{"id":6490,"date":"2010-02-02T15:22:42","date_gmt":"2010-02-02T20:22:42","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=6490"},"modified":"2010-02-02T15:22:42","modified_gmt":"2010-02-02T20:22:42","slug":"forex-daily-market-commentary-8","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/02\/02\/forex-daily-market-commentary-8\/","title":{"rendered":"Forex Daily Market Commentary"},"content":{"rendered":"

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

Fundamental Outlook at 1500 GMT (EDT + 0500)<\/strong><\/p>\n

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

The euro appreciated \t\tvis-\u00e0-vis the U.S. dollar today<\/strong> as the single \t\tcurrency tested offers around the US$ 1.3965 level and was supported \t\taround the $1.3885 level. \u00a0The common currency gained some ground on \t\tnews the European Commission will support Greece\u2019s deficit-reduction \t\tprogram that will be published tomorrow.\u00a0 Greece\u2019s budget deficit was \t\t12.7% of GDP last year and is struggling to convince the markets it can \t\tbring that down to 3% by 2012.\u00a0 Greek debt is now trading at a massive \t\t400bps premium at the ten-year level over German bunds, the highest \t\tlevel since 1998.\u00a0 Most traders expect the European Central Bank will \t\tkeep monetary policy unchanged on Thursday.\u00a0 Data released in the \t\teurozone today saw EMU-16 producer price inflation up 0.1% m\/m and off \t\t2.9% y\/y.\u00a0 Also, January PMI construction improved to 48.6 from 47.1 and \t\tGerman December retail sales were up 0.8% m\/m and off 2.5% y\/y.\u00a0 Some \t\tdealers were spooked into selling the euro last night after Reserve Bank \t\tof Australia surprised the markets by not raising interest rates last \t\tnight on the premise that higher-yielding currencies like the Australian \t\tdollar could be weaker.\u00a0 ECB member Weber today said fiscal \t\tconsolidation is the \u201cmain challenge\u201d in 2010 and said he expects a \t\t\u201cslight\u201d worsening of the German labour market in 2010.\u00a0 He also said \t\tGermany will not experience a recovery before 2011 and added the \t\teconomic recovery in 2010 increasingly depends on exports.\u00a0 In U.S. \t\tnews<\/strong>, traders will pay close attention to testimony today from \t\tformer Fed Chairman Volcker who will indicate hedge funds and private \t\tequity funds should be allowed to profit and fail.\u00a0 Volcker is also a \t\tproponent of limiting the size of banks so that none are \u201ctoo big to \t\tfail\u201d and create unmanageable systemic risk.\u00a0 Data released in the U.S. \t\ttoday saw December pending home sales print as expected at 1.0% m\/m and \t\tup 10.5% y\/y.\u00a0 Tomorrow\u2019s data will include MBA mortgage applications, \t\tJanuary Challenge job cuts, and January ISM non-manufacturing data.\u00a0 The \t\tbig news this week will be Friday\u2019s January non-farm payrolls data.\u00a0 \t\tSome dealers believe the U.S. jobs report will show some improvement \t\tfollowing a bit of an economic bounce the economy received at the end of \t\tQ4 2009.\u00a0 Treasury Secretary Geithner today reported small banks \u201cremain \t\tunder enormous pressure\u201d and said the proposed additional fee on banks \t\twill not impact lending.\u00a0 Euro bids are cited around the US$ 1.3740 \t\tlevel.<\/p>\n

