By GCI Fx Research
€
The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4365 level and was capped around the $1.4430 level. The common currency retracted some of yesterday’s gains that saw the pair propelled to its highest level since October 2008. In Fed news, traders are talking about tensions between the Obama administration and the Fed, SEC, and FIDC about the government’s plan to modify regulatory oversight over the agencies. Many data were released in the U.S. today. First, the June employment cost index was up 0.4% q/q and 1.8% y/y. Second, June existing home sales improved for a fifth consecutive month, up 3.6% m/m, up from the revised 0.8% climb in May, while the June pending home sales index was up 9.2% y/y from a revised 5.4% in May. Third, June personal income was off 1.3% m/m, a sharp turnaround from the revised May print of 1.3% while June personal spending was up 0.4%. Fourth, the PCE deflator was off 0.4% y/y, down from a revised -0.3% y/y in May. The PCE core PCE index was up 0.2% m/m from 0.1% in May and up 1.5% y/y from 1.8% in May. In eurozone news, most traders expect the European Central Bank will keep borrowing costs unchanged on Thursday when the Governing Council meets. Data released in the eurozone today saw EMU-16 July producer prices up 0.3% m/m and decline 0.6% y/y, the largest annual decline since at least January 1982. Euro bids are cited around the US$ 1.3900 figure.
¥/ CNY
The yen depreciated marginally vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥95.45 level and was supported around the ¥94.35 level. Japanese finance minister Yosano indicated he is not concerned about recent moves higher in long-term interest rates, characterizing them as “marginal.” Economics minister Hayashi reported it is premature to know whether or not Japan has fallen back into deflation because core price declines are modest. Data released in Japan overnight saw the July monetary base climb 6.1% y/y. Also, it was reported Bank of Japan has purchased ¥38.10 billion of equities from banks as of 31 July as part of its ¥ 1 trillion quantitative easing program that will run through April 2010. The Nikkei 225 stock index climbed 0.22% to close at ¥10,375.01. 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 ¥135.95 level and was capped around the ¥137.70 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥160.00 figure while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥88.95 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8315 in the over-the-counter market, up from CNY 6.8288.
Daily Market Commentary provided by GCI Financial Ltd.
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