By GCI Fx Research
€
The euro moved sharply higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3515 level and was supported around the US$ 1.3220 level. Group of Twenty officials meeting in London appeared poised to announce details of plans to combat tax havens and increase funding to the International Monetary Fund. Officials noted “We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4%, and accelerate the transition to a green economy.” Also, G20 leaders pledged to “refrain from competitive devaluations of our currencies.” The common currency rallied today after the European Central Bank reduced its main refinancing rate target by 25bps instead of the widely expected 50bps cut. The ECB has reduced its key rate by 300bps since October 2008. ECB member Stark said next month will be the proper time for the ECB to decide on non-conventional policy measures. In U.S. news, February factory orders were up 1.8%, below expectations, from a downwardly revised 3.5% decline in January. Also, weekly initial jobless claims grew 12,000 to 669,000 last week while continuing jobless claims extended their move higher. Euro bids are cited around the US$ 1.3245 level.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥99.90 level and was supported around the ¥98.40 level. The yen was given across the board as risk appetite returned to markets following gains in U.S. equity markets and a sense that Group of Twenty officials could be making progress at their London summit. Bank of Japan is expected to broaden its quantitative easing framework in the near future, possibly by purchasing a greater range of asset-backed securities. The Nikkei 225 stock index climbed 4.40% to close at ¥8,719.78. 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 ¥134.25 level and was supported around the ¥130.30 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥146.90 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥87.85 level. In Chinese news, the U.S. dollar closed at CNY 6.8340 in the over-the-counter market.
₤
The British pound moved higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.4750 level and was supported around the $1.4445 level. Data released in the U.K. today saw March construction PMI rise to 30.9 while March Nationwide house prices were up 0.9% m/m and off 15.7% y/y, the first monthly rise since October 2007. It was also reported that ISD median pay increases fell to +3.4% y/y in the three months to February. Cable bids are cited around the US$ 1.4515 level. The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.9085 level and was capped around the ₤0.9170 level.
Daily Market Commentary provided by GCI Financial Ltd.
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