InvestMacro FX

By GCI Fx Research

€

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4245 level and was supported around the US$ 1.4100 figure.  U.S. equity markets staged a further recovery in response to better-than-expected U.S. pending home sales data that saw an increase of 6.7% in April, significantly above the 0.4% estimate.  There is a growing consensus that the U.S. economy has bottomed out.  May ADP employment change data and ISM non-manufacturing data will be released tomorrow.  In eurozone news, the EMU-16 unemployment rate escakated to its highest level since September 1999, rising to 9.2% from 8.9% in March.  Notably, 3.1 million people have lost their jobs in the eurozone over the past year and this will have an ongoing appreciable impact on final private demand.  Other data saw French April producer price inflation off 0.6% m/m and 5.5% y/y.  The European Central Bank convenes on Thursday and most traders believe policymakers will keep the ECB’s main refinancing rate unchanged at the current record low of 1.0%.  Euro bids are cited around the US$ 1.3435 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥95.30 level and was capped around the ¥96.65 level.  The U.S. dollar fell sharply across the board as traders reduced their long U.S. dollar exposure on fears that major foreign holders of U.S. dollar assets may have a declining risk appetite for U.S. assets.  The Nikkei 225 stock index climbed 0.3% to close at ¥9,704.31.  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 ¥137.45 level and was supported around the ¥135.75 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥159.20 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥90.55 level. In Chinese news, the U.S. dollar strengthened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8298 in the over-the-counter market, up from CNY 6.8257.

₤

The British pound appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6595 level and was supported around the $1.6320 level.  Many data were released in the U.K. today. First, April net lending to individuals expanded ₤1.287 billion, up from a revised ₤693 million in March.  Second, May PMI construction improved to 45.9.  Third, April mortgage approvals increased to 43,000 from 40,000.  Fourth, mortgage approvals improved to 43,201, an eleven-month high that indicated the housing sector may be improving.  Fifth, the April M4 money supply expanded 0.2% m/m and 17.4% y/y.  Sixth, BSA reported April gross mortgage lending was unchanged from March at ₤1.5 billion. Cable bids are cited around the US$ 1.6070 level.  The euro appreciated vis-à-vis the British pound as the single currency tested offers around the ₤0.8670 level and was supported around the ₤0.8600 figure.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

By CountingPips.com

The Reserve Bank of Australia decided to hold its interest rate at its lowest standing since 1960 at 3.00 percent today. Today’s rate decision was widely expected and follows a rate hold in May after a reduction of 25 basis points in April.  The RBA had slashed the interest rate by 1.00 percent in February and in December for a total of 425 basis points since September 2008 in response to the global economic downturn.

Glenn Stevens, RBA Governor of Monetary Policy, commented on the global economy in the bank statement saying, “Evidence has continued to emerge that the global economy is stabilising, after a sharp contraction during the December and March quarters. The considerable economic policy stimulus in train in most countries is helping to contain the downturn, and should support an eventual recovery. The turnaround is clearest in China and some other emerging countries. Recovery in the major countries is likely to take longer to begin and be slower when it does occur.”

Stevens said that the Australian economy has continued to contract in 2009 and that job growth will likely fall going forward.  On inflation and the direction of bank policy, Stevens stated, “the prospect of inflation declining over the medium term suggests that scope remains for some further easing of monetary policy, if needed. In assessing how it might use that scope, the Board will continue to monitor how economic and financial conditions unfold, and how they impinge on prospects for a sustainable recovery in economic activity.”

In other Australian economic news today, the Australian Current Account deficit decreased by 27 percent in the first quarter of 2009 according to data released by the Australian Bureau of Statistics. Australia’s current account balance for the first quarter was a seasonally adjusted deficit of A$4,614 million changed by A$1,743 million from a revised A$6357 million million in the fourth quarter of 2008. Helping to decrease the deficit was a 22 percent surplus on goods and services while the income deficit decreased by 8 percent.

The Australian dollar was mostly higher in Forex Trading today as the aussie gained versus the US dollar, euro, Japanese yen and Canadian dollar while falling versus the New Zealand dollar.

