{"id":10460,"date":"2010-06-22T16:10:47","date_gmt":"2010-06-22T20:10:47","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=10460"},"modified":"2010-06-22T16:10:47","modified_gmt":"2010-06-22T20:10:47","slug":"forex-daily-market-commentary-80","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/06\/22\/forex-daily-market-commentary-80\/","title":{"rendered":"Forex Daily Market Commentary"},"content":{"rendered":"

By GCI Forex Research<\/strong><\/p>\n

Fundamental Outlook at 1400 GMT (EDT + 0400)<\/strong><\/p>\n

\u20ac<\/strong><\/p>\n

The euro depreciated vis-\u00e0-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2250 level and was capped around the $1.2355 level.\u00a0 European sovereign debt concerns were back at the forefront today and these led to a weaker common currency.\u00a0 European Union Economic and Monetary Affairs Commissioner Rehn reported \u201cContrary to what some people argue, Europe is not suffocating growth by this strategy of fiscal consolidation. What we are doing is putting our fiscal houses in order in a gradual, differentiated way: faster where the doubts about fiscal sustainability have been biggest, and slower elsewhere.\u201d\u00a0 There is talk that the U.S. and Europe are at odds over a coordinated economic policy.\u00a0 The former is said to favour higher levels of deficit spending to stimulate economic growth while the latter is said to support reduced fiscal spending and would be comfortable with reduced economic output.\u00a0 The European Union is currently evaluating sanctions for \u201cinadequate debt trajectory\u201d and may consider a tax on bond issues by highly-indebted countries.\u00a0 Eurogroup Chairman Juncker reported the economic recovery \u201cremains fragile and loaded with risks.\u201d\u00a0 The common currency\u2019s standing in many central banks\u2019 reserve portfolios is diminishing, a reflection of the currency\u2019s recent volatility and the eurozone\u2019s significant debt woes.\u00a0 German Chancellor Merkel reiterested Germany wants a stable euro and an independent European Central Bank.\u00a0 European Central Bank member Ordonez said Bank of Spain will publish banks\u2019 stress test results as soon as possible.\u00a0 Data released in the eurozone today saw the EMU-16 April current account print at -\u20ac5.1 billion, down from the revised prior reading of +\u20ac1.5 billion, while EMU-16 June consumer confidence improved to -17.\u00a0 German data saw the June Ifo business climate indicator improve to 101.8 while the expectations sub-index receded to 102.4.\u00a0 In U.S. news, May existing home sales tumbled 2.2% m\/m from an upwardly revised 8.0% in April to an annualized 5.66 million units, a surprise decrease.\u00a0 The April house price index climbed 0.8% and the June Richmond Fed manufacturing index fell back to +23 from the prior reading of +26.\u00a0 Most dealers believe the Federal Open Market Committee will keep interest its federal funds rate target unchanged at 0.25% tomorrow when its monetary policy decision is announced.\u00a0 The Fed may also retain its \u201cextended period\u201d rhetoric to describe the ongoing accommodation of monetary policy.\u00a0 Euro offers are cited around the US$ 1.2570 level.<\/p>\n

