{"id":7624,"date":"2010-03-16T16:20:37","date_gmt":"2010-03-16T20:20:37","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=7624"},"modified":"2010-03-16T16:20:37","modified_gmt":"2010-03-16T20:20:37","slug":"forex-daily-market-commentary-27","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/03\/16\/forex-daily-market-commentary-27\/","title":{"rendered":"Forex Daily Market Commentary"},"content":{"rendered":"

By GCI Fx Research <\/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\t1.3770 level and was supported around the $1.3655 level. \u00a0As expected, \t\tthe Federal Open Market Committee kept its benchmark federal funds \t\ttarget rate unchanged at 0.25%.\u00a0 The FOMC reported \u201cInformation received \t\tsince the Federal Open Market Committee met in January suggests that \t\teconomic activity has continued to strengthen and that the labor market \t\tis stabilizing. Household spending is expanding at a moderate rate but \t\tremains constrained by high unemployment, modest income growth, lower \t\thousing wealth, and tight credit. Business spending on equipment and \t\tsoftware has risen significantly. However, investment in nonresidential \t\tstructures is declining, housing starts have been flat at a depressed \t\tlevel, and employers remain reluctant to add to payrolls. While bank \t\tlending continues to contract, financial market conditions remain \t\tsupportive of economic growth. Although the pace of economic recovery is \t\tlikely to be moderate for a time, the Committee anticipates a gradual \t\treturn to higher levels of resource utilization in a context of price \t\tstability. \u00a0With substantial resource slack continuing to restrain cost \t\tpressures and longer-term inflation expectations stable, inflation is \t\tlikely to be subdued for some time. \u00a0The Committee will maintain the \t\ttarget range for the federal funds rate at 0 to 1\/4 percent and \t\tcontinues to anticipate that economic conditions, including low rates of \t\tresource utilization, subdued inflation trends, and stable inflation \t\texpectations, are likely to warrant exceptionally low levels of the \t\tfederal funds rate for an extended period. To provide support to \t\tmortgage lending and housing markets and to improve overall conditions \t\tin private credit markets, the Federal Reserve has been purchasing $1.25 \t\ttrillion of agency mortgage-backed securities and about $175 billion of \t\tagency debt; those purchases are nearing completion, and the remaining \t\ttransactions will be executed by the end of this month. The Committee \t\twill continue to monitor the economic outlook and financial developments \t\tand will employ its policy tools as necessary to promote economic \t\trecovery and price stability. In light of improved functioning of \t\tfinancial markets, the Federal Reserve has been closing the special \t\tliquidity facilities that it created to support markets during the \t\tcrisis. The only remaining such program, the Term Asset-Backed \t\tSecurities Loan Facility, is scheduled to close on June 30 for loans \t\tbacked by new-issue commercial mortgage-backed securities and on March \t\t31 for loans backed by all other types of collateral.\u201d Kansas City Fed \t\tPresident Hoenig dissented with the decision, arguing \u201cthat continuing \t\tto express the expectation of exceptionally low levels of the federal \t\tfunds rate for an extended period was no longer warranted because it \t\tcould lead to the buildup of financial imbalances and increase risks to \t\tlonger-run macroeconomic and financial stability.\u201d Data released in the \t\tU.S. today saw February housing starts off 5.9% to an annualized 575,000 \t\tunits while February building permits were off 1.6% m\/m to an annualized \t\t612,000.\u00a0 Also, the February import price index was off 0.3% m\/m and up \t\t11.2% y\/y.\u00a0 Data to be released in the U.S. tomorrow include February \t\tproducer price inflation data.\u00a0 In eurozone news<\/strong>, Standard & \t\tPoor\u2019s affirmed Greece\u2019s BBB+ credit rating and removed the country from \t\t\u201ccreditwatch negative.\u201d\u00a0 Eurozone finance ministers last night \t\treiterated their plan to \u201ctake coordinated action\u201d but did not provide \t\tmuch additional information other than to suggest any assistance would \t\ttake the form of bilateral loans rather than loan guarantees.\u00a0 Data \t\treleased in the eurozone today saw the EMU-16 consumer price index \t\texpand 0.3% while the core consumer price index expanded 0.4% m\/m, up \t\tfrom -0.1% in January; consumer prices were also up 0.9% y\/y.\u00a0 Also, the \t\tEMU-16 March ZEW economic sentiment survey fell to 37.9 from the prior \t\treading of 40.2.\u00a0 The German March ZEW survey\u2019s economic sentiment and \t\tcurrent situation indices improved to 44.5 and -51.9, respectively.\u00a0 \t\tEuropean Central Bank member Stark called on more regulation for credit \t\tdefault swaps and called on countries to improve their fiscal finances.\u00a0 \t\tEuro bids are cited around the US$ 1.3335 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 \u00a590.00 figure and was capped around the \u00a590.75 level. \u00a0Traders await \t\tBank of Japan Policy Board\u2019s interest rate decision tonight with strong \t\texpectations of additional monetary easing.\u00a0 The central bank may expand \t\ta \u00a510 trillion fund that provides funding to banks when policymakers \t\tconvene on 16-17 March and this is important because an unlimited \t\tuncollateralized loan facility expires on 31 March.\u00a0 Some BoJ-watchers \t\tbelieve the facility could expand by at least \u00a55 trillion. The central \t\tbank remains under significant pressure to do more to combat the \t\tdeflation problem further. Finance minister Kan today reported \u201cFiscal \t\tpolicy focusing on stimulating demand will have some impact against \t\tdeflation.\u00a0 The central bank can make an inflationary impact with \t\tmonetary policy\u2026I want to overcome deflation as soon as possible in \t\tcooperation with monetary policies.\u201d\u00a0 National Strategies Minister \t\tSengoku called on the central bank to enact policies that will be \t\tpositive for \u201cproduction activity, capital investment, and consumer \t\tspending.\u201d\u00a0 Former MoF mouthpiece \u201cMr Yan\u201d Sakakibara reported deflation \t\tis a \u201cstructural problem\u201d that monetary policy cannot remedy.\u00a0 Data \t\treleased in Japan overnight saw February machine tool orders climb \t\t217.4% y\/y and dealers await the release of January tertiary index \t\tdata.\u00a0 The Nikkei 225 stock index lost 0.28% to close at \u00a510,721.71.\u00a0 \t\tU.S. dollar offers are cited around the \u00a594.75 level.\u00a0 The euro moved \t\thigher <\/strong>vis-\u00e0-vis the yen as the single currency tested offers around \t\tthe \u00a5124.60 level and was supported around the \u00a5123.20 level.\u00a0 The \t\tBritish pound moved higher <\/strong>vis-\u00e0-vis the yen as sterling tested \t\toffers around the \u00a5137.45 level while the Swiss franc moved higher <\/strong>vis-\u00e0-vis the yen and tested offers around the \u00a585.80 level. In \t\tChinese news<\/strong>, the U.S. dollar depreciated vis-\u00e0-vis the Chinese yuan \t\tas the greenback closed at CNY 6.8260 in the over-the-counter market, \t\tdown from CNY 6.8262. \u00a0People\u2019s Bank of China reported inflation \t\texpectations are rising in a quarterly survey released today and this \t\tcould render it difficult for the government to meet its 3% annual \t\tinflation target.\u00a0 Higher inflation expectations will likely propel \t\tinterest rates higher.<\/p>\n

