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$ 1.5625 level and was capped around the $1.5735 level. Technically, today’s intraday low was right around the 38.2% retracement of the move from $1.5340 to $1.5895. Traders await this weekend’s Group of Seven meeting in Washington, D.C. to see if policymakers will verbally intervene against the U.S. dollar’s weakness and recent exchange rate volatility. French officials this weekend indicated the G7 will pursue a more stability in the FX market while German sources indicated the government there is against any exchange rate intervention to prop up the U.S. dollar. Data released in the eurozone today saw German February industrial output up 0.4% m/m and 10.1% y/y while February manufacturing output was up 0.3%. The European Central Bank is widely expected to keep interest rates unchanged on Thursday. Bundesbank’s Zeitler noted he sees German 2009 GDP growth “around 1.5%.” Qatari central bank Governor Al Thani reported Kuwait may repeg its currency to the U.S. dollar ahead of planned monetary union for the region in 2010. Euro bids are cited around the US$ 1.5345 level.

JPN/CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥102.85 level and was supported around the ¥101.45 level. Dealers sold yen on reduced risk aversion as Japanese accounts invested yen proceeds in overseas markets following the recent beginning of Japan’s new fiscal year. As expected, the Fukuda government nominated Bank of Japan Deputy Governor Shirakawa to become the new Governor of the central bank. Opposition lawmakers are expected to accept the nomination as early as tomorrow and Shirakawa may represent Japan this weekend at the Group of Seven meeting in Washington, D.C. The nomination of former MoF bureaucrat Watanabe as a Deputy Governor may not be accepted. Data released in Japan overnight saw the February leading index of economic indicators rise to 50.0 from a revised 36.4 in January while the coincident index improved to 44.4 from 20.0 in January. It was also reported that Japan’s foreign reserves reached a record US$ 1.02 trillion in March. The Nikkei 225 stock index gained 1.18% to close at ¥13,450.23. Dollar offers are cited around the ¥103.65 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥161.45 level and was supported around the ¥159.55 level. The British pound and Swiss franc gained ground vis-à-vis the yen as the crosses tested offers around the ¥204.40 and ¥101.50 levels, respectively. The Chinese yuan appreciated sharply vis-à-vis the U.S. dollar as the greenback closed at CNY 7.0015 in the over-the-counter market, down from CNY 7.0158.

STERLING

The British pound moved lower vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9835 level and was capped around the $1.9950 level. Most traders expect Bank of England’s Monetary Policy Committee to lower the headline repo rate on Thursday, with a 25bps easing being the most likely scenario. Chancellor of the Exchequer Darling called on the G7 to lay out a “clear and detailed plan of action” to counter market turmoil. Cable bids are cited around the US$ 1.9605 levels. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7915 level and was supported around the ₤0.7865 level.

Swiss

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0170 level and was supported around the CHF 1.0055 level. Swiss National Bank President Roth reported “We expect a major correction of oil prices. And when oil prices stabilize around $100, the inflation rate should decline in the second quarter.” Data released in Switzerland today saw the March unemployment rate fall to 2.6% from 2.7% in February. U.S. dollar offers are cited around the CHF 1.0375 level. The euro and British pound rallied vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.5955 and CHF 2.0185 levels, respectively.

Subscribe by RSS Subscribe by Email