\u00a5\/ CNY<\/strong><\/p>\n

The yen appreciated vis-\u00e0-vis the U.S. dollar today as the greenback tested bids around the \u00a590.50 level and was capped around the \u00a591.10 level.\u00a0 Traders pushed the yen higher across the board, one day after the yen came off following China\u2019s announcement that it would be liberalizing its yuan exchange rate policy.\u00a0 Moody\u2019s today affirmed its AA2 rating on Japan and maintained its stable outlook on the country.\u00a0 Yields on 10-year Japanese government bonds fell to 1.185%, their lowest level since 5 January 2009.\u00a0 There is some speculation the government plans to nearly double its growth projection for the current fiscal year to 2.6% following January\u2019s estimate of 1.4%.\u00a0 Notably, Japan\u2019s economy contracted 2.0% during its last fiscal year and 3.7% the preceding fiscal year.\u00a0 The government is expected to release new growth estimates as early as tomorrow.\u00a0 BoJ will soon release its June quarterly survey of consumer sentiment and it is expected to evidence a fifth consecutive quarter of improved confidence.\u00a0 Also, big firms are expected to expand capital spending by 4.9% this fiscal year.\u00a0 Data released in Japan overnight saw May supermarket sales off 5.3% y\/y.\u00a0 The Nikkei 225 stock index lost 1.22% to close at \u00a510,112.89.\u00a0 The euro moved lower vis-\u00e0-vis the yen as the single currency tested bids around the \u00a5111.05 level and was capped around the \u00a5112.45 level.\u00a0 The British pound moved higher vis-\u00e0-vis the yen as sterling tested offers around the \u00a5134.75 level while the Swiss franc moved higher vis-\u00e0-vis the yen and tested offers around the \u00a582.20 level. In Chinese news, the U.S. dollar appreciated vis-\u00e0-vis the Chinese yuan as the greenback closed at CNY 6.8130 in the over-the-counter market, up from CNY 6.7969.\u00a0 Traders booked profits on previous short dollar positions after China\u2019s announcement that it would end its two-year U.S. dollar peg ahead of this week\u2019s Group of Twenty summit in Toronto.\u00a0 People\u2019s Bank of China noted it will prevent \u201cexcessive\u201d exchange rate movements.\u00a0 Today\u2019s CNY gains were the largest since July 2005 when China revalued the yuan.\u00a0 Notably, the twelve-month non-deliverable yuan forward rose 1.1% to 6.6425 and this implies traders are speculating on a 2.3% yuan appreciation.\u00a0 People\u2019s Bank of China reported a stronger yuan will help curb inflation and focus investment on service industries from export manufacturing industries.\u00a0 Most dealers expect the appreciation will be relatively gradual with some forecasts calling for about a 4-5% appreciation this year and around a similar amount next year.\u00a0 During the past two years, Chinese monetary authorities bought dollars to prevent the yuan from strengthening too much.\u00a0 The CNY appreciation some 21% during the three years after China introduced its managed float against a basket of currencies in July 2005.\u00a0 The yuan has jumped some 16% vis-\u00e0-vis the euro this year and that may temper the yuan\u2019s upside.\u00a0 PBoC is estimated to have accumulated some US$ 2.4 trillion in foreign reserves while intervening in the currency markets.\u00a0 May industrial profits data will be released on 24 June.<\/p>\n

\u00a3<\/strong><\/p>\n

The British pound appreciated vis-\u00e0-vis the U.S. dollar today as cable tested offers around the US$ 1.4855 level and was supported around the US$ 1.4685 level.\u00a0 Chancellor of the Exchequer Osborne announced the U.K. will raise more than \u00a32 billion per year by taxing banks that have risky balance sheets.\u00a0 Both Germany and France are expected to follow suit with a similar levy.\u00a0 Osborne\u2019s Budget was presented today and the government is now forecasting economic growth of about 2.3% in 2011.\u00a0 Also, the U.K. value-added tax was increased to 20% from 17.5%, a policy shift expected to add an additional \u00a313 billion per year in revenue.\u00a0 Cable bids are cited around the US$ 1.4620 level.\u00a0 The euro depreciated vis-\u00e0-vis the British pound as the single currency tested bids around the \u00a30.8275 level and was capped around the \u00a30.8365 level.<\/p>\n

CHF<\/strong><\/p>\n

The Swiss franc appreciated vis-\u00e0-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1035 level and was capped around the CHF 1.1120 level.\u00a0 Data released in Switzerland today saw the May trade balance decline sharply to CHF 820 million from the upwardly-revised April total of CHF 2.06 billion.\u00a0 This decline reflects the impact of the strong franc and the limited success Swiss National Bank has had in blunting the impact of the stronger franc through euro-buying intervention.\u00a0 SNB member Jordan said deflation risks have largely gone away and said there is currently no need for intervention.\u00a0 Swiss National Bank yesterday reported that its foreign currency investments rose to CHF 239 billion in May from CHF 153.6 billion in April, indicative of the significant amount of franc-selling intervention the central bank has been conducting to protect the Swiss export sector.\u00a0 U.S. dollar offers are cited around the CHF 1.1470 level.\u00a0 The euro depreciated vis-\u00e0-vis the Swiss franc as the single currency tested bids around the CHF 1.3585 level while the British pound moved lower vis-\u00e0-vis the Swiss franc and tested bids around the CHF 1.6295 level.<\/p>\n

Forex Daily Market Commentary<\/strong><\/em> provided by<\/em><\/strong> GCI Financial Ltd<\/strong><\/a>.<\/strong><\/p>\n

GCI Financial Ltd (\u201dGCI\u201d) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (\u201dForex\u201d) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (\u201dCFDs\u201d) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.<\/p>\n

DISCLAIMER: GCI\u2019s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.<\/p>\n","protected":false},"excerpt":{"rendered":"

European Union Economic and Monetary Affairs Commissioner Rehn reported \u201cContrary to what some people argue, Europe is not suffocating growth by this strategy of fiscal consolidation…<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-10460","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/10460","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/comments?post=10460"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/10460\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=10460"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=10460"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=10460"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}