{"id":10494,"date":"2010-06-23T14:52:20","date_gmt":"2010-06-23T18:52:20","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=10494"},"modified":"2010-06-23T14:52:20","modified_gmt":"2010-06-23T18:52:20","slug":"forex-daily-market-commentary-81","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/06\/23\/forex-daily-market-commentary-81\/","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$ 1.2210 level and was capped around the $1.2305 level.\u00a0 As expected, the Federal Open Market Committee voted to keep its federal funds target rate between 0% and 0.25% The FOMC reported \u201cInformation received since the Federal Open Market Committee met in April suggests that the economic recovery is proceeding and that the labor market is improving gradually. Household spending is increasing but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly; however, investment in nonresidential structures continues to be weak and employers remain reluctant to add to payrolls. Housing starts remain at a depressed level. Financial conditions have become less supportive of economic growth on balance, largely reflecting developments abroad. Bank lending has continued to contract in recent months. Nonetheless, the Committee anticipates a gradual return to higher levels of resource utilization in a context of price stability, although the pace of economic recovery is likely to be moderate for a time.\u00a0 Prices of energy and other commodities have declined somewhat in recent months, and underlying inflation has trended lower. With substantial resource slack continuing to restrain cost pressures and longer-term inflation expectations stable, inflation is likely to be subdued for some time. The Committee will maintain the target range for the federal funds rate at 0 to 1\/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period. The Committee will continue to monitor the economic outlook and financial developments and will employ its policy tools as necessary to promote economic recovery and price stability.\u201d\u00a0 Kansas City Fed President Hoenig dissented, arguing that \u201ccontinuing to express the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted because it could lead to a build-up of future imbalances and increase risks to longer-run macroeconomic and financial stability, while limiting the Committee\u2019s flexibility to begin raising rates modestly.\u201d\u00a0 Some traders are speculating the Fed will not raise rates until 2011 on account of ongoing unemployment trends while more dovish Fed-watchers are speculating the Fed may not lift rates until 2012.\u00a0 The Fed\u2019s most recent forecasts are predicting the unemployment rate will end 2010 around 9.1% and 9.5% and decline between 8.1% and 8.5% next year.\u00a0 The Fed now sees the \u201clonger run\u201d unemployment rate to be between 5.0% and 5.3% and currently see the \u201clonger run\u201d PCE inflation rate to be between 1.7% and 2.0% with inflation not reaching the upper end of that rate until 2012.\u00a0 Data released in the U.S. today saw MBA mortgage applications decline in the latest week by 5.9% while May new home sales were off a surprising 32.7% m\/m to 300,000 annualized units, down from the downwardly-revised 446,000 annualized units in April.\u00a0 This decrease was not expected but the downturn could worsen if the U.S. government does not announce new homebuyer subsidies or tax credits.\u00a0 Data to be released tomorrow include May durable goods orders and weekly initial jobless claims.\u00a0 A statement written by Philadelphia Fed President Plosser was published today in which he notes \u201cRather than seek ways to politicize the Fed, we should seek ways to ensure its independence from short-term political pressures while reducing the temptation to use the central bank as an inappropriate tool for conducting fiscal policy.\u201d\u00a0 Plosser warned the Fed\u2019s purchase of US$ 1.25 trillion in mortgage-backed securities could be \u201cviewed as a form of fiscal policy.\u201d\u00a0 In eurozone news, data released today saw EMU-16 June PMI services index tick lower to 55.4 while the PMI manufacturing index ticked lower to 55.6 and the composite index fell to 56.0.\u00a0 The German July GfK consumer confidence survey remained steady at 3.5 and both German PMI services and manufacturing indices were lower.\u00a0 Additionally, French June business confidence was lower and both June PMI services and manufacturing moved lower.\u00a0 Collectively, these PMI data for the eurozone evidence a moderation in economic activity.\u00a0 Famed currency trader Soros reported Germany is \u201cendangering the European Union\u201d and has brought European Union integration to a \u201cscreeching halt.\u201d Portuguese banks\u2019 financing activities at the European Central Bank doubled in May to \u20ac35.8 billion, reflective of some of the stresses they are undergoing.