{"id":3493,"date":"2009-08-25T15:44:38","date_gmt":"2009-08-25T20:44:38","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=3493"},"modified":"2009-08-25T15:44:38","modified_gmt":"2009-08-25T20:44:38","slug":"fundamental-outlook-at-1400-gmt-edt-0400-73","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2009\/08\/25\/fundamental-outlook-at-1400-gmt-edt-0400-73\/","title":{"rendered":"Fundamental Outlook at 1400 GMT (EDT + 0400)"},"content":{"rendered":"

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

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

The euro moved higher vis-\u00e0-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4335 level and was supported around the $1.4250 level.\u00a0 While there are growing indications the global economic freefall may be abating, there is now some talk that the global economy may have come too far, too fast and resulted in overvalued equities markets.\u00a0 The euro has been highly correlated with equities prices and a move lower in share prices could put the common currency on the backfoot. Data released in the eurozone today saw German second quarter gross domestic product growth expand 0.3%, confirming the provisional estimate from 13 August.\u00a0 These data followed four consecutive months of contraction and reflected a 0.4% increase in government spending and a 0.7% increase in private consumption.\u00a0 Yesterday, it was reported that eurozone industrial new orders registered their strongest gain in nearly nineteen months in June.\u00a0 As a whole, EMU-16 GDP growth was off 0.1% in Q2.\u00a0 European Central Bank policymakers continue to manage expectations regarding the sustainability of a broad economy recovery in the eurozone.\u00a0 ECB rate-setters will next convene on 3 September and are unlikely to change monetary policy at that time.\u00a0 One month EONIA interest rate futures prices have a downward slope between the front-month August 2009 contract and the July 2010 contract and this indicates the market anticipate a small degree of monetary tightening between now and then.\u00a0 This weekend, European Central Bank President Trichet was rather cautious in his remarks at the Kansas City Federal Reserve\u2019s annual Jackson Hole symposium.\u00a0 Trichet reported \u201cwe see some signs confirming that the real economy is starting to get out of the period of freefall\u201d but added this \u201cdoes not mean at all that we do not have a very bumpy road ahead of us.\u201d\u00a0 Some ECB policymakers are thought to be questioning the sustainability of the recent improvement in eurozone economic data.\u00a0 ECB\u2019s Liikanen this weekend said there is \u201cno need\u201d for the ECB to reassess its policy stance and added unemployment will rise more. ECB\u2019s Nowotny suggested the ECB won\u2019t reverse its policy stance anytime soon.\u00a0\u00a0 Likewise, ECB\u2019s Gonzalez-Paramo reported \u201cthe situation is still very uncertain\u201d and called EMU-16 interest rates appropriate.\u00a0 ECB member Mersch warned against \u201csuccumbing to optimism\u201d about the economic recovery.\u00a0 In U.S. news, it was reported the Obama administration will nominate Fed Chairman Bernanke for a second term atop the Federal Reserve. Bernanke\u2019s star has risen in recent months as some U.S. economic problems have moderated but it does not mean he will not face a contentious fight during his congressional approval hearings.\u00a0 Data released in the U.S. today saw the June S&P\/ Case-Shiller home price index off 14.92% from a revised 19.11% while August consumer confidence rallied to 54.1 from a revised 47.4.\u00a0 Also, the August Richmond Fed manufacturing index was unchanged at +14 and June house prices were up 0.5% m\/m from a revised +0.6% in May.\u00a0 Euro bids are cited around the US$ 1.3900 figure.<\/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 \u00a593.80 level and was capped around the \u00a594.60 level.\u00a0 The yen was stronger across the board as risk appetite weakened on escalating concerns that some asset prices are overvalued.\u00a0 China Construction Bank Chairman Guo Shuqing reported excess cash has resulted in asset bubbles.\u00a0 Traders also pared risk after Atlanta-based SunTrust Banks warned U.S. financial institutions may report additional credit losses stemming from commercial real estate. A greater resumption of risk appetite could result in more demand for short yen carry trades in which the yen is used as a financing vehicle to invest in assets with greater yield spreads.\u00a0 Vice finance minister Tango yesterday reported Japan needs to limit Japanese government bond sales as much as possible.\u00a0 Tango\u2019s comments are topical because the Liberal Democratic Party of Japan may lose this weekend\u2019s general election with the Aso government conceding the LDP\u2019s stronghold on power to the rival Democratic Party of Japan.\u00a0 DPJ leader Hatoyama was on the tape yesterdat saying the DPJ does not plan to increase JGB issuance, contrary to public chatter that the liberal DPJ will expand public works projects.\u00a0 Bank of Japan Governor Shirakawa spoke at the Fed\u2019s Jackson Hole symposium this weekend and said monetary policy \u201cshould avoid inflating asset bubbles by keeping interest rates low for too long.\u201d\u00a0 The Nikkei 225 stock index lost 0.79% to close at \u00a510,497.36.\u00a0 U.S. dollar offers are cited around the \u00a5104.15 level.\u00a0 The euro moved lower vis-\u00e0-vis the yen as the single currency tested bids around the \u00a5133.95 level and was capped around the \u00a5135.25 level.\u00a0 The British pound moved lower vis-\u00e0-vis the yen as sterling tested bids around the \u00a5153.60 level while the Swiss franc moved lower vis-\u00e0-vis the yen and tested bids around the \u00a588.30 level. In Chinese news, the U.S. dollar lost ground vis-\u00e0-vis the Chinese yuan as the greenback closed at CNY 6.8267 in the over-the-counter market, down from CNY 6.8267.\u00a0 Chinese Premier Wen yesterday said the markets need to avoid being \u201cblindly optimistic\u201d about the global economic recovery and added China must maintain its \u201cmoderately loose\u201d monetary policy and \u201cactive\u201d fiscal policy.\u00a0 PBoC reported it will ensure \u201creasonable and ample\u201d liquidity.<\/p>\n