Tomorrow stayed tuned for the release of the Australian Gross Domestic Product release for the first quarter of 2009. Forecasts are for a 0.2 percent decline which would bring the Australian economy into two straight declining quarters of GDP growth which is the general definition of a recession.

By Fast Brokers

Volume topped out yesterday as anticipated and the EUR/USD slipped down towards our 1.4117 support.  The currency pair is bouncing back on Wednesday despite the EU unemployment rate coming in one basis point higher than expected at 9.2%.  Our trend lines are reaching their inflection point right now, indicated we could see a bullish breakout today into the 1.43-1.44 range.  The present relative strength of the Euro is supported by a rising EUR/GBP.  However, yesterday the EUR/GBP registered significant losses from a technical standpoint.  The EUR/GBP sank beneath December 2008 lows, a very bearish move.  Therefore, even though we’re witnessing an intraday recovery in the currency pair, it appears the EUR/GBP’s downtrend has more room to go.  Hence, even though we maintain our bullish outlook on the EUR/USD trend wise, it seems the currency pair may continue to post a relatively weak performance as compared to the GBP/USD should the Dollar depreciate further.

Regardless of the near-term peak, the EUR/USD remains in great shape.  The currency pair continues its bull run with all foreseeable medium-term downtrend line pressures fading into the distance.  Even though the EUR/USD’s uptrend has played out beautifully, the currency pair is approaching some near-term obstacles which could result in some consolidation.  These obstacles include 12/29 and 12/18 highs.  Therefore, the 1.43-1.47 area could prove to be a bit challenging in the near-term.  While a wide 3% range, 1.43-1.47 gives you an idea of where the EUR/USD might bounce around.  1.43-1.44 could naturally serve as the 1st consolidation point with investors awaiting the results of the ECB meeting on Thursday.  We won’t see too much data from the EU until then, giving all the more reason to anticipate an incoming period of consolidation.  However, if the EUR/USD can manage to pop above 1.4432 then the currency pair may ignore 1.43 consolidation and accelerate near-term gains.

Meanwhile, economic data around the globe continues to improve.  Investors are shrugging off the GM bankruptcy in what appears to be a buy on the news.  While investors are anticipating the ECB to keep its benchmark rate at 1%, the central bank pulled a trick card last meeting by announcing the purchase of covered bonds.  As a result, investors will be paying more attention to the ECB’s action and if inaction language concerning their alternative monetary policy actions.  The EUR/USD should continue to benefit as long as the global economy recovers and investors exit the dollar from fear of inflation in the U.S.  Therefore, it appears we are returning to pre-crisis norms of a weak dollar and pricey oil.

Fundamentally, we maintain our resistances of 1.4222, 1.4290, 1.4325, 1.4374, and 1.4432.  To the downside, we hold our supports of 1.4187, 1.4117, 1.4078, 1.4024, and 1.3987.  The 1.40 area serves as a psychological cushion with 1.45 acting as a psychological barrier.  The EUR/USD is currently exchanging at 1.4216.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

The Cable pulled back on declining volume yesterday, although losses were negligible.  The GBP/USD is already popping up Tuesday after British Construction PMI and Net Lending to Individuals both came in encouragingly above analyst expectations.  The recovery in the British economy continues to outpace even optimistic expectations, giving the Pound relative strength.  Though the EUR/USD is outperforming the GBP/USD on the present 4-hour bar, we believe the recent British economic data will help push the Pound higher over the remainder of the week.

Meanwhile, the S&P futures are breaking out to new yearly highs, adding fuel to the fire of the uptrend of both the Cable and the EUR/USD due to their positive correlation with U.S. equities.  However, as with the EUR/USD, we notice an upcoming zone of technical resistance which may result in some near-term consolidation.  For the Cable, the next obstacle becomes October 30 highs, making the psychological 1.65-1.66 zone a possible area of consolidation.  The GBP/USD has made quite a run as of late, and it wouldn’t be surprising to see some bulls cash in profits.

We’re going to see some more important economic data surface from Britain over the next few days leading up to Thursday’s interest rate decision.  With the EU pretty quiet until Thursday, we could see the GBP/USD exert higher comparative volatility for the time being.  Investors will watch for continued confirmation of a recovery in British economic data along with good news from the U.S. economy.  Despite our anticipation of approaching consolidation, we maintain our bullish outlook on the Cable trend wise due to the incredible progress made fundamentally over the past week.  The GBP/USD has left behind our key 2nd tier downtrend, meaning there is quite a bit of room to work with to the upside.