\u00a0 The ECB reported its \u20ac60 billion covered bond purchase program is nearing completion as the amount purchased as of yesterday totaled \u20ac59.283 billion.\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 \u00a590.15 level and was capped around the \u00a590.60 level.\u00a0 Bank of Japan Deputy Governor Nishimura reported Europe\u2019s sovereign debt crisis continues to require \u201csufficient attention\u201d and added Japan\u2019s economy remains on a \u201cmoderate\u201d recovery path.\u00a0 He added overcoming deflation remains a \u201ccritical challenge\u201d for the central bank and cited capital spending as a positive improvement.\u00a0 Moody\u2019s this week affirmed its AA2 rating on Japan and maintained its stable outlook on the country.\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 Many data will be released in today tonight include May foreign trade and the May corporate service price index.\u00a0 The Nikkei 225 stock index lost 1.87% to close at \u00a59,923.70.\u00a0\u00a0 The euro moved lower vis-\u00e0-vis the yen as the single currency tested bids around the \u00a5110.60 level and was capped around the \u00a5111.35 level.\u00a0 The British pound moved higher vis-\u00e0-vis the yen as sterling tested offers around the \u00a5134.95 level while the Swiss franc moved lower vis-\u00e0-vis the yen and tested bids around the \u00a581.25 level. In Chinese news, the U.S. dollar appreciated vis-\u00e0-vis the Chinese yuan as the greenback closed at CNY 6.8140 in the over-the-counter market, up from CNY 6.8130. The yuan has retained some of the gains it earned this week following People\u2019s Bank of China\u2019s decision to eventually end its two-year peg to the U.S. dollar and internationalize the yuan.\u00a0 China\u2019s move to liberalize the yuan should help to counter inflationary pressures and cause China to rely less on foreign trade and focus more on domestic final private demand.\u00a0 Group of Twenty officials will meet with President Hu in Toronto this week.\u00a0 Notably, inflation printed at 3.1% in May, above the government\u2019s target of 3.0%.\u00a0 May industrial profits data will be released tomorrow along with June PMI business conditions.<\/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$ 1.4940 level and was supported around the US$ 1.4800 figure.\u00a0 Minutes from Bank of England\u2019s June Monetary Policy Committee meeting were released today and they evidenced a 7-to-1 vote to keep the benchmark interest rate unchanged at 0.5%.\u00a0 MPC member Sentance favoured a 25bps tightening to 0.75%, noting that inflation has proven to be \u201cresilient\u201d since the end of the recession.\u00a0 In contrast to Sentance\u2019s position, \u201cother members thought that changes to the balance of risks were insufficient to warrant a change in the stance.\u201d U.K. consumer price inflation reached a seventeen-month high in April. Sterling reacted to the surprise vote by moving higher on expectations there could be more members voting for higher rates in the future.\u00a0 Data released in the U.K. today saw May BBA loans for house purchases climb higher to \u00a336.7 billion.\u00a0 Also, the June CBI distributive trades survey balance improved to -5 from -18 in May, evidencing stronger retail sales activity.\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 \u00a30.8215 level and was capped around the \u00a30.8285 level.<\/p>\n

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

The Swiss franc depreciated vis-\u00e0-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1135 level and was supported around the CHF 1.1050 level.\u00a0 Swiss National Bank will publish its quarterly bulletin on Friday.\u00a0 Data released in Switzerland this week 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 this week said deflation risks have largely gone away and said there is currently no need for intervention.\u00a0 Swiss National Bank this week 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 appreciated vis-\u00e0-vis the Swiss franc as the single currency tested offers around the CHF 1.3610 level while the British pound moved higher vis-\u00e0-vis the Swiss franc and tested offers around the CHF 1.6560 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":"

As expected, the Federal Open Market Committee voted to keep its federal funds target rate between 0% and 0.25% The FOMC reported \u201cInformation received since the Federal Open Market Committee…<\/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-10494","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/10494","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=10494"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/10494\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=10494"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=10494"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=10494"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}