{"id":18214,"date":"2011-01-17T08:15:30","date_gmt":"2011-01-17T13:15:30","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=18214"},"modified":"2011-01-17T08:15:30","modified_gmt":"2011-01-17T13:15:30","slug":"forex-daily-market-commentary-197","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/01\/17\/forex-daily-market-commentary-197\/","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

USD<\/span><\/em><\/strong><\/p>\n

The dollar strengthened during a quiet FX session in Asia as \t\t\tShanghai equities fell by approximately 3% in the aftermath of \t\t\tFriday’s surprise reserve ratio hike by the PBoC. But the Nikkei-255 \t\t\twas unaffected and is unchanged at the time of writing. EURUSD \t\t\ttraded 1.3310-1.3415, USDJPY 82.68-83.01. Friday’s batch of US \t\t\teconomic data was mixed, which contributed to a volatile session. \t\t\tRetail sales grew by only +0.6% (cons. +0.8%), and the University of \t\t\tMichigan confidence reading fell unexpectedly to 72.7 (prev. 75.5). \t\t\tHowever, industrial production rose by +0.8% in December, well ahead \t\t\tof the +0.5% consensus. Crucially, core CPI for December was stable \t\t\tat +0.8% y\/y (cons. +0.7%). As a result of the data, our US \t\t\teconomists see no reason to change their Q4 GDP forecast, and \t\t\tcontinue to expect a +3.5% annualised pace. Fed Governor Tarullo \t\t\tsaid he sees no reason to either increase or decrease the size of \t\t\tthe Fed’s $600 bn program of asset purchases. Boston Fed President \t\t\tRosengren seemed to agree saying “there will be a time when these \t\t\taggressive actions need to be reversed, but first we need to get the \t\t\teconomy on a much more solid footing”. Richmond Fed President Lacker, \t\t\tan FOMC voter this year, said he was “very concerned” that trouble \t\t\tin the municipal bond markets could cause “broader distress”. \t\t\tTarullo added that the Fed will look closely at the exposure of \t\t\tbanks to municipal bonds. Treasury Secretary Geithner called on \t\t\tChina to allow the yuan to appreciate more rapidly, noting that this \t\t\twould help to contain Chinese inflation. The US is on holiday today, \t\t\tand there are no US data releases scheduled.
\n EUR<\/span><\/em><\/strong><\/p>\n

Fitch cut Greece’s sovereign debt rating to BB+, outlook negative, \t\t\tfrom BBB- on Friday, citing its “heavy public debt burden” which \t\t\trenders “fiscal solvency highly vulnerable to adverse shocks”. All \t\t\tthree of the main ratings agencies now rate the sovereign as \t\t\tsub-investment grade. Greek Finance Minister Papaconstantinou \t\t\trepeated that Greece will not restructure its debt. Slovak Finance \t\t\tMinister Miklos repeated his opposition to the Greece rescue package \t\t\twhich was activated in May, saying that “debt restructuring would be \t\t\ta better solution for Greece”.
\nECB President Trichet urged European governments to make “enormous \t\t\tefforts to bring down their debt”. He said that Ireland and Greece \t\t\tmust respect the programs they committed to. He repeated his view \t\t\tthat a credible strong dollar is in the world’s interest.
\nGerman Finance Minister Schaeuble noted that there were practical \t\t\tlimitations to the value of loans the European Financial Stability \t\t\tFacility could provide, and that the headline figure of \u20ac440 bn \t\t\t“cannot be fully utilised”. (This has long been the view of our \t\t\tEuropean rates strategists). Schaeuble said “we have to and will \t\t\tsolve this problem”. Chancellor Merkel did not seem to be in favour \t\t\tof a quick fix without additional conditions, and instead insisted \t\t\tthat if Europe’s financial rescue infrastructure is to be enhanced, \t\t\tthen this should be done as part of a “complete strategy that must \t\t\tabsolutely include closer economic coordination”. French Finance \t\t\tMinister Lagarde said that several dimensions of the problem are \t\t\tcurrently being looked into, including the size of the facility, the \t\t\ttransition from the current temporary facility to the permanent one \t\t\tin 2013, as well as “the possibility of acquiring bonds on the \t\t\tsecondary market”. Portugal’s Prime Minister Socrates said that a \t\t\t“joint response” to the debt crisis is being prepared, and suggested \t\t\tit may be ready in time for the next EU Council meeting in February.
\nECB Governing Council member Nowotny said that member states may \t\t\tneed to refinance about \u20ac924 bn this year, and that given markets \t\t\tare “nervous” this issuance could lead to some “uncertainties” in \t\t\tQ1.
\nThe final German CPI estimate for December was confirmed at +1.2% \t\t\tm\/m and +1.9% y\/y. In a weekend article in a German newspaper, ECB \t\t\tPresident Trichet said the ECB “are always concerned if inflation \t\t\trises and are following developments very closely” but he said that \t\t\tthe higher inflation figures for December can be largely accounted \t\t\tfor by rising energy prices. Trichet went on to say that interest \t\t\trates are currently at the right level, but that the ECB will always \t\t\ttake the decisions necessary to ensure price stability. ECB \t\t\tGoverning Council member Weber said that CPI risks in the Eurozone \t\t\tare now “broadly balanced” but that these risks “could well move to \t\t\tthe upside”.
\n JPY<\/span><\/em><\/strong><\/p>\n

