{"id":6975,"date":"2010-02-19T15:03:52","date_gmt":"2010-02-19T20:03:52","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=6975"},"modified":"2010-02-19T15:03:52","modified_gmt":"2010-02-19T20:03:52","slug":"forex-daily-market-commentary-17","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/02\/19\/forex-daily-market-commentary-17\/","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\t1.3545 level and was supported around the $1.3440 level. \u00a0The Federal \t\tReserve raised the discount rate yesterday by 50bps to 0.75%, citing \t\t\u201ccontinued improvements in financial market conditions\u201d and said this \t\tmove represents a \u201ca further normalization of the Federal Reserve\u2019s \t\tlending facilities.\u201d\u00a0 The Fed also announced that the maximum maturity \t\tfor primary credit loans will be shortened to overnight effective 18 \t\tMarch and added its Term Auction Facility (TAF) program will end on 8 \t\tMarch 2010.\u00a0 The Fed clearly wanted to show that the economy is \t\timproving without disrupting the financial markets too much. Many \t\tFed-watchers see the move as largely symbolic, especially given the fact \t\tthat there is only around US$ 14.7 billion outstanding at the Fed\u2019s \t\tdiscount window.\u00a0 Federal Reserve Bank of New York President Dudley \t\ttoday said \u201cThink of this as the last adjustment tied to the end of all \t\tthe liquidity facilities.\u00a0 Think of this as the last piece of that \t\tpackage, rather than the first piece of the new package.\u201d Speaking about \t\tthe economy, Dudley added \u201cMonetary policy is about the economy.\u00a0 We \t\tneed to see solid growth and job creation.\u00a0 Today we got an inflation \t\treport that showed there\u2019s no inflation pressure.\u00a0 So our focus needs to \t\tbe on growth and jobs.\u201d Data released in the U.S. today saw the January \t\theadline consumer price index climb 0.2% m\/m and 2.6% y\/y while the \t\tex-food and energy CPI rate was off 0.1% m\/m and up 1.6% y\/y.\u00a0 These \t\tdata were a contrast with yesterday\u2019s producer price inflation data that \t\tcame in stronger-than-expected and today\u2019s CPI data suggest that \t\tretailers are finding it difficult to pass on price increases to \t\tconsumers.\u00a0 Other data released today saw Q4 mortgage delinquencies \t\tdecline to 9.47% from the prior reading of 9.64%.\u00a0 Some economits \t\tbelieve the Fed may raise the federal funds target rate by the end of \t\tthe year while others do not foresee any change this year.\u00a0 In \t\teurozone news<\/strong>, Germany and Greece continue to exchange insults as \t\tGreece tries to restore itself to fiscal health.\u00a0 Many German \t\tpoliticians continue to oppose a financial bailout of Greece.\u00a0 European \t\tCentral Bank member Gonzalez-Paramo said there is no risk of \u201closing \t\taccess to liquidity.\u201d\u00a0 He also added the ECB will progressively phase \t\tout measures.\u00a0 Spanish Prime Minister Zapatero said his country \u201cwill \t\tcut its deficit once the economy recovers.\u201d\u00a0 Data released in the \t\teurozone today saw the December EMU-16 current account surplus print at \t\t\u20ac1.9 billion.\u00a0 Also, German January producer price inflation was up 0.8% \t\tm\/m and off 3.4% y\/y, the highest monthly level since July 2008.\u00a0 Euro \t\tbids are cited around the US$ 1.3335 level.<\/p>\n

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

The yen depreciated \t\tvis-\u00e0-vis the U.S. dollar today<\/strong> as the greenback tested offers \t\taround the \u00a592.10 level and was supported around the \u00a591.60 level. \u00a0Bank \t\tof Japan today reported the economic recovery is continuing but added \t\t\u201cthere is not yet sufficient momentum to support a self-sustaining \t\trecovery in domestic private demand.\u201d\u00a0 BoJ also noted exports and \t\tproduction will continue to improve and regarding deflation, the BoJ \t\tadded \u201cthe year-on-year pace of decline in consumer prices\u2026to remain \t\tmore or less unchanged for the time being, and then moderate as the \t\taggregate supply and demand balance improves gradually.\u201d As expected, \t\tBank of Japan voted yesterday to unanimously to maintain its overnight \t\tcall rate at 0.1%, the same official target level it has been at since \t\tDecember 2008.\u00a0 BoJ Governor Shirakawa reported \u201cthe key to putting \t\tJapan out of deflation\u201d is \u201cimproving productivity.\u201d\u00a0 He also noted the \t\tcentral bank will monitor the impact of Toyota\u2019s massive vehicle recall \t\ton overall Japanese production and the impact of Europe\u2019s debt crisis.\u00a0 \t\tThe government had been pushing the BoJ to expand policy further to \t\tcounter strong deflationary pressures.\u00a0 Finance minister Kan today said \t\t\u201cthe Bank of Japan and government are basically pointing in the same \t\tdirection.\u00a0 The government will do its part with fiscal and tax policy, \t\twhile the central bank will use monetary tools.\u201d\u00a0 The Nikkei 225 stock \t\tindex lost 2.05% to close at \u00a510,123.58. U.S. dollar offers are cited \t\taround the \u00a594.75 level.\u00a0 The euro moved lower <\/strong>vis-\u00e0-vis the yen \t\tas the single currency tested bids around the \u00a5123.55 level and was \t\tcapped around the \u00a5124.35 level.\u00a0 The British pound moved lower <\/strong> vis-\u00e0-vis the yen as sterling tested bids around the \u00a5140.85 level while \t\tthe Swiss franc moved lower <\/strong>vis-\u00e0-vis the yen and tested bids \t\taround the \u00a584.30 level. In Chinese news<\/strong>, the U.S. dollar \t\tremained steady vis-\u00e0-vis the Chinese yuan as the greenback closed at \t\tCNY 6.8333 in the over-the-counter market.\u00a0 Chinese financial markets \t\twere closed for the Chinese New Year holiday.\u00a0 Last week, People\u2019s Bank \t\tof China reconfirmed it will \u201cgradually guide monetary conditions back \t\tto normal levels from the counter-crisis mode\u201d but then the central bank \t\tlifted reserve requirements by 0.5%, effective 25 February. The central \t\tbank is clearly trying to contain inflationary pressures and avert asset \t\tbubbles.\u00a0 Some China-watchers believe the central bank could allow the \t\tyuan to appreciate some 5% in the coming months.<\/p>\n

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

The British pound moved sharply lower vis-\u00e0-vis the U.S. dollar today<\/strong> as cable tested bids around the US$ 1.5350 level and was capped around \t\tthe $1<\/p>\n","protected":false},"excerpt":{"rendered":"

The Fed also announced that the maximum maturity for primary credit loans will be shortened to overnight effective 18 March and added its Term Auction Facility (TAF) program will end…<\/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-6975","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/6975","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=6975"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/6975\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=6975"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=6975"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=6975"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}