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

The British pound appreciated vis-\u00e0-vis \t\tthe U.S. dollar today<\/strong> as cable tested offers around the US$ 1.5200 \t\tfigure and was supported around the $1.4975 level. \u00a0Data released in the \t\tU.K. today saw the DCLG January house price index expand 6.2% y\/y, the \t\thighest increase since February 2008.\u00a0 Bank of England Monetary Policy \t\tCommittee member Barker yesterday reported the U.K. economy could recede \t\tagain, adding the economic recovery will continue to be \u201cbumpy and \t\tfragile.\u201d\u00a0 Cable continues to suffer from political uncertainty ahead of \t\tthe upcoming mandatory General Election.\u00a0 Prime Minister Brown is \t\texpected to lose to Tory leader Cameron but Cameron may not be able to \t\tform a majority government if he wins, and this could lead to a weaker \t\tpound. \u00a0Many data will be released in the U.K. including February \t\tjobless claims along with the BoE MPC meeting minutes.\u00a0 \u00a0Cable bids are \t\tcited around the US$ 1.4455 level.\u00a0 The euro moved lower<\/strong> vis-\u00e0-vis the British pound as the single currency tested bids around \t\tthe US$ 0.9045 level and was capped around the $0.9120 level.<\/p>\n

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

The Swiss franc \t\tappreciated vis-\u00e0-vis the U.S. dollar today<\/strong> as the greenback tested \t\tbids around the CHF 1.0545 level and was capped around the CHF 1.0625 \t\tlevel.\u00a0 Notably, the franc rocketed to its highest level vis-\u00e0-vis the \t\teuro since October 2008 as the common currency plumbed the CHF 1.45 \t\thandle. Traders are speculating Swiss National Bank will be less \t\tinclined to intervene by selling francs as the Swiss economic recovery \t\tstrengthens.\u00a0 SECO released economic forecasts today that are calling \t\tfor economic growth of about 1.4% in 2010, up from the +0.7% forecast \t\tissued in December.\u00a0 Unemployment is expected to decline to 4.3% from \t\t4.9% in 2010 and private spending is expected to ramp up.\u00a0 Data released \t\tin Switzerland yesterday saw February producer and import prices decline \t\t0.3% m\/m and fall 1.0% y\/y.\u00a0 U.S. dollar offers are cited around the CHF \t\t1.1045 level.\u00a0 The euro moved lower<\/strong> vis-\u00e0-vis the Swiss franc as \t\tthe single currency tested bids around the CHF 1.4505 level while the \t\tBritish pound moved higher <\/strong>and tested offers around the CHF 1.6050 \t\tlevel.<\/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 Fx Research \u20ac The euro appreciated vis-\u00e0-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3770 level and was supported around the $1.3655 level. \u00a0As expected, the Federal Open Market Committee kept its benchmark federal funds target rate unchanged at 0.25%.\u00a0 The FOMC reported \u201cInformation received since the … <\/p>\n

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