{"id":6949,"date":"2010-02-18T14:54:39","date_gmt":"2010-02-18T19:54:39","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=6949"},"modified":"2010-02-18T14:54:39","modified_gmt":"2010-02-18T19:54:39","slug":"forex-daily-market-commentary-16","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/02\/18\/forex-daily-market-commentary-16\/","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 vis-\u00e0-vis the U.S. \t\tdollar today<\/strong> as the single currency tested offers around the US$ \t\t1.3645 level and was supported around the $1.3540 level. The common \t\tcurrency reversed course during the North American session and moved to \t\tintraday highs after U.S. equities opened better and also following the \t\trelease of U.S. economic data.\u00a0 It was reported that weekly initial \t\tjobless claims unexpectedly rose to 473,000 from a revised print of \t\t442,000 while continuing jobless claims were unchanged from a revised \t\t4.563 million.\u00a0 Traders await clues as to when the U.S. labour market \t\twill improve and today\u2019s data do not offer much confidence.\u00a0 Other data \t\treleased in the U.S. today saw the January producer price index climb \t\tstronger-than-expected at +1.4% m\/m and +4.6% y\/y while the ex-food and \t\tenergy core rate was up 0.3% m\/m and 1.0% y\/y. \u00a0Additionally, the \t\tFebruary Philadelphia Fed\u2019s manufacturing index improved to 17.6 with \t\timprovements in the employment, prices received, and new orders \t\tsub-indices while January leading indicators came in \t\tweaker-than-expected at +0.3%.\u00a0 Tomorrow\u2019s U.S. data releases will \t\tinclude the January consumer price index.\u00a0 Minutes from the Federal Open \t\tMarket Committee\u2019s most recent meeting were released overnight in which \t\tpolicymakers debated a reduction in the size of the Fed\u2019s balance sheet \t\tthat currently stands at US$ 2.26 trillion.\u00a0 Some policymakers noted \t\tthey want to begin selling some of the Fed\u2019s assets \u201cin the near future\u201d \t\tand added the Fed\u2019s holdings need to shrink \u201csubstantially over time.\u201d\u00a0 \t\tIn Bernanke\u2019s prepared testimony on 10 February, he noted he does not \t\texpect any asset sales in the \u201cnear term\u201d and said any such sales will \t\toccur at a \u201cgradual pace.\u201d\u00a0 The Fed also reaffirmed it would end its US$ \t\t1.25 trillion program to purchase mortgage-backed securities as \t\tpreviously planned.\u00a0 Philadelphia Fed President Plosser said he \t\tadvocates selling the Fed\u2019s mortgage-backed securities at the right \t\ttime, rather than \u201crelaying on redemptions.\u201d\u00a0 In eurozone news<\/strong>, \t\tthe EMU-16 flash February consumer confidence index fell to -17.4.\u00a0 \t\tGerman Chancellor Merkel today said it would be a \u201cscandal\u201d if banks \t\thelped Greece falsify its budget deficit statistics through derivatives \t\ttransactions.\u00a0 Even if the swaps were legal at the time, Greece\u2019s \t\tindebtedness may have been understated for years.\u00a0 Many German \t\tpoliticians are railing against any semblance of a financial bailout for \t\tGreece.\u00a0 Euro bids are cited around the US$ 1.3530 level.<\/p>\n