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

The \t\tyen appreciated vis-\u00e0-vis the U.S. dollar today<\/strong> as the greenback tested bids around the \u00a590.25 level and was capped \t\taround the \u00a590.90 level. \u00a0Finance minister Kan urged Bank of Japan to \t\tcontinue implementing \u201cappropriate and flexible policies\u201d and work \t\tclosely with the government to combat deflation.\u00a0 BoJ Governor Shirakawa \t\tlast week reported it is a \u201ccritical challenge\u201d to root out deflation \t\tbut said this week that a lack of final private demand is the \u201croot \t\tcause of deflation\u201d and there is no \u201cmagic wand\u201d to lift prices.\u00a0 Kan \t\talso said \u201cit is possible that the yuan will be one of the agenda items. \t\tI will discuss it on the understanding that stable growth in China is \t\tdesirable for Japan.\u201d\u00a0 Notably, bids fell short of the BoJ\u2019s offer today \t\tin its open market operation as part of the central bank\u2019s lending \t\tprogram announced in December.\u00a0 Prime Minister Hatoyama said the budget \t\tenvironment in 2011 will remain \u201csevere.\u201d Bank of Japan Chief Economist \t\tMomma yesterday reported \u201cthe risk that the Japanese economy will fall \t\toff from a cliff is small, but there is still a long way to go.\u00a0 Even if \t\tthe global economy continues to recover, the spread of that to capital \t\tspending and the labour market will be limited.\u201d\u00a0 Momma also indicated \t\tcapital spending will not indicate signs of a rebound until the fiscal \t\tyear beginning in April 2011 and said the labour market will also remain \t\tweak.\u00a0 The Nikkei 225 stock index gained 1.63% to close at \u00a510,371.09.\u00a0 \t\tU.S. dollar offers are cited around the \u00a594.75 level.\u00a0 The euro moved \t\tlower <\/strong>vis-\u00e0-vis the yen as the single currency tested bids around \t\tthe \u00a5125.80 level and was capped around the \u00a5126.80 level.\u00a0 The \t\tBritish pound moved lower <\/strong>vis-\u00e0-vis the yen as sterling tested bids \t\taround the \u00a5143.85 level while the Swiss franc moved lower <\/strong> vis-\u00e0-vis the yen and tested bids around the \u00a585.45 level. In Chinese \t\tnews<\/strong>, the U.S. dollar depreciated vis-\u00e0-vis the Chinese yuan as the \t\tgreenback closed at CNY 6.8271 in the over-the-counter market, down from \t\tCNY 6.8275. \u00a0A rumour circulated through the market last night that \t\tChina will permit the yuan to appreciate after July. People\u2019s Bank of \t\tChina adviser Fan Gang yesterday reported China\u2019s \u201creal worry\u201d remains \t\tasset bubbles that could emerge as China\u2019s economy emerges from a crisis \t\tperiod into a \u201cboom time.\u201d\u00a0 Fan also noted moves by PBoC to reduce \t\tliquidity last month were \u201ctimely and necessary.”<\/p>\n

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

The British pound moved higher vis-\u00e0-vis the U.S. \t\tdollar today<\/strong> as cable tested offers around the \t\tUS$ 1.5995 level and was supported around the $1.5900 figure level. \u00a0The \t\tbig question facing traders is whether Bank of England\u2019s Monetary Policy \t\tCommittee will scale back, pause, or extend its bond purchase program \t\twhen its monetary policy announcement is made on Thursday.\u00a0 The \t\topposition Tory party, appearing poised to assume the top government \t\tslot in H1 2010, today reported it would keep the BoE\u2019s inflation target \t\tat 2.0% if they assume power and control of the government.\u00a0 Many data \t\twere released in the U.K. yesterday. First, January manufacturing PMI \t\timproved to 56.7 from 54.6, a fifteen-year high.\u00a0 Second, December \t\tmortgage approvals decreased to 59,020.\u00a0 Third, net lending to \t\tindividuals rose by \u20a41.2 billion in December.\u00a0 Fourth, Hometrack January \t\thouse prices were up +0.1%.\u00a0 Cable bids are cited around the US$ 1.5720 \t\tlevel.\u00a0 The euro moved higher<\/strong> vis-\u00e0-vis the British pound as the \t\tsingle currency tested offers around the \u20a40.8760 level and was supported \t\taround the \u20a40.8710 level.<\/p>\n

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

The Swiss franc \t\tappreciated vis-\u00e0-vis the U.S. dollar today<\/strong> as \t\tthe greenback tested bids around the CHF 1.0540 level and was capped \t\taround the CHF 1.0605 level. \u00a0There was talk in the European session \t\tthat Swiss National Bank lifted the euro\/ Swiss franc cross to keep a \t\tlid on the Swiss franc.\u00a0 Data released in Switzerland today saw the SECO \t\tconsumer climate indicator improve to -7 from -14.\u00a0 The media this week \t\treported Swiss National Bank is unlikely to abandon its policy to keep a \t\tlid on the Swiss franc even though the domestic economy continues to \t\timprove.\u00a0 U.S. dollar offers are cited around the CHF 1.0760 level.\u00a0 The euro moved higher<\/strong> vis-\u00e0-vis the Swiss franc as the single \t\tcurrency tested offers around the CHF 1.4740 level while the British \t\tpound moved lower<\/strong> vis-\u00e0-vis the Swiss franc and tested bids around \t\tthe CHF 1.6800 figure.<\/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":"

Finance minister Kan urged Bank of Japan to continue implementing \u201cappropriate and flexible policies\u201d and work closely with the government to combat deflation…<\/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-6490","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/6490","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=6490"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/6490\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=6490"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=6490"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=6490"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}