{"id":15590,"date":"2010-11-19T09:26:48","date_gmt":"2010-11-19T14:26:48","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=15590"},"modified":"2010-11-19T09:26:48","modified_gmt":"2010-11-19T14:26:48","slug":"forex-daily-market-commentary-158","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/11\/19\/forex-daily-market-commentary-158\/","title":{"rendered":"Forex Daily Market Commentary"},"content":{"rendered":"

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

Fundamental Outlook at \t\t\t0800 GMT (EDT + 0400)<\/strong><\/p>\n

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

The euro appreciated \t\t\tvis-\u00e0-vis the U.S. dollar today<\/strong> as the \t\t\tsingle currency tested offers around the US$ 1.3730 level and was \t\t\tsupported around the $1.3610 level. \u00a0The common currency pressed \t\t\thigher for a third consecutive day on optimism a bailout for Ireland \t\t\twould be announced imminently.\u00a0 Some Irish government officials \t\t\treported it is \u201cvery likely\u201d the country will reach an accord with \t\t\tthe European Central Bank and International Monetary Fund.\u00a0 Many \t\t\ttraders believe an Irish bailout will contain peripheral eurozone \t\t\tsovereign jitters while others believe countries like Portugal and \t\t\tSpain may eventually require some bailout assistance.\u00a0 Dealers are \t\t\talso monitoring Greece to see if that country is fully compliant \t\t\twith terms involved in its bailout earlier this year. Irish central \t\t\tbank Governor Honohan yesterday reported the country may seek \u201ctens \t\t\tof billions\u201d in aid, an indication the country was creeping closer \t\t\tto agreeing on financial assistance terms.\u00a0 Similarly, Irish finance \t\t\tminister Lenihan added \u201cIf these talks were to result in a \t\t\tsubstantial contingency capital funding\u201d (availability that did not \t\t\tneed to be drawn down now), that \u201cwould be a very desirable \t\t\toutcome.\u201d He added it is \u201cclear\u201d that Ireland will need aid for its \t\t\tbanks.\u00a0 ECB President Trichet reported he is \u201cso happy\u201d that Fed \t\t\tChairman Bernanke has an inflation goal similar to the ECB\u2019s goal \t\t\tand added a strong U.S. dollar is \u201cvery, very important.\u201d\u00a0 Data \t\t\treleased in the eurozone today saw German October producer prices \t\t\tcome in more than expected at +0.4% m\/m and +4.3% y\/y.\u00a0 In U.S. \t\t\tnews<\/strong>, Fed Chairman Bernanke spoke in Frankfurt again today and \t\t\tagain defended the Fed\u2019s latest decision to expand quantitative \t\t\teasing.\u00a0 Bernanke warned emerging market economies may experience \t\t\tslower growth \u201cif the recovery in the advanced economies falls \t\t\tshort.\u201d\u00a0 Similarly, Bernanke did not refer to China by name but \t\t\tidentified \u201clarge, systemically important countries with persistent \t\t\tcurrent account surpluses\u201d that have undervalued currencies.\u00a0 He \t\t\talso added asset purchases \u201csignificantly\u201d move asset prices and \t\t\tcalled on the U.S. savings rate to rise to reduce the current \t\t\taccount gap.\u00a0 Moreover, Bernanke warned exchange rate adjustments \t\t\tcannot fix all problems.\u00a0 Philadelphia Fed President Plosser warned \t\t\tthe benefits of \u201cQE2,\u201d the Fed\u2019s second round of quantitative \t\t\teasing, may not be sufficient to outweigh the costs.\u00a0 Fed Governor \t\t\tWarsh, who voted for the Fed\u2019s easing plans this month despite \t\t\texpressing some doubts about the program, said there is a \u201cwindow of \t\t\topportunity for the economy to find a higher gear\u201d in 2011. \t\t\tMinneapolis Fed President Kocherlakota said criticism that the Fed\u2019s \t\t\teasing policies will cause a surge in inflation \u201cisn\u2019t valid in \t\t\tcurrent circumstances.\u201d\u00a0 Euro bids are cited around the US$ 1.3555 \t\t\tlevel.<\/p>\n

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

The yen appreciated \t\t\tvis-\u00e0-vis the U.S. dollar today<\/strong> as the \t\t\tgreenback tested bids around the \u00a583.15 \t\t\tlevel and was capped around the \u00a583.65 level. Technically, today\u2019s \t\t\tintraday low was right around the 50% retracement of the \u00a585.95 \u2013 \t\t\t80.25 range. \u00a0Bank of Japan Policy Board Moriomoto said monetary \t\t\tpolicy requires a year or more to have an impact and added he is \t\t\tconcerned about how the yen\u2019s strength could make share prices \t\t\tunstable and affect sentiment. \u00a0BoJ Governor Shirakawa said it is \t\t\timportant for Group of Twenty members to keep discussing the global \t\t\tcurrency system.\u00a0 Prime Minister Kan reported the BoJ is taking \t\t\t\u201cbold action\u201d over monetary policy.\u00a0 Kyodo<\/span> yesterday Bank of \t\t\tJapan may seek to boost its capital before it purchases riskier \t\t\tassets.\u00a0 The Cabinet\u2019s monthly economic report was released this \t\t\tweek in which the government reported \u201cThe economic movements appear \t\t\tto be pausing recently. It is also in a difficult situation such as \t\t\ta high unemployment rate.\u201d\u00a0 Bank of Japan Deputy Governor Yamaguchi \t\t\tthis week warned the \u201cdrivers\u201d of Japanese economic growth are \t\t\tslowing along with the deceleration in the global economic \t\t\texpansion.\u00a0 Data released in Japan last night saw the September \t\t\tall-industry activity index decline 0.8% m\/m, down from the revised \t\t\tprior level of -0.2%. Earlier this week, it was reported that Q3 \t\t\tgross domestic product was up 0.9% q\/q, up from the 0.4% prior \t\t\tlevel, and was up 3.9% on an annualized basis from the revised prior \t\t\treading of 1.8%.\u00a0 This represented the fourth consecutive quarter of \t\t\texpansion and was better than expected. \u00a0On a negative note, \t\t\thowever, export growth decelerated to +2.4% q\/q, down from a revised \t\t\t5.6% in the previous quarter.\u00a0 The Nikkei 225 stock index climbed \t\t\t0.09% to close at \u00a510,022.39.\u00a0 U.S. dollar offers are cited around \t\t\tthe \u00a584.60 level.\u00a0 The euro moved higher <\/strong>vis-\u00e0-vis the yen as \t\t\tthe single currency tested offers around the \u00a5114.30 level and was \t\t\tsupported around the \u00a5113.50 level.\u00a0 The British pound moved \t\t\tlower <\/strong>vis-\u00e0-vis the yen as sterling tested bids around the \t\t\t\u00a5133.35 level while the Swiss franc moved lower <\/strong>vis-\u00e0-vis the \t\t\tyen and tested bids around the \u00a583.65 level. In Chinese news<\/strong>, \t\t\tthe U.S. dollar appreciated vis-\u00e0-vis the Chinese yuan as the \t\t\tgreenback closed at CNY 6.6393 in the over-the-counter market, up \t\t\tfrom CNY 6.6334. \u00a0People\u2019s Bank of China overnight lifted banks\u2019 \t\t\treserve requirements for the fifth time this year as monetary \t\t\tauthorities continue to drain cash from the financial system to \t\t\treduce inflation and the risks of asset bubbles. The hike was 50bps \t\t\tand will be implemented from 29 November to \u201cappropriately\u00a0 control\u201d \t\t\tcredit and loans.\u00a0 The benchmark Shanghai Composite Index fell 3.2% \t\t\tthis week on speculation an interest rate hike from PBoC is \t\t\timminent.\u00a0 There is increasing speculation China may impose \t\t\ttemporary price controls on account of the recent run-up in \t\t\tinflation.\u00a0 Chinese Premier Wen Jiabao this week reported his \t\t\tcabinet is drafting anti-inflation policies to combat the fastest \t\t\tinflation the country has seen in two years.\u00a0 Many economists \t\t\tbelieve People\u2019s Bank of China will be forced to raise interest \t\t\trates within weeks following a sharp acceleration in inflation last \t\t\tmonth to its fastest pace in 25 months.\u00a0 The benchmark one-year \t\t\tlending rate could hit 5.81% by the end of the year according to \t\t\tsome economists, a move that would represent a 25bps tightening.<\/p>\n

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

The British pound \t\t\tdepreciated vis-\u00e0-vis the U.S. dollar today<\/strong> as cable tested bids around the US$ 1.5960 level and was capped \t\t\taround the US$ 1.6095 level. \u00a0Technically, today\u2019s intraday low was \t\t\tjust below the 50.0% retracement level of the $1.5650 \u2013 1.6300 \t\t\trange. \u00a0Bank of England Deputy Governor Tucker said the BoE\u2019s new \t\t\tFinancial Policy Committee \u201cwill not dilute our commitment to price \t\t\tstability.\u201d Bank of England MPC member Posen yesterday reported the \t\t\tcentral bank should expand its current \u00a3200 billion asset purchase \t\t\tprogram by \u00a350 billion, citing a \u201crisk of deflation.\u201d Prime Minister \t\t\tCameron warned against speculating about Ireland\u2019s financial \t\t\tsituation and added his government is ready to provide Ireland with \t\t\tfinancial aid if required.\u00a0 Data released in the U.K. this week saw \t\t\tOctober retail sales up 0.5% m\/m and off 0.1% y\/y while the October \t\t\tex-auto and fuel component was up 0.3% m\/m and 1.2% y\/y.\u00a0 Also, the \t\t\tOctober public sector net cash requirement fell sharply to \u00a32.4 \t\t\tbillion and October public sector net borrowing slipped to \u00a39.8 \t\t\tbillion.\u00a0 Additionally, November CBI total orders improved to -15 \t\t\tfrom the previous reading of -28.\u00a0 Minutes from BoE\u2019s Monetary \t\t\tPolicy Committee meeting earlier this month were released this week \t\t\tin which rate-setters voted 1-7-1 to keep the Bank rate unchanged at \t\t\t0.5% and its asset purchase plan unchanged at \u00a3200 billion. \u00a0Bank of \t\t\tEngland Governor King this week reiterated the central bank \u201ccould \t\t\tdo further quantitative easing if that turned out to be necessary,\u201d \t\t\tadding \u201cthere are significant risks to inflation undershooting.\u201d\u00a0 \t\t\tCable bids are cited around the US$ 1.5795 level.\u00a0 The euro \t\t\tappreciated<\/strong> vis-\u00e0-vis the British pound as the single currency \t\t\ttested offers around the \u00a30.8560 level and was supported around the \t\t\t\u00a30.8495 level.<\/p>\n

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

The Swiss franc \t\t\tappreciated vis-\u00e0-vis the U.S. dollar today<\/strong> as the greenback tested bids around the CHF 0.9875 level and was \t\t\tcapped around the CHF 0.9970 level. \u00a0\u00a0Technically, today\u2019s intraday \t\t\tlow was right around the 50.0% retracement of the CHF 1.0275 \u2013 \t\t\t0.9460 range.\u00a0 Swiss National Bank Chairman Hildebrand yesterday \t\t\tsaid price stability remains the central bank\u2019s key objective, \t\t\tadding the SNB should have a financial stability regulation role.\u00a0 \t\t\tData released in Switzerland this week saw the October trade surplus \t\t\texpand to CHF 2.1 billion from the revised prior reading of CHF 1.68 \t\t\tbillion as exports climbed 6.2%.\u00a0 Also, the November Credit Suisse \t\t\tZEW expectations index weakened to -30.9 from the prior reading of \t\t\t-27.5.\u00a0 Swiss National Bank is expected to keep monetary policy \t\t\tunchanged when its quarterly interest rate decision is announced \t\t\tnext month.\u00a0 Notably, Swiss core inflation was negative in October \t\t\tfor the first time in at least sixteen years.\u00a0 This renders it \t\t\tlikely SNB may be forced to keep interest rates relatively low for \t\t\tquite some time.\u00a0 In September, SNB kept its main interest rate \t\t\tunchanged at 0.25% and reduced its inflation projections through \t\t\tearly 2013.\u00a0 U.S. dollar offers are cited around the CHF 1.0045 \t\t\tlevel.\u00a0 The euro appreciated<\/strong> vis-\u00e0-vis the Swiss franc as the \t\t\tsingle currency tested offers around the CHF 1.3625 level while the British pound moved lower<\/strong> vis-\u00e0-vis the Swiss franc and \t\t\ttested bids around the CHF 1.5870 level.<\/p>\n

Forex Daily Market Commentary<\/strong><\/em> provided by<\/em><\/strong> GCI Financial Ltd<\/strong><\/a>.<\/strong><\/span><\/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":"

Many traders believe an Irish bailout will contain peripheral eurozone sovereign jitters while others believe countries like Portugal and Spain may eventually require some bailout assistance. Dealers are also…<\/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-15590","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/15590","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=15590"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/15590\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=15590"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=15590"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=15590"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}