Looking ahead to Wednesday, Britain will release their Halifax HPI and Services PMI data points along with key numbers from the U.S.  If the data is better than expected all around, the GBP/USD may bypass consolidation and dart higher in optimism concerning a recovering global economy.  If the Cable can climb above our 1.6679 resistance the currency pair could really take off.  We maintain our bullish outlook on the GBP/USD due to the aforementioned analysis.

Fundamentally, we find resistances of 1.6462, 1.6522, 1.6587, 1.6679, and 1.6734.  To the downside, we see supports of 1.6379, 1.6343 1.6307, 1.6233, and 1.6170.  The 1.60 level acts as a psychological cushion with 1.65 serving as a psychological barrier.  The GBP/USD is currently exchanging at 1.6440.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

The USD/JPY is exhibiting some interesting consolidative volatility while bouncing between our 2nd tier uptrend and downtrend lines.  It seems this pattern could continue until these two trend lines reach an inflection point, which may not be until Friday’s trading session.  Meanwhile, the GBP/USD, and EUR/USD are encountering some technical obstacles, indicating slightly consolidative patterns until Thursday’s double-header ECB and BOE meetings.  The USD/JPY remains encouragingly above March 19 lows and is slowly floating north.  Therefore, the USD/JPY’s uptrend has a faint glimmer of hope.  The uptrend may ultimately rely upon a continued rise in the S&P coupled with investors regaining confidence in the viability of the U.S. Dollar.  However, despite the USD/JPY finding near-term support, we maintain our bearish outlook on the USD/JPY trend wise.  We haven’t seen any game-changing, fundamental moves to the upside to swing the momentum.  There are still 5 downtrend lines bearing down on price with the highly psychological 100 level hanging in the distance.  However, the USD/JPY may begin to wake from its sideways action as our trend lines collide.

Fundamentally, we maintain resistances of 95.82, 96.33, 96.90, 97.45, and 97.98.  To the downside, we hold our supports of 95.12, 94.43, 93.77, 93.11, and 92.65.  The 100 level serves as a key psychological barrier with 95 acting as a psychological cushion.  The USD/JPY is currently exchanging at 95.73.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Fast Brokers

Gold continued Monday’s pullback on declining volume has investors locked in profits from the precious metal’s nice run.  Since volume fell with price, we don’t view yesterday’s selloff as significant and gold is presently finding support on our 1st tier downtrend line.  The precious metal has outperformed as of late, putting on an impressive show and clearing the way for a breakout in the S&P futures due to their positive correlation.  In fact, the S&P set new 2009 highs yesterday.  It appears as if it is the S&P’s turn to lead way as investors look to make a statement by following through on Monday’s key fundamental step.  Gold has a few challenging obstacles to overcome in the near-term, the most important being our 3rd tier downtrend line and the highly psychological $1000/oz level.

Gold will need a strong confirmation from the S&P and continued depreciation of the Dollar to have a chance of leaving $1000/oz behind.  Until our 3rd tier downtrend line is breached, the possibility remains that gold could duck back into its medium-term downtrend line.  However, this attempt to beat $1000/oz seems more promising than gold’s last try in February.  Both the GBP/USD and EUR/USD made fundamental bull statements a while back and the global economic recovery is gaining steam.  Furthermore, crude has been on a tear as investors worry about future inflation.  Gold has traditionally served as a reliable inflationary hedge.  Therefore, we maintain our bullish outlook trend-wise unless the precious metal should make a fundamentally significant move to the downside.

Fundamentally we find resistances of $978.11/oz, $980.56/oz, $983.25/oz, $985.33/oz and $987.29/oz.  To the downside, we see supports of $975.81/oz, $972.34/oz, $970.35/oz, $967.81/oz, and $964.89/oz. Gold is currently trading at $977.30/oz.

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

By Adam Hewison

I was quite amazed when I looked back to see how long it’s been since I’ve put together a Dollar Index (NYBOT_DX) video. I had to look back to September of 2008 to find the last series of videos I had done specifically for the Dollar Index, and it proved to be successful.

