{"id":19766,"date":"2011-02-24T08:40:07","date_gmt":"2011-02-24T13:40:07","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=19766"},"modified":"2011-02-24T08:40:07","modified_gmt":"2011-02-24T13:40:07","slug":"forex-daily-market-commentary-222","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2011\/02\/24\/forex-daily-market-commentary-222\/","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

Central bank expectations and yield adjustments remain the key \t\t\tdriver for FX markets but jitters over the situation in the Middle \t\t\tEast and its wider impact are now proving too hard to ignore. \t\t\tAlthough markets have managed to segregate event risk, Brent and WTI \t\t\tcrude futures have broken through $110\/bbl and $100\/bbl respectively \t\t\t– levels which could prove damaging to the global economy at a \t\t\tparticularly crucial time in the recovery. The wider fear is that \t\t\tcentral banks may need to move on policy far earlier than planned to \t\t\tcontain inflation expectations, but risk a rise in borrowing costs \t\t\tthat corporate and household sectors may not be prepared for. \t\t\tOvernight EURUSD and USDJPY both struggled to make any headway and \t\t\ttraded in ranges of 1.3742-1.3785 and 81.96-82.52 respectively. \t\t\tEquities closed down almost 1% and Treasury yields finished modestly \t\t\tlower as they sold off following a weaker 5y Treasury auction.
\nThe second-tier data releases and Fedspeak did not provide the \t\t\tdollar with broad support although existing home sales for January \t\t\tunexpectedly gained. Kansas City Fed President Hoenig and \t\t\tPhiladelphia Fed President were unsurprising hawks. Plosser said \t\t\ttapering of QE2 is not necessary though the committee had not yet \t\t\tdecided on an exit strategy and an early exit should not be ruled \t\t\tout if the economy continues to improve. Plosser also said they may \t\t\tneed to change policy even with elevated unemployment and Hoenig \t\t\twarned of the dangers of loose monetary policy. US activity figures \t\t\tare due. Initial jobless claims are due and we are with consensus in \t\t\tlooking for a dip down to 405k. The previous reading was the survey \t\t\tweek for the broader Bureau of Labor Statistics payrolls report, \t\t\twhich could mute the impact of a decrease in claims. But the \t\t\tresumption of a downtrend should be modestly positive for the \t\t\tdollar, though external developments again could be the larger \t\t\tdriver.
\n EUR<\/span><\/em><\/strong><\/p>\n

German GDP for Q4 was confirmed at 4.0%y\/y, 0.4%q\/q, driven by \t\t\tstrong export growth and public spending.
\nYesterday’s CPI prints in France and Italy surprised to the \t\t\tdownside, but the euro continues to be driven by policymaker \t\t\tcomments and stays supported as the general tones remain hawkish. We \t\t\tbelieve the market right now risks being too optimistic on policy \t\t\texpectations, but with headline inflationary pressures rising ECB \t\t\tofficials will likely maintain a hawkish stance but just short of \t\t\tthe crucial “vigilance” threshold.
\nSlovakia Finance minister said that the next ECB President is likely \t\t\tto be German, unless Germany decide against this themselves.
\n GBP<\/span><\/em><\/strong><\/p>\n

Spencer Dale joined Martin Weale and Andrew Sentance in calling for \t\t\trate hikes. Dale and Weale called for 25bp, while Sentance called \t\t\tfor 50bp. Adam Posen continued to vote for further QE. The minutes \t\t\twere hawkish both on the vote front and on the tone, noting that ‘of \t\t\tthose members not favouring a rise in Bank Rate, some thought that \t\t\tthe case for an increase had nevertheless grown in strength’. \t\t\tClearly this is a fundamental shift in stance from the BOE, and the \t\t\tquestion is now whether the hawks can entice 2 other members over to \t\t\ttheir camp. Sentance is due to leave the MPC in May so his call for \t\t\t50bp of hikes suggests that he is trying to push through his policy \t\t\tbefore his departure. The key is whether they will get the two extra \t\t\thawks by May, and sterling is likely to remain supported for the \t\t\tnear-term, as speculation mounts that they might just be able to.
\nThe BoE’s Sentance, Weale and Posen are not expected to offer any \t\t\tsurprises at their upcoming speaking appearances. Fellow policymaker \t\t\tMiles said that inflation is worrying but also said there is no \t\t\tstrong case to tighten policy faster than market rates are implying. \t\t\tHe sees CPI falling sharply in 2012 and said it is unlikely the \t\t\tpound would drop due to loose monetary policy.
\nCBI reported sales are due today at 11:00 GMT and another decline to \t\t\t28 (prev. 37) is expected.
\n AUD<\/span><\/em><\/strong><\/p>\n

Australian capex figures were solid, showing a rise of 1.3% in Q4 \t\t\t(cons. 4%) but our economists note the equipment capex rose 6.1%, \t\t\tand overall the result should add about 0.5% to GDP. Our economists \t\t\tnote that the data reinforce the view that while there is some catch \t\t\tup needed in the economy in H1, the RBA may need to tighten further \t\t\tin H2, though consumers and the housing sector will feel the \t\t\tpressure of higher rates.
\n NZD<\/span><\/em><\/strong><\/p>\n

Prime Minister Key said the delay of the rebuilding of Christchurch \t\t\tfollowing the recent earthquake will likely curb New Zealand’s \t\t\teconomic recovery, though he did not expect a sovereign credit \t\t\trating downgrade, in line with Moody’s comment that there would be \t\t\tno immediate impact on their Aaa rating.<\/p>\n

TECHNICAL OUTLOOK<\/span><\/strong>
\nUSDCHF clears 0.9329\/01.
\nEURUSD BULLISH Rise through 1.3744 exposes 1.3826 and 1.3862 next. \t\t\tNear term support is at 1.3647.
\nUSDJPY NEUTRAL Decline through 82.34 has exposed 81.78, while \t\t\tresistance lies at 82.89.
\nGBPUSD BULLISH Bullish pressure holds below 1.6279\/99 resistance \t\t\tzone. Near-term support comes in at 1.6101.
\nUSDCHF BEARISH Negative momentum continues; breach of 0.9329\/01 \t\t\tsupport area has exposed 0.9241. Near-term resistance at 0.9506.
\nAUDUSD NEUTRAL 1.0158 and 0.9944 mark the near-term directional \t\t\ttriggers.
\nUSDCAD BEARISH Initial support is at 0.9816 ahead of 0.9745\/12 area. \t\t\tResistance at 0.9959.
\nEURCHF BEARISH Push below 1.2774 would expose 1.2709. Initial \t\t\tresistance at 1.2958.
\nEURGBP NEUTRAL Move above 0.8514 would expose 0.8533. Near-term \t\t\tsupport lies at 0.8384.
\nEURJPY BULLISH Focus is on 114.19, breach of this level would expose \t\t\t114.94. Support holds at 112.09.<\/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":"

Central bank expectations and yield adjustments remain the key driver for FX markets but jitters over the situation in the Middle East and its wider impact are now proving too hard to ignore. Although markets have managed to segregate event risk…<\/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-19766","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/19766","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=19766"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/19766\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=19766"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=19766"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=19766"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}