Thursday: Daily Forex Market Commentary

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 $1.5715 level. The common currency came off despite a significant drop in U.S. June existing home sales of 2.6% to 4.86 million annualized units, a ten-year low. Other data released Thursday saw weekly initial jobless claims rise 34,000 to 406,000 while continuing jobless claims were off 9,000 to 3.107 million. Yesterday’s Federal Reserve Beige Book reported “the pace of economic activity has slowed somewhat since the last report.” Fed policymakers continue to be relatively hawkish in their statements.

In eurozone news, the EMU-15 purchasing managers’ index contracted for the second consecutive month – dropping to 47.8 - while the German Ifo business climate index declined for the fourth consecutive month, off to 97.5 from 101.2 in June. Other data saw the EMU-15 May current account balance print at -€7.3 billion. Euro bids are cited around the $1.5230 level.

JPN/CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥107.25 level and was capped around the ¥107.95 level. Bank of Japan Policy Board member Mizuno noted “I think there is a possibility that it will take more time than the BOJ officially says before the Japanese economy will recover.” Data released in Japan today saw Japanese exports fall for the first time in nearly five years, off 88.9% y/y to ¥138.6 billion. The Nikkei 225 stock index gained 2.18% to close at ¥13,603.31. Dollar bids are cited around the ¥103.65 level.

The euro came off vis-à-vis the yen as the single currency tested bids around the ¥167.90 level and was capped around the ¥169.45 level. The British pound and Swiss franc slumped vis-à-vis the yen as the crosses tested bids around the ¥212.75 and ¥103.35 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8289 in the over-the-counter market, down from CNY 6.8297. A Chinese government report was issued and concluded consumer prices increases are likely to moderate.

STERLING

The British pound fell sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9815 level and was capped around the $1.9990 level. Data released in the U.K. today saw June retail sales fall 3.9%, its largest fall since at least 1986 but inflationary pressures moved higher. Cable bids are cited around the $1.9360 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7905 level and was supported around the ₤0.7845 level.

SWISS

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback closed at CHF 1.0350 level and was capped around the CHF 1.0405 level. Most traders expect Swiss National Bank to keep interest rates unchanged for the foreseeable future. U.S. dollar offers are cited around the CHF 1.0515 level. The euro and British pound came off vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6225 and CHF 2.0560 levels, respectively.

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