In today’s video we will look at the Dollar Index and the impact it is having on crude oil (NYMEX_CL) and other major markets. I’ll also make a rather surprising prediction as to the most likely trend the dollar is going to take in the next 12 months.

This is a video you will not want to miss as the ramifications of inflation and the dollar are rather shocking.

I will show you how MarketClub has used the same approach in the same market using our “Trade Triangle” technology to trade this index and just how successfully this approach has been.

See how we did trading, corn, wheat, soybeans, crude oil, gold and the dollar index for Q1 of this year.

I strongly recommend that you watch my earlier Dollar Index video and then watch the new one. This will give you more confidence in using our “Trade Triangle” approach.

See the New Video Here…

As always, the videos are free to watch and there is no need to register. I would love to get your feedback about this video and your own predictions about these markets on our blog.

All the best,

Adam Hewison
President, INO.com
Co-creator, MarketClub

Source: ForexYard

Strong economic data from the U.S, U.K and China combined with strong equity performances has led to a sell-off of the safe haven currencies and pushed investors to higher yielding, riskier currencies as many see the global recession coming to an end. The encouraging global economic data has also been helping push Crude Oil to the $70 price level.

Economic News

USD – Dollar Moves on Release of Strong Economic Data

The release of strong economic data from the U.S. economy led to a stock market rally in the U.S. and the rest of the world. This led to strong implications for the Dollar. The Dollar rose against the Yen, whilst dropping against the British Pound. However, there was very little movement against the EUR. The main factors affecting Dollar volatility yesterday were the release of optimistic manufacturing, personal income, and construction figures from the U.S. This led traders to the conclusion that the worst of the economic downturn in the U.S. is over.

The results of the data releases led the Dollar to tumble to an 8-month low against the Pound. The pair closed higher by nearly 230 pips at 1.6445. The greenback rose by nearly 140 pips vs. the Yen to 96.37, as investors dropped the JPY for higher-yielding assets. The Dollar’s behavior against the EUR was more stable as the pair remained virtually unchanged, up barely 10 pips at 1.4154. This was mainly due to traders putting their money into riskier investments on both sides of the Atlantic, leading to low volatility in the EUR/USD currency cross.

Looking ahead to today, there are 2 important news events coming out of the U.S. These are the Pending Home Sales data set to be released at 14:00 GMT, and the Total Vehicle Sales figures that will be released throughout the afternoon. Forex traders are advised to take up their positions in the Dollar and its major crosses early in the day as markets are likely to go volatile as Europe also publishes unemployment data later in the day. Additionally, investors are likely to weigh-in on the real value of the U.S. Dollar as the forex market still reacts to Monday’s U.S. data.

EUR – Pound Climbs to an 8-Month High Versus the Dollar

The Pound climbed to an 8-month high in Monday’s trading versus the Dollar. This was in part due to a global stock market rally, led by the U.S. that was sparked by the release of highly optimistic U.S. economic data. This was what the GBP needed to extend its rally against the Dollar. However, investors dropping lower-yielding currencies such as the Dollar, for higher-yielding ones such as the Pound led to a very bullish Pound yesterday. The GBP also recorded great volatility and gains versus its other major currency pairs.

The Pound rose by a massive 230 pips against the Dollar to around 1.6445. The GBP recorded massive gains vs. the JPY to close nearly 400 pips higher at 158.24, as traders dropped the safe-haven JPY currency for the GBP. The Pound also gained an impressive 100 pips against the EUR to close at 0.8618. These results show a resurgent British Pound, as the global economic situation improves in Britain and the rest of the developed economies. Therefore, as long as long as the global economic situation improves, then the Pound is likely to reap the benefits.

Today is set to be another congested news day for the British economy and the Pound. There is the release of Construction PMI at 7:30 GMT, Net Lending to Individuals and Mortgage Approvals at 8:30 GMT and Nationwide Consumer Confidence figures at 23:01 GMT. It would be a wise move for traders to open their GBP positions both prior to and after these economic data releases, as the pound is likely to be volatile throughout the trading day.

