{"id":9173,"date":"2010-05-05T18:41:17","date_gmt":"2010-05-05T22:41:17","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=9173"},"modified":"2010-05-05T18:41:17","modified_gmt":"2010-05-05T22:41:17","slug":"forex-daily-market-commentary-55","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/05\/05\/forex-daily-market-commentary-55\/","title":{"rendered":"Forex Daily Market Commentary"},"content":{"rendered":"

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

Fundamental Outlook at 1400 GMT (EDT + 0400)<\/strong><\/p>\n

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

The euro depreciated sharply vis-\u00e0-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2805 level and was capped around the $1.2995 level. The common currency reached its lowest level since March 2009 as sovereign credit concerns worsened in the eurozone and the threat of contagion to other major industrialized countries worsened.\u00a0 Germany and France are offering the most financial assistance to Greece as part of a multilateral bailout plan that includes the eurozone and the International Monetary Fund.\u00a0 The European Central Bank this week decided to allow Greek debt for repo-eligible collateral despite the fact that it has been downgraded to junk status.\u00a0 The ECB will announce its interest rate decision and is expected to keep all options open but not reduce its headline main refinancing rate target.\u00a0 ECB member Weber highlighted the risk of \u201ccontagion effects\u201d from the Greek crisis.\u00a0 The risk of contagion has certainly heightened as Moody\u2019s reported it placed Portugal\u2019s Aa2 government bond rating on review for a possible downgrade, a move that would likely happen in the next three months.\u00a0 Data released in the eurozone today saw EMU-16 April PMI services improve to 55.6 from the prior reading of 55.5 while the April PMI composite remained steady at 57.3.\u00a0 Also, EMU-16 March retail sales improved to 0.0% m\/m and -0.1% y\/y.\u00a0 German data saw April PMI services improve to 55.2 from 55.0 while French April PMI services improved to 59.2 from 57.8.\u00a0 In U.S. news, data released in the U.S. today saw MBA mortgage applications improve 4.0% from the prior reading of -2.9%.\u00a0 Also, April Challenger job cuts were off 71.1% y\/y, down from the prior reading of -55.0.\u00a0 On a positive note, the April ADP employment change survey came in stronger than expected at +32,000 private jobs, up from the upwardly revised +19,000 prior reading.\u00a0 Finally, the April ISM non-manufacturing composite ticked higher to 55.4.\u00a0 The most important data to be released this week include the April non-farm payrolls data with many forecasts calling for a gain of about 190,000 jobs and the unemployment rate steady at 9.7%.\u00a0 Boston Fed President Rosengren reported he is still \u201cworrying about\u201d the weak housing market. Euro bids are cited around the US$ 1.2740 level.<\/p>\n

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

The yen appreciated vis-\u00e0-vis the U.S. dollar today as the greenback tested bids around the \u00a594.00 figure and was capped around the \u00a595.00 figure.\u00a0 Traders continue to move into yen as a safