{"id":17340,"date":"2010-12-28T11:17:01","date_gmt":"2010-12-28T16:17:01","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=17340"},"modified":"2010-12-28T11:17:01","modified_gmt":"2010-12-28T16:17:01","slug":"forex-daily-market-commentary-185","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/12\/28\/forex-daily-market-commentary-185\/","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$ 1.3275 level and was \t\t\tsupported around the $1.3160 level.\u00a0 Technically, today\u2019s intraday \t\t\thigh was right around the 61.8% retracement of the $1.2650 \u2013 1.4280 \t\t\trange.\u00a0 The dollar was weak across the board including the majors \t\t\tand the Antipodean dollar bloc.\u00a0 Data released in the U.S. today saw \t\t\tthe October CaseShiller home price index decline more than expected \t\t\tat -0.99% m\/m and -0.80% y\/y.\u00a0 These data evidence a U.S. housing \t\t\tmarket that likely began the fourth quarter on a weak note despite \t\t\tstrong indications the Federal Reserve would be easing monetary \t\t\tpolicy drastically.\u00a0 Other data released to be released today \t\t\tinclude December consumer confidence and the December Richmond Fed \t\t\tmanufacturing index.\u00a0 European Central Bank member Mersch called for \t\t\ttougher penalties against eurozone countries that exceed fiscal \t\t\tdeficit limits, incuding near-automatic sanctions.\u00a0 The European \t\t\tCentral Bank last week increased its intervention in the eurozone \t\t\tgovernment bond market with purchases under the ECB\u2019s asset-buying \t\t\tprogram escalating to \u20ac1.1 billion from \u20ac603 million the previous \t\t\tweek.\u00a0 ECB member Stark this weekend reported \u201cHelping governments \t\t\tcannot and should not be a goal of these (bond-buying) operations.\u201d\u00a0 \t\t\tGerman December consumer price inflation data will be released \t\t\ttomorrow.\u00a0 French Q3 gross domestic product data were released today \t\t\tand narrowed to +0.3% m\/m and +1.7% y\/y.\u00a0 Estonia will be joining \t\t\tthe eurozone as of the New Year and this will increase the size of \t\t\tthe bloc to seventeen members.\u00a0 In U.S. news<\/strong>, traders \t\t\tcontinue to speculate on whether the Federal Reserve will be forced \t\t\tto ease monetary policy further in 2011. The U.S. dollar\u2019s recent \t\t\tpullback is coinciding with a move higher in riskier assets \t\t\tincluding crude oil and gold.\u00a0 It was reported today that more than \t\t\t50% of the credit provided through the Federal Reserve\u2019s emergency \t\t\tTerm Auction Facility went to foreign banks during the financial \t\t\tcrisis.\u00a0 \u00a0Notably, the Dow Jones Industrial Average has risen \t\t\tapproximately 14% since Fed Chairman Bernanke hinted at the end of \t\t\tAugust that the Fed could expand policy further, a move it made in \t\t\tearly November by announcing it could purchase as much as US$ 600 \t\t\tbillion in additional U.S. Treasury securities by the middle of \t\t\t2011.\u00a0 New voting members of the Federal Open Market Committee will \t\t\tbe casting rate-setting votes in 2011 and many Fed-watchers believe \t\t\tthe new voting members as a whole may provide the Fed with a more \t\t\thawkish bent.\u00a0 Euro bids are cited around the US$ 1.2995 level.<\/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 \u00a581.80 \t\t\tlevel and was capped around the \u00a582.85 level. \u00a0Technically, today\u2019s \t\t\tintraday low was right around the 61.8% retracement of the \u00a580.25 \u2013 \t\t\t84.50 range.\u00a0 Finance Minister Noda verbally intervened against the \t\t\tyen\u2019s strength again, vowing to take \u201cbold action when moves are \t\t\texcessive.\u201d\u00a0 Noda added the yen\u2019s appreciation has been \u201cone-sided\u201d \t\t\twhile Economy Minister Kaieda added \u201cabrupt yen moves must be \t\t\tavoided.\u201d\u00a0 Japanese policymakers clearly remain preoccupied with \t\t\tpreventing the yen\u2019s advances from eroding exporters\u2019 margins too \t\t\tmuch, especially after positive Japanese economic data were released \t\t\tovernight.