{"id":5814,"date":"2010-01-12T16:08:16","date_gmt":"2010-01-12T21:08:16","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=5814"},"modified":"2010-01-12T16:08:16","modified_gmt":"2010-01-12T21:08:16","slug":"fundamental-outlook-at-1500-gmt-edt-0500-5","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/01\/12\/fundamental-outlook-at-1500-gmt-edt-0500-5\/","title":{"rendered":"Fundamental Outlook at 1500 GMT (EDT + 0500)"},"content":{"rendered":"

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

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

The euro depreciated vis-\u00e0-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4450 level and was capped around the $1.4520 level.\u00a0 The common currency was pressured during Australian dealing after a Chinese official reported the U.S. dollar has likely hit the bottom while adding the yen still had room to decline.\u00a0 There is growing dissent apparent at the Federal Reserve.\u00a0 Kansas City Fed President Hoenig reported the Fed should conclude in March its program to purchase mortgage debt, as planned, because the private securities market is \u201chealing.\u201d Hoenig is calling for a \u201cmodest\u201d and \u201cpersistent\u201d economy despite last week\u2019s lackluster December non-farm payrolls number.\u00a0 In contrast to Hoenig, St. Louis Fed President Bullard \u2013 speaking in China \u2013 suggested the U.S. may want to continue some of its expansionary policies, including the securities purchasing programs.\u00a0 Bullard also noted U.S. interest rates \u201cmay remain low for quite some time.\u201d\u00a0 Friday\u2019s weaker-than-expected and disappointing U.S. December non-farm payrolls data dented the view that the Fed may raise interest rates by the middle of the year.\u00a0 European Central Bank President Trichet yesterday called on global governments to reduce excessive budget deficits to satisfy investors.\u00a0 Trichet noted he sees a \u201cprogressive normalization of the economy\u201d but called on market participants to \u201cstrengthen risk management significantly.\u201d\u00a0 ECB member Nowotny yesterday said new risk-taking by some market participants is a concern for central bankers and regulators and that risk-taking needs to be limited by increases in capital requirements.\u00a0 Nowotny also confirmed there will be \u201csluggish\u201d economic growth in the eurozone this year.\u00a0 Data released in the eurozone yesterday saw French November industrial output climb +1.1% and October\u2019s print was upwardly revised.\u00a0 In U.S. news, data to be released in the U.S. today include November trade balance figures with estimates running around \u2013US$ 34.5 billion.\u00a0 Euro bids are cited around the US$ 1.3885 level.<\/p>\n