\u20a4<\/strong><\/p>\n

The British pound came off vis-\u00e0-vis the U.S. dollar today as cable tested bids around the US$ 1.6340 level and was capped around the $1.6425 level.\u00a0 Sterling has been weaker for three consecutive trading days and has fallen from its perch above the $1.70 handle this month. Sterling is still on the defensive after minutes from Bank of England Monetary Policy Committee\u2019s meeting from August revealed BoE Governor King voted unsuccessfully in the minority to expand its bond-buying program by \u20a475 billion to \u20a4200 billion.\u00a0 Instead, the central bank voted to expand the quantitative easing operation by \u20a450 billion to \u20a4175 billion.\u00a0 August GfK consumer confidence will be released on Thursday.\u00a0 Cable bids are cited around the US$ 1.6215 level.\u00a0 The euro moved higher vis-\u00e0-vis the British pound as the single currency tested offers around the \u20a40.8745 level and was supported around the \u20a40.8705 level.<\/p>\n

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

The Swiss franc appreciated vis-\u00e0-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0570 level and was capped around the CHF 1.0640 level.\u00a0 Swiss National Bank Governing Board member Hildebrand said the derivatives market needs to be regulated better.\u00a0 Swiss National Bank\u2019s next interest rate decision is expected on 17 September. The three-month Swiss franc Libor target is currently at 0.325 and the front-month September 2009 futures implied rate is trading at 0.290.\u00a0 Data released in Switzerland yesterday saw the July UBS consumption indicator fell to 0.77 from a revised 0.95 in June.\u00a0 UBS warned \u201cunemployment is likely to continue to increase significantly in the coming months.\u201d\u00a0 U.S. dollar offers are cited around the CHF 1.0670 level.\u00a0 The euro moved lower vis-\u00e0-vis the Swiss franc as the single currency tested bids around the CHF 1.5150 level while the British pound came off vis-\u00e0-vis the Swiss franc and tested bids around the CHF 1.7325 level.<\/p>\n

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":"

By GCI Financial – The euro has been highly correlated with equities prices and a move lower in share prices could put the common currency on…<\/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-3493","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/3493","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=3493"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/3493\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=3493"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=3493"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=3493"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}