\u00a0 \u00a0\u00a0On 22 December, the government released an economic \t\t\tgrowth forecast that predicts economic growth will fall to +1.5% in \t\t\tthe fiscal year beginning 1 April, down from the estimated +3.1% \t\t\trate of growth in the current fiscal year.\u00a0 Many data were released \t\t\tin Japan overnight. First, the November jobless rate remained steady \t\t\tat 5.1%.\u00a0 Second, November overall household spending remained \t\t\tsteady at -0.4%, defying expectations of an improvement.\u00a0 Third, \t\t\tDecember Tokyo-area consumer price inflation was off 0.2% y\/y at the \t\t\theadline level and off 0.5% y\/y at the ex-food, energy level.\u00a0 \t\t\tFourth, November national consumer price inflation was up 0.1% y\/y \t\t\tat the headline level and off 0.5% y\/y at the ex-fresh food level, \t\t\tevidencing a minor uptick from October\u2019s rate.\u00a0 In October, Bank of \t\t\tJapan\u2019s Policy Board forecast that core prices would rise 0.1% in \t\t\tthe fiscal year beginning 1 April and 0.6% the following fiscal \t\t\tyear.\u00a0 Fifth, November industrial production improved significantly \t\t\tand was up 1.0% m\/m and 5.8% y\/y.\u00a0 Sixth, November retail trade was \t\t\tup 1.9% m\/m and 1.3% y\/y.\u00a0 Seventh, November labour cash earnings \t\t\twere off 0.2% y\/y.\u00a0 Minutes from Bank of Japan Policy Board\u2019s 4-5 \t\t\tNovember meeting were released earlier this week and one voting \t\t\tmember \u201cwas of the view that the effects of the measure taken (by \t\t\tthe Federal Reserve to ease policy in early November) were highly \t\t\tuncertain and growth in the U.S. economy was still likely to remain \t\t\tlow for some time.\u201d BoJ officials also noted they needed to continue \t\t\tmonitoring the impact of the yen\u2019s gains on exporters with one \t\t\tmember speculating gross domestic product growth could contract this \t\t\tquarter.\u00a0 Officials warned the yen \u201cmight exert downward pressure on \t\t\tJapan\u2019s economy by negatively affecting business and household \t\t\tsentiment.\u00a0 A few members expressed the opinion that careful \t\t\tattention should be paid to the economy\u2019s vulnerability to downside \t\t\trisks, particularly when the pace of economic improvement remained \t\t\tslow.\u201d\u00a0 The Nikkei 225 stock index lost 0.61% to close at \t\t\t\u00a510,292.63.\u00a0 U.S. dollar offers are cited around the \u00a584.60 level.\u00a0 \t\t\tThe euro moved lower <\/strong>vis-\u00e0-vis the yen as the single currency \t\t\ttested bids around the \u00a5108.20 level and was capped around the \t\t\t\u00a5109.50 level.\u00a0 The British pound moved lower <\/strong>vis-\u00e0-vis the \t\t\tyen as sterling tested bids around the \u00a5126.55 level while the \t\t\tSwiss franc moved higher <\/strong>vis-\u00e0-vis the yen and tested offers \t\t\taround the \u00a587.15 level. In Chinese news<\/strong>, the U.S. dollar \t\t\tdepreciated vis-\u00e0-vis the Chinese yuan today as the greenback closed \t\t\tat CNY 6.6250 in the over-the-counter market, down from CNY 6.6313. \t\t\t\u00a0People\u2019s Bank of China raised the yield on one-year bills for the \t\t\tfirst time in seven weeks.\u00a0 PBoC official Wu Nianlu reported it \t\t\twould be optimal if the yuan was convertible by 2016.\u00a0 People\u2019s Bank \t\t\tof China raised its one-year lending and deposit rates by 25bps on \t\t\tSaturday, its second rate hike since mid-October.\u00a0 The benchmark \t\t\tlending rate increased to 5.81% and the benchmark deposit rate \t\t\tincreased to 2.75%.\u00a0 Many economists believe PBoC will front-load \t\t\tadditional rate hikes and other monetary tightening policies in the \t\t\tcoming months.\u00a0 Notably, China has raised banks\u2019 reserve \t\t\trequirements six times in 2010 and reduced loan growth from record \t\t\tlevels.\u00a0 These actions evidence a central bank and government that \t\t\tremain very concerned about elevated rates of inflation.\u00a0 Data \t\t\treleased in China overnight saw the November leading index tick \t\t\thigher to 101.58.\u00a0 Data released in China earlier this week saw \t\t\tNovember industrial profits move lower to +49.4% y\/y.\u00a0 China is said \t\t\tto be targeting 8% GDP growth and 4% inflation growth in 2011 along \t\t\twith 16% M2 money supply growth.<\/p>\n