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

The yen depreciated vis-\u00e0-vis the U.S. dollar today as the greenback tested offers around the \u00a592.40 level and was supported around the \u00a591.80 level.\u00a0 Traders moved out of yen after shares in Japan Airlines declined 45% on speculation that the ailing airline is to file for bankruptcy imminently.\u00a0 Data released in Japan overnight saw the November current account surplus expand 76.9% y\/y to \u00a51.103 trillion, better-than-expected.\u00a0 Also, December bank lending was off 1.3% m\/m and 3.1% y\/y. Bank of Japan official Shinobu Nakagawa yesterday reported it is \u201cpossible\u201d that official Japanese interest rates will remain near zero per cent until 2011 on account of the poor economic outlook.\u00a0 Nakagawa also reported the appreciating yen helps to support demand for Japanese government bonds.\u00a0 There is increasing speculation BoJ could increase its bond purchase activity to avert a relapse into another recession.\u00a0 Currently, the central bank purchases around \u00a51.8 trillion in Japanese government bonds every month and it may decide to up its purchases to counter intense deflationary pressures.\u00a0 A new announcement could be made as early as H1 2010.\u00a0 An anonymous Ministry of Finance official reported finance minister Kan and U.S. Treasury Secretary Geithner agree on exchange rate policy.\u00a0\u00a0 New finance minister Kan last week said it is his responsibility to respond to moves in the currency market but added the markets should determine rates.\u00a0 Last Thursday, Kan indicated the yen should be weaker whereas his predecessor, Fujii, green-lighted a stronger yen when he first took office last year.\u00a0 Chief Cabinet Secretary Hirano said the government should not make any comments that could impact the markets.\u00a0 Prime Minister Hatoyama last week said rapid exchange rate moves are \u201cnot good\u201d and \u201cunwelcome.\u201d Most traders believe the Japanese government will probably try to orchestrate a weaker yen to help counter deflationary pressures and stimulate foreign trade.\u00a0 The Nikkei 225 stock index climbed 1.09% to close at \u00a510,798.32 yesterday.\u00a0\u00a0 U.S. dollar offers are cited around the \u00a594.75 level.\u00a0 The euro moved higher vis-\u00e0-vis the yen as the single currency tested offers around the \u00a5133.75 level and was supported around the \u00a5132.95 level.\u00a0 The British pound moved lower vis-\u00e0-vis the yen as sterling tested bids around the \u00a5147.65 level while the Swiss franc moved lower vis-\u00e0-vis the yen and tested bids around the \u00a590.20 level. In Chinese news, the U.S. dollar appreciated vis-\u00e0-vis the Chinese yuan as the greenback closed at CNY 6.8275 in the over-the-counter market, up from CNY 6.8263.\u00a0 The pair was volatile overnight as a Chinese sovereign wealth fund official reported the U.S. dollar reached \u201crock bottom\u201d but added the yen still has room to decline.\u00a0 The official quickly noted these were his own opinions and not official public policy.\u00a0 He did, however, suggest that both the U.S. and China are likely to raise rates in H2 2010.\u00a0\u00a0 Last week, People\u2019s Bank of China guided interest rate expectations higher by selling three-month bills at higher rates for the first time in nineteen weeks.\u00a0 This evidences the central bank\u2019s attempt to tighten liquidity.\u00a0\u00a0 PBoC-watchers believe the central bank may lift interest rates for the first time in three years by September.\u00a0 There is increasing speculation that China\u2019s economy could slow dramatically this year.\u00a0 People\u2019s Bank of China yesterday reported it will support \u201crelatively fast\u201d economic growth and manage inflation expectations.\u00a0 Additionally, PBoC noted it will target \u201cmoderate\u201d loan growth in 2010.<\/p>\n

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

The British pound depreciated sharply vis-\u00e0-vis the U.S. dollar today as cable tested bids around the US$ 1.6060 level and was capped around the $1.6120 level.\u00a0 Many data were released overnight. First, the December RICS house price balance declined to +30 from +35 in November, the first decline since February.\u00a0 Second, BRC December retail sales surged to a five-month high.\u00a0 Third, RICS reported house prices moderated last month.\u00a0 BCC noted the U.K. economy is improving but is \u201cstruggling to enter a recovery phase.\u201d Former Bank of England Monetary Policy Committee member Buiter yesterday reported the central bank may start to raise interest rates by the middle of the year, possibly taking the Bank Rate to 0.75% to 1.00%.\u00a0 Buiter suggested the BoE\u2019s rate hike could come before the European Central Bank contemplates one.\u00a0 The big news in the U.K. remains the general election that is scheduled to be called before June.\u00a0 Prime Minister Brown is attempting to rally the Labour Party following widespread discontent from within his own ranks.\u00a0 Tory opposition leader Cameron is pledging earlier and deeper deficit reductions.\u00a0 Cable bids are cited around the US$ 1.5730 level. The euro gained ground vis-\u00e0-vis the British pound as the single currency tested offers around the \u20a40.9010 level and was supported around the \u20a40.8995 level.<\/p>\n

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

The Swiss franc depreciated vis-\u00e0-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0205 level and was supported around the CHF 1.0150 level.\u00a0 Data released in Switzerland yesterday saw November real retail sales up 0.6%.\u00a0 Swiss National Bank is expected to keep interest rates unchanged for at least the next couple of months.\u00a0 U.S. dollar offers are cited around the CHF 1.0615 level.\u00a0 The euro moved higher vis-\u00e0-vis the Swiss franc as the single currency tested offers around the CHF 1.4765 level while the British pound moved higher vis-\u00e0-vis the Swiss franc and tested offers around the CHF 1.6400 figure.<\/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":"

The common currency was pressured during Australian dealing after a Chinese official reported the U.S. dollar has likely hit the bottom while adding the yen still had room to decline…<\/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-5814","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/5814","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=5814"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/5814\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=5814"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=5814"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=5814"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}