JPY – JPY Tumbles Against its Major Currency Pairs

The JPY tumbled against its major currency pairs yesterday as the Japanese Stock market made big gains. This was ignited by a release of a string of strong economic figures from the U.S. immediately fueling a rally on Wall Street. Japanese shares, especially the automakers, such as Toyota were boosted by the General Motors bankruptcy. This led to signs of optimism that Japan will gain a higher global market share of the auto industry.

The Yen declined by about 440 pips vs. the GBP to close at 158.24. The Yen also made steep declines against the Dollar to close about 140 pips lower at 96.37. The EUR/JPY pair finished higher on Monday by over 200 pips at 136.47. This market behavior came about as traders dropped the Yen for higher-yielding currencies in yesterday’s trading. The repercussions of a weaker Yen in the long-term may turn out to be fruitful for the Japanese economy as competitiveness returns to Japan’s export market

Crude Oil – Crude Oil Eyes $70 a Barrel

Crude Oil recorded another day of bullishness on Monday, as the black gold extended
its bullish run. Crude closed up $1.25 or 2% in yesterday’s trading. This came about as the U.S. released impressive economic data, indicating that the U.S. economy will continue to beat many analysts’ expectations. Traders are also still taking into account the optimism of the OPEC meeting from the latter part of last week.

The price of Crude Oil is only likely to keep on rising as long as the global economic situation continues to pick up. In recent months the U.S., Euro-Zone, British, and Chinese economies have signaled that they are getting back on track. This is despite rising unemployment. If the trend continues, then OPEC’s forecast may be correct and we may see Crude at $75-$80 sooner rather than later.

Technical News

EUR/USD

After the sharp rise in price yesterday, the pair has been down-correcting to find its true value. With most oscillators beginning to go neutral, the daily chart’s RSI still shows this pair in the over-bought territory, meaning there is still room for a downward correction. The Bollinger Bands are tightening on the hourly chart. As such, we might be seeing some downward movement today. Going short might be a wise choice.

GBP/USD

This pair appears to be floating in the over-bought territory on the hourly and daily charts’ RSI, indicating a downward correction may be impending. The bearish cross on the daily chart’s Slow Stochastic also supports this notion. However, there does appear to be a bullish cross on the 4-hour chart’s Slow Stochastic, which demonstrates that this pair may actually be range trading with clear ups and downs. Buying on lows and selling on highs could be a good move throughout the day.

USD/JPY

The recent uptrend has pushed the price of this pair into the over-bought territory on the RSI of the 4 hour chart, signaling an imminent downward correction. A bearish cross may also be forming on the 4 hour charts’ Slow Stochastic, which would support the notion of a downward move. Going short with tight stops might be a wise choice today.

USD/CHF

With relatively flat movement over the past several days, this pair has remained in a range-trading pattern for some time. Most oscillators are giving off neutral indicators, but there was a recent bullish cross on the daily chart’s Slow Stochastic, signaling a correction to the sharp downward movement from last week. With the weekly Momentum oscillator still showing an upward direction, going long with tight stops may be a wise choice today

The Wild Card – NZD/USD

This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the daily chart’s RSI. Not only that, but there actually appears to be a bearish cross forming on the hourly charts’ Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

The Canadian Gross Domestic Product decreased in the first quarter of 2009 by the most since 1991 according to a report by Statistics Canada released today. Canadian GDP fell in the January to March quarter by an annualized 5.4 percent following a revised decline of 3.7 percent in the fourth quarter of 2008. The decline was the largest quarterly fall since the first quarter decrease of 5.9 percent in 1991. Today’s data, despite the fall, was better than market forecasts as predictions were for an annualized 6.5 percent decrease.

GDP data for the month of March showed a decline of 0.3 percent following a 0.1 percent decrease in February.  The monthly decline matched economic forecasts predicting a fall of 0.1 percent.

Contributing to the first quarter GDP decline was a decrease in the production of goods by 4.0 percent with the service-producing industries also falling in the first quarter by 0.5 percent. Exports declined for the seventh straight quarter at a 8.7 percent dip while imports also fell at a 11.0 percent clip.  Consumer spending decreased in the first quarter as spending declined by 0.4 percent while spending on durable goods also decreased by 1.8 percent.

Canadian dollar lower in currency trading.