Finance Minister Noda said that Prime Minister Kan has ordered him \t\t\tto watch FX markets carefully and to cooperate with the BoJ. He said \t\t\the is ready to act decisively on FX if needed.
\nNewly appointed Minister for the Economy and Fiscal Policy, Yosano, \t\t\tsaid that Japan could lose international trust, and long-term rates \t\t\tcould rise, if bond issuance continues to exceed revenues. Yosano \t\t\twent on to say that it is inappropriate for cabinet ministers to \t\t\tcomment on the yen’s level, and that Japan should not rely \t\t\texcessively on BoJ monetary easing to end deflation.
\n CHF<\/span><\/em><\/strong><\/p>\n

SNB Chairman Hildebrand said that FX policy is still unchanged at \t\t\tthe SNB, despite valuation losses incurred as a result of currency \t\t\tmovements. He also agreed with earlier assessments that Swiss franc \t\t\tstrength would negatively affect growth, echoing the conclusions of \t\t\ta currency summit in Switzerland on Friday.
\nSNB Vice-Chairman Jordan said it is the job of the SNB to ensure \t\t\tprice stability and that it “will do everything in its power to \t\t\tfight deflation or inflation”.
\n CAD<\/span><\/em><\/strong><\/p>\n

Prime Minister Harper said that his government remains concerned \t\t\tabout the growth in household debt. The Bank of Canada is due to \t\t\tannounce its policy decision on Tuesday, and the consensus expects \t\t\tno change to the policy rate.<\/p>\n

TECHNICAL OUTLOOK<\/span><\/strong>
\nGBPUSD pressure on 1.5911.
\nEURUSD BULLISH Resistance at 1.3500 holds, while initial support is \t\t\tat 1.3089.
\nUSDJPY NEUTRAL Motion is sideways; 83.67 and 82.31 mark the \t\t\tnear-term directional triggers.
\nGBPUSD BULLISH Pressure on 1.5911, break here would expose 1.5965; \t\t\tsupport at 1.5719.
\nUSDCHF BULLISH Trading below 0.9784, break of this level would \t\t\texpose 0.9852. Support is at 0.9605.
\nAUDUSD BEARISH The pair found support at 0.9804 ahead of 0.9753; \t\t\tresistance at 1.0020.
\nUSDCAD BEARISH Outlook remains bearish; focus is on 0.9849\/25 area \t\t\tahead of 0.9712. Resistance is at 1.0004.
\nEURCHF BULLISH Positive tone continues targeting 1.3004; initial \t\t\tsupport at 1.2686.
\nEURGBP BEARISH Broader focus is on the downside at 0.8313 ahead of \t\t\t0.8285 while resistance is at 0.8499 Friday’s high.
\nEURJPY BULLISH Momentum is improving; targeting 111.53 ahead of \t\t\t112.19. Support is at 108.69.<\/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 dollar strengthened during a quiet FX session in Asia as Shanghai equities fell by approximately 3% in the aftermath of Friday’s surprise reserve ratio hike by the PBoC. But the Nikkei-255 was unaffected and is unchanged at the time of writing…<\/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-18214","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/18214","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=18214"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/18214\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=18214"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=18214"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=18214"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}