By GCI Fx Research
€
The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3425 level and was supported around the US$ 1.3210 level. The common currency has been bid higher over the past several sessions as U.S. equity markets have staged a recovery. The S&P has erased its year-to-date losses. Data released in the U.S. today saw March 2009 total construction activity up +0.3% m/m and off 11.1% y/y. Additionally, March pending home sales were up +3.2%. Federal Reserve Chairman Bernanke testifies tomorrow and traders will be closely scrutinizing his comments to learn his current assessment of the economy. More importantly, dealers want any information they can glean about the results of the banks’ stress tests. In addition to indications that Citigroup and Bank of America will be forced to obtain additional capital, there is talk that Wells Fargo may be forced to seek more capital. In eurozone news, German finance minister Steinbrueck said he is concerned with the rise in unemployment in several European Union countries. German economics minister Guttenberg said Germany must reach a solution “rather quickly” to establish bad banks to acquire banks’ toxic assets. Data released in the U.S. today saw EMU-16 April manufacturing contract to 36.8, marginally better than expected. Also, the EU Sentix investor confidence indicator improved to -34.3 from -35.3 in April. It was also reported that German March retail sales were off 1% from February. 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 ¥98.70 level and was capped around the ¥99.55 level. Japanese Golden Week holidays continue and liquidity is reduced in the Tokyo market. Finance minister Yosano said major economies must support demand by taking appropriate “fiscal and monetary measures” to counter the global economic recession. Last month, the government announced an economic stimulus package valued at about ¥57 trillion that included about ¥15.4 trillion in fresh spending and tax cuts. Bank of Japan is expected to continue its quantitative easing policies for several months. The Nikkei 225 yesterday stock index will next reopen at ¥8,977.37. 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 ¥132.85 level and was supported around the ¥131.30 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥149.15 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.10 level. In Chinese news, the U.S. dollar ended at CNY 6.8225 in the over-the-counter market.
₤
The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5020 level and was supported around the $1.4835 level. Cable approached its highest level since 12 January. Cable bids are cited around the US$ 1.4735 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8945 level and was supported around the ₤0.8885 level.
Daily Market Commentary provided by GCI Financial Ltd.
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