to keep interest unchanged and at ultra-accommodative levels overnight. More importantly, the central bank decided to purchase additional government bonds outright to ease credit strains heading into the fiscal year-end at the end of the month. BoJ will now purchase ¥1.8 trillion every month, or ¥21.6 trillion annually, up from the ¥1.4 trillion monthly and ¥16.8 trillion annual level established in January. The Nikkei 225 stock index climbed 0.29% to close at ¥7,972.17. 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 ¥129.20 level and was supported around the ¥128.00 figure. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥136.55 figure while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥84.30 level. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8347.
₤
The British pound moved lower vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.3840 level and was capped around the $1.4070 level. Data released in the U.K. today saw unemployment move above the two million level for the first time in nearly twelve years with the claimant count jumping 138,400 in February and the unemployment rate higher at 6.5%. Bank of England Governor King yesterday reported the central bank will decide when and how to reverse its asset purchases and normalize interest rates when inflation conditions allow same. King also said the upcoming Group of Twenty meeting needs to drive home the message that macroeconomic stimulus is needed. Cable bids are cited around the US$ 1.3720 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9415 level and was supported around the ₤0.9255 level.
Daily Market Commentary provided by GCI Financial Ltd.
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