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


\nThe British pound appreciated vis-\u00e0-vis \t\t\tthe U.S. dollar today<\/strong> as cable tested \t\t\toffers around the US$ 1.5510 level and was supported around the US$ \t\t\t1.5410 level. Technically, today\u2019s intraday high was right around \t\t\tthe 38.2% retracement of the $1.4230 – \u00a01.6300 range.\u00a0 The pair last \t\t\tweek reached its weakest level since September.\u00a0 Data released in \t\t\tthe U.K. earlier this week saw the December Hometrack housing survey \t\t\toff 0.4% m\/m and off 1.6% y\/y.\u00a0 Q3 Bank of England housing equity \t\t\twithdrawal data will be released tomorrow followed by December \t\t\tNationwide house prices on Friday.\u00a0 Bank of England Monetary Policy \t\t\tCommittee member Fisher last week warned mortgage interest rates \t\t\tcould reach 5%. Cable bids are cited around the US$ 1.5265 level.\u00a0 \t\t\tThe euro appreciated<\/strong> vis-\u00e0-vis the British pound as the \t\t\tsingle currency tested offers around the \u00a30.8590 level and was \t\t\tsupported around the \u00a30.8530 level.<\/p>\n

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

The Swiss franc \t\t\tappreciated sharply vis-\u00e0-vis the U.S. dollar today<\/strong> as the greenback tested bids around the CHF 0.9435 level and was \t\t\tcapped around the CHF 0.9605 level. \u00a0The pair has now lost about \t\t\ttwenty big figures from its 2010 high and fell to an all-time low \t\t\ttoday as the franc continues to sharply escalate.\u00a0 Data released in \t\t\tSwitzerland today saw the November UBS consumption indicator decline \t\t\tto 1.630 from the revised prior reading of 1.708, still indicating \t\t\tan expansion in consumer spending activity. The December KOF Swiss \t\t\tleading indicator will be released tomorrow.\u00a0 There is intense focus \t\t\ton the Swiss franc by traders now.\u00a0 Swiss National Bank Chairman \t\t\tHildebrand has labeled the franc\u2019s record rally a \u201cburden\u201d and \t\t\toptions traders are said to more bullish on the franc over the next \t\t\tquarter than any other currency other than the yen.\u00a0 SNB incurred \t\t\tapproximately CHF 22 billion of intervention-related losses in the \t\t\tfirst nine months of 2010 on account of its inability to halt the \t\t\tfranc\u2019s appreciation and there is a broadening perspective the SNB \t\t\tmay not be able to reverse the franc\u2019s ongoing gains.\u00a0 SNB last week \t\t\treported \u201cConcerns about stability in the euro area have led to \t\t\trenewed financial market tensions.\u00a0 Should these tension be \t\t\texacerbated and put a strain on economic developments in the euro \t\t\tarea, this would also have a detrimental effect on the Swiss \t\t\teconomy.\u00a0 If a deflation risk emerges, the SNB would take the \t\t\tmeasures necessary to ensure price stability.\u201d The SNB\u2019s 2012 \t\t\tinflation forecast was reduced to 1% from 1.2% on 16 December, just \t\t\ta few months after SNB Vice Chairman Jordan reported intervention is \t\t\tno longer necessary because the deflation threat was almost gone.\u00a0 \t\t\t\u00a0Last week, the euro reached an all-time low vis-\u00e0-vis the Swiss \t\t\tfranc.\u00a0 U.S. dollar offers are cited around the CHF 0.9780 level.\u00a0 \t\t\tThe euro depreciated<\/strong> vis-\u00e0-vis the Swiss franc as the single \t\t\tcurrency tested bids around the CHF 1.2485 level while the \t\t\tBritish pound moved lower<\/strong> vis-\u00e0-vis the Swiss franc and tested \t\t\tbids around the CHF 1.4550 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":"

The euro appreciated vis-\u00e0-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3275 level and was supported around the $1.3160 level.<\/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-17340","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/17340","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=17340"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/17340\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=17340"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=17340"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=17340"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}