Daily Market Commentary - GCI Financial

EURO

The euro moved higher vis-à-vis the U.S. dollar today tested offers around the US$ 1.5470 level and was supported around the $1.5405 level. Liquidity was thin on account of the start of the Easter holiday weekend and liquidity will also be reduced on Easter Monday. The Federal Reserve has confirmed that borrowings this week at its discount window stood at US$ 28.925 billion as of Wednesday, significantly higher than US$ 27 million for the week ending 12 March. The Fed established a new primary dealer credit facility this past weekend and lending totaled US$ 28.8 billion including allocations to Goldman Sachs and Lehman Brothers. Traders are eager to see if there will be more dislocations in the U.S. commercial banking or investment banking sectors. In eurozone news, French consumer spending rose 1.2% m/m and 3.7% y/y in January. Euro bids are cited around the US$ 1.5610 level.

JPN/CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥99.00 figure and was capped around the ¥99.75 level. The Fukuda government is pressuring opposition lawmakers to end the vacancy atop Bank of Japan following former Governor Fukui’s retirement on Wednesday and lawmakers’ refusal to accept a couple of former MoF compromise candidates. New BoJ Deputy Governor Shirakawa will assume the helm temporarily but policymakers want the vacancy filled quickly given the current bout of instability in the global financial markets. The Nikkei 225 stock index gained 1.81% to close at ¥12,482.57. Dollar offers are cited around the ¥102.05 level. The euro weakened vis-à-vis the yen as the single currency tested bids around the ¥153.00 figure and was capped around the ¥154.15 level. The British pound and Swiss franc depreciated vis-à-vis the yen as the crosses tested bids around the ¥196.55 and ¥98.30 levels, respectively. The Chinese yuan weakened vis-à-vis the U.S. dollar as the greenback closed at CNY 7.0540 in the over-the-counter market, up from CNY 7.0516.

STERLING

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9820 level and was capped around the $1.9880 level. Technically, today’s intraday high was right around the 50% retracement of the move from $1.9370 to $2.0395. Many traders believe Bank of England’s Monetary Policy Committee will reduce its headline repo rate within the next two months. Cable bids are cited around the US$ 1.9605 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7795 level and was supported around the ₤0.7760 level.

SWISS

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0050 level and was capped around the CHF 1.0100 figure. U.S. dollar offers are cited around the CHF 1.0375 level. The euro and British pound came off vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.5535 and CHF 1.9955 levels, respectively.

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