The Canadian dollar has been mostly lower today in the currency markets against the major currencies.  The U.S. dollar has advanced slightly against the Canadian loonie as the USD/CAD has gained from its 1.0868 opening at 00:00 GMT to trading at 1.0934 at 4:09pm EST in the US session according to currency data from Oanda. The USD/CAD reached an intraday low of 1.0785 before moving higher.

The euro has gained against the loonie as the EUR/CAD trades at the 1.5460 level after opening the day at 1.5375. The British pound has also advanced sharply versus the loonie today as the GBP/CAD has surged to the 1.7963 level after opening the day at 1.7633.

The loonie has gained ground versus the Japanese yen today as the CAD/JPY has moved up to the 88.31 yen per loonie level after opening the day at 87.39.

The Australian dollar is sharply higher today against the loonie as the AUD/CAD pair trades at 0.8862 from today’s opening rate of 0.8755 while the New Zealand dollar has also climbed against the CAD.  The NZD/CAD trades at 0.7123 from 0.6988 earlier today.

AUD/CAD Chart – The AUD/CAD advancing higher today in currency trading and trading in overbought territory on the Relative Strength Indicator below (30-Minute Chart).

By GCI Fx Research

€

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4245 level and was supported around the US$ 1.4100 figure.  The common currency added on to recent gains and reached its highest level since 29 December 2008.  Data released in the U.S. today saw April personal spending decrease 0.1% m/m while April personal income was up 0.5% m/m, an indication that consumption is not keeping up with income.  It was also reported that April core U.S. personal consumption expenditures were up 0.3% m/m and 1.9% y/y.  Other data saw the U.S. ISM May manufacturing index print at 42.8, up from 40.1 in April.  U.S. equity markets were up sharply with the Dow posting more than a 200-point surge through mid-day U.S. trading.  In eurozone news, the EMU-16 May manufacturing PMI index improved to 40.7 from 36.8 in April, the largest rise since at least June 1997 but still below the “boom-or-bust” 50.0 level, evidencing an ongoing contraction in the sector.  Germany’s PMI manufacturing level printed at a stronger-than-expected 39.6 in May, up from April’s print of 35.4.  The EMU-16 print represented a seven-month high.  Other data released today saw April construction spending climb 0.8% m/m.  The EMU-16 April unemployment rate will be released tomorrow.  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 ¥96.75 level and was supported around the ¥94.45 level.  The yen was firmly given across the board as risk appetite strengthened and traders moved into currencies with higher-yielding assets.  There has not been much verbal intervention from Japanese monetary officials and there is little expectation that actual intervention will materialize now.  Bank of Japan is expected to keep monetary policy unchanged for foreseeable future, especially after the central bank and government upgraded their respective assessments of the economy one week ago.  The Nikkei 225 yesterday stock index rallied 1.63% to close at ¥9,677.75. 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 ¥137.25 level and was supported around the ¥133.90 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 6.8257 in the over-the-counter market, down from CNY 6.8273.  U.S. Treasury Secretary Geithner is meeting Chinese officials in China and said China’s U.S. dollar assets are “very safe,” reiterating the U.S. believes in a strong U.S. dollar.  Geithner also said the rise in U.S. yields reflect “an improvement in confidence” whereas many traders believe the run-up in yields reflects a worsening of the U.S. fiscal outlook.

₤

The British pound appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6495 level and was supported around the $1.6160 level.  Cable reached its highest level since 30 October 2008 as traders continued their pursuit of higher-yielding assets.  Data released in the U.K. today saw May manufacturing PMI improve to 45.4 from 43.1 in April, exceeding forecasts but the fourteenth consecutive month of contraction.  Also, Hometrack May house prices were steady, the first time in twenty months they have not declined.  Prime Minister Brown indicated he will not step down regardless of the results of next week’s European and local elections.  Brown also supported Chancellor of the Exchequer Darling who may have inadvertently gotten involved in the pay scandal impacting many members of Parliament.  Cable bids are cited around the US$ 1.5535 level.  The euro depreciated vis-à-vis the British pound as the single currency tested bids around the ₤0.8615 level and was capped around the ₤0.8740 level.

Daily Market Commentary provided by GCI Financial Ltd.

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