By GCI Fx Research
€
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3090 level and was capped around the US$ 1.3250 level. The common currency came off as traders moved out of higher-yielding currencies and into safe haven plays on account of a swine influenza outbreak that has already claimed more than 100 lives in Mexico. Cases have been reported in the U.S., Canada, Europe, and the Antipodes and there is a growing concern the situation could evolve into a global pandemic. Data released in the eurozone tosay saw the German May GfK consumer sentiment index remain steady at 2.5. Also, the German March import price index was off 0.4% m/m while the eurozone composite index of leading indicators climbed 0.2% to 92.4 in March. Group of Seven officials convened in Washington, D.C. this weekend and German Bundesbank President Weber reported he does not expect the German or eurozone economies to evidence economic growth before the middle of 2010. European Central Bank member Noyer said French banks have passed stress tests so far and ECB member Draghi reported deflation remains a risk to the global economy. Eurogroup chairman Juncker said G7 officials are generally comfortable with current exchange rates as the broadly reflect economic fundamentals. ECB President Trichet said the amount of taxpayers’ funds that have been but at risk in the U.S. and eurozone in creating fiscal stimuli are roughly similar, countering a reported U.S. claim the eurozone is not doing enough fiscally to help improve its economy. In U.S. news, traders are awaiting next Monday’s results of banks’ stress tests to see which of the nineteen largest U.S. banks may require additional capital from the government. Euro bids are cited around the US$ 1.2765 level.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥96.45 level and was capped around the ¥97.10 level. Bank of Japan Governor Shirakawa said the Group of Seven meeting in Washington, D.C. this weekend evidenced some indications of hope on the economy and he added there are nascent signs the economy may be stabilizing with the rate of economic decline decelerating. The yen gained steam overnight as global fears over a possible swine influenza pandemic increased. The Nikkei 225 stock index climbed 0.21% to close at ¥8,726.34. 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 ¥126.45 level and was capped around the ¥128.30 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥140.0 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥84.00 figure. The Chinese yuan depreciated vis-à-vis the U.S. dollar today as the greenback closed at CNY 6.8275 in the over-the-counter market, up from CNY 6.8233. Chinese Vice Finance Minister Li Yong reported “flawed international monetary system is the institutional root cause of the (financial) crisis, and a major defect in the current international economic governance structure. People’s Bank of China Governor Zhou and Chinese government officials continue to call for the creation of a supranational reserve currency.
₤
The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4515 level and was capped around the $1.4675 level. Data released in the U.K. today saw BBA March net mortgage lending ease to ₤3.7 billion from ₤3.9 billion in February. Similarly, mortgage approvals declined and Hometrack April house prices registered their smallest decline in thirteen months. BBA also reported gross mortgage lending declined to ₤8.9 billion in March from ₤9.2 billion in February. Cable bids are cited around the US$ 1.4350 level. The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.8965 level and was capped around the ₤0.9055 level.
Daily Market Commentary provided by GCI Financial Ltd.
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