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

The yen appreciated \t\tvis-\u00e0-vis the U.S. dollar today<\/strong> as the greenback tested bids around \t\tthe \u00a590.65 level and was capped around the \u00a591.25 level. \u00a0As expected, \t\tBank of Japan voted unanimously to maintain its overnight call rate at \t\t0.1%, the same official target level it has been at since December \t\t2008.\u00a0 BoJ Governor Shirakawa reported \u201cthe key to putting Japan out of \t\tdeflation\u201d is \u201cimproving productivity.\u201d\u00a0 He also noted the central bank \t\twill monitor the impact of Toyota\u2019s massive vehicle recall on overall \t\tJapanese production and the impact of Europe\u2019s debt crisis.\u00a0 The \t\tgovernment had been pushing the BoJ to expand policy further to counter \t\tstrong deflationary pressures.\u00a0 In recent days, finance minister Kan has \t\tbeen proposing an inflation target of at least 1%.\u00a0 In December, BoJ \t\tPolicy Board members noted their \u201cunderstanding\u201d of price stability is \t\tincreases of up to 2%, with a median of 1%.\u00a0 Shirakawa pushed back \t\tharder on the central bank after today\u2019s meeting, saying \u201cIt\u2019s important \t\tto gain trust of financial markets by showing a path of fiscal \t\tconsolidation.\u201d\u00a0 In recent weeks, he has indicated that increases in \t\tproductivity and final private demand are required to close the output \t\tgap, along with fiscal consolidation.\u00a0 He also today indicated \t\tgovernments need to \u201crespect\u201d the fact the monetary policy is not \t\tdesigned to finance fiscal spending.\u00a0 Shirakawa\u2019s overnight remarks are \t\tthe sternest he\u2019s made to date and evidences a new level of tension and \t\tfriction between the central bank and government.\u00a0 Whereas the Japanese \t\tgovernment has limited \u2013 if any at all \u2013 scope to increase fiscal \t\tspending, the central bank is making it clear that it will not be a \t\tproxy fiscal agent for government spending.\u00a0 Earlier this week, Kan \t\tsuggested the government may modify its tax code and raise the sales \t\ttax.\u00a0 The Nikkei 225 stock index climbed 0.28% to close at \u00a510,335.69.\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 \u00a5141.20 level and was capped around the \u00a5143.05 level.\u00a0 The \t\tBritish pound moved lower <\/strong>vis-\u00e0-vis the yen as sterling tested bids \t\taround the \u00a5141.20 level while the Swiss franc moved lower <\/strong> vis-\u00e0-vis the yen and tested bids around the \u00a583.85 level. In Chinese \t\tnews<\/strong>, the U.S. dollar remained steady vis-\u00e0-vis the Chinese yuan as \t\tthe greenback closed at CNY 6.8333 in the over-the-counter market.\u00a0 \t\tChinese financial markets were closed for the Chinese New Year holiday.\u00a0 \t\tLast week, People\u2019s Bank of China reconfirmed it will \u201cgradually guide \t\tmonetary conditions back to normal levels from the counter-crisis mode\u201d \t\tbut then the central bank lifted reserve requirements by 0.5%, effective \t\t25 February. The central bank is clearly trying to contain inflationary \t\tpressures and avert asset bubbles.\u00a0 Some China-watchers believe the \t\tcentral bank could allow the yuan to appreciate some 5% in the coming \t\tmonths.<\/p>\n

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

The British pound moved lower vis-\u00e0-vis the U.S. dollar today<\/strong> as \t\tcable tested bids around the US$ 1.5555 level and was capped around the \t\t$1.5685 level. \u00a0Many data were released in the U.K. today.\u00a0 First, the \t\tFebruary CBI industrial trends survey improved to -36 from -39 in \t\tJanuary, evidencing a marginal improvement in manufacturing activity.\u00a0 \t\tSecond, January mortgage approvals decreased to 49,000 from 60,000 and \t\tthe January M4 money supply rose to 0.6% m\/m and 5.1% y\/y.\u00a0 Perhaps the \t\tbiggest news today confirmed that U.K. public borrowing increased for \t\tthe first time in the month of January since at least 1993, up \u20a44.3 \t\tbillion.\u00a0 Notably, public borrowing from April 2009 through January 2010 \t\tgrew to \u20a4124.2 billion, an all-time record.\u00a0 These data are indicative \t\tof the significant amount of debt being issued in the U.K. to finance \t\tthe Brown government\u2019s expansionary fiscal spending initiatives.\u00a0 The \t\tU.K. media is reporting some economists are displeased with economic \t\tlanguage Bank of England Governor King used in recent testimony as \t\tcompared with the MPC\u2019s meeting minutes.\u00a0 Cable bids are cited around \t\tthe US$ 1.5340 level.\u00a0 The euro moved higher<\/strong> vis-\u00e0-vis the \t\tBritish pound as the single currency tested offers around the \u20a40.8720 \t\tlevel and was supported around the \u20a40.8660 level.<\/p>\n

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

The Swiss franc appreciated vis-\u00e0-vis \t\tthe U.S. dollar today<\/strong> as the greenback tested bids around the CHF \t\t1.0745 level and was capped around the CHF 1.0825 level. \u00a0Data released \t\tin Switzerland today saw the January trade surplus climb to\u00a0 CHF 2.42 \t\tbillion from CHF 1.36 billion in December.\u00a0 Also, the ZEW February \t\texpectations survey fell to 52.5 from 56.2 in January.\u00a0 Dealers are \t\ttoday again speculating the Swiss National Bank sold francs for euro in \t\tan intervention to help Swiss foreign trade.\u00a0 Many dealers believe the \t\tSwiss National Bank will not be able to prevent the Swiss U.S. dollar \t\toffers are cited around the CHF 1.0930 level.\u00a0 The euro moved lower<\/strong> vis-\u00e0-vis the Swiss franc as the single currency tested bids around the \t\tCHF 1.4645 level while the British pound depreciated<\/strong> vis-\u00e0-vis \t\tthe Swiss franc and tested bids around the CHF 1.6805 level.<\/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":"

Traders await clues as to when the U.S. labour market will improve and today\u2019s data do not offer much confidence. Other data released…<\/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-6949","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/6949","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=6949"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/6949\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=6949"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=6949"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=6949"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}