By GCI Fx Research
€
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3025 level and was capped around the US$ 1.3195 level. The common currency extended recent losses after verbal intervention from European Central Bank President Trichet who said the euro is “not weak” at current levels. Regarding the possibility the ECB will initiate quantitative easing policy soon, Trichet added “In our economy, banks play such a dominant role that non-standard measures need to be implemented – first and foremost – through the intervention and with the active participation of banks. This is why I have sometimes referred to our non-standard measures as those of enhanced credit support.” Concerning the U.S. dollar, Trichet reported “I am very, I would say, appreciative, of what is said by our U.S. friends Ben Bernanke, Tim Geithner and Barack Obama that indeed a strong dollar is in the interest of the United States of America.” Many dealers believe the ECB will extend the maturity of its longer-term refinancings to twelve months. Data released in the eurozone today saw the February trade deficit improved to -€4.0 billion from -€5.4 billion. In U.S. news, traders await remarks from Federal Reserve Chairman Bernanke. Many Fed officials including Vice Chairman Kohn will speak tomorrow. Data released in the U.S. today saw the mid-April University of Michigan consumer sentiment indicator print at 61.9, up from 57.3 at the end of March. Euro bids are cited around the US$ 1.3100 figure.
¥/ CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥99.75 level and was supported around the ¥98.70 level. Finance minister Yosano verbally intervened and reported “currency market now, with (the U.S. dollar – yen) around ¥100, seems to be stable. Share prices (in the Nikkei 225 cash index) have also gone to around 9,000. We don’t know about the future, but at least at the present time I think that conditions (in the stock and foreign exchange markets) have stabilized in a way that gives us some measure of relief.” His comments render it less likely the government and Bank of Japan will enact yen-selling intervention. Data released in Japan overnight saw the February tertiary index decline 0.8% m/m. Also, the March consumer sentiment index printed at 28.9, up from 26.7. The Nikkei 225 stock index climbed 1.74% to close at ¥8,907.58. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥128.80 level and was capped around the ¥131.45 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥146.15 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥84.70 level. The Chinese yuan depreciated vis-à-vis the U.S. dollar today as the greenback closed at CNY 6.8291 in the over-the-counter market, up from CNY 6.8286.
₤
The British pound fell sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4755 level and was capped around the $1.4940 level. Sterling tracked the common currency lower after ECB President Trichet’s dovish comments. Cable bids are cited around the US$ 1.4525 level. The euro weakened vis-à-vis the British pound as the single currency tested bids around the ₤0.8795 level and was capped around the ₤0.8860 level.
CHF
The Swiss franc came off vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1685 level and was supported around the CHF 1.1455 level. Swiss National Bank President Roth reiterated his support for the quantitative easing policy announced last month saying “In view of the risk of deflation, decisive action was called for, and we will continue to pursue this strategy for as long as the risk remains.” Data released in Switzerland today saw February retail sales off 3.8%. Cable bids are cited around the US$ 1.4525 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8795 level and was capped around the ₤0.8860 level.
Daily Market Commentary provided by GCI Financial Ltd.
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