Daily Market Commentary - GCI Financial

EURO

The euro came off vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.5340 level and was capped around the $1.5455 level. The common currency reached its lowest level since 12 March after traders continued to unwind short U.S. dollar positions. Data released in the U.S. today saw February existing home sales climb 2.9%, up from January’s 0.4% decline. Some economists believe the pullback in the beleaguered U.S. housing market is slowing. Other data released today saw the Chicago Fed National Activity Index’s three-month moving average fall to -0.87 in February and these data seemingly increase the possibility of recession. Traders are closely watching JPMorgan Chase Bank’s increased bid for failed investment banking giant Bear Stearns and the Federal Reserve’s role in that tie-up. Liquidity was reduced today in Europe on account of the Easter Monday holiday. Euro bids are cited around the US$ 1.5145 level.

JPN/CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥100.15 level and was supported around the ¥99.30 level. The pair continues to claw back following its recent foray below the psychologically-important ¥100.00 figure. All eyes will be on the Fukuda government to see who it may name this week to succeed retired Bank of Japan Governor Fukui following the failure of the two earlier nominations last week. Acting BoJ Governor Shirakawa said “The top priority is to appropriately handle the nervous climate in the global financial market triggered by the subprime loan issue.” Data released in Japan overnight saw the March large company business sentiment index fall to a record low at -9.3 in the January – March period, down from +0.5 in the October – December period. Finance minister Nukaga reported the Chinese yuan’s recent appreciation hasn’t been enough and this will likely be topical at the April Group of Seven meeting. It was also reported that nationwide land prices appreciated for the second consecutive year in 2007. Other data released overnight saw February supermarket sales up 1.9%, the first rise in 26 months. The Nikkei 225 stock index gained lost 0.02% to close at ¥12,480.09. Dollar offers are cited around the ¥102.05 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥154.75 level and was supported around the ¥153.05 level. The British pound gained ground vis-à-vis the yen as sterling tested offers around the ¥199.25 level while the Swiss franc weakened vis-à-vis the yen and tested bids around the ¥97.85 level. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 7.0555 in the over-the-counter market, up from CNY 7.0540.

STERLING

The British pound gained marginal ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.9845 level and was supported around the $1.9755 level. Technically, today’s intraday low was right around the 61.8% retracement of the move from $1.9360 to $2.0395. Data released in the U.K. today saw Rightmove March house prices rise 0.8% m/m. Most traders believe Bank of England will reduce interest rates by May. Cable bids are cited around the US$ 1.9605 level. The euro weakened vis-à-vis the British pound as the single currency tested bids around the ₤0.7755 level and was capped around the ₤0.7790 level.

SWISS

The Swiss franc depreciated sharply vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0220 level and was supported around the CHF 1.0090 level. Stops were reached above the CHF 1.0205 level, representing the 38.2% retracement of the move from CHF 1.1105 to CHF 0.9645. U.S. dollar offers are cited around the CHF 1.0375 level. The euro and British pound moved higher vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.5740 and CHF 2.0290 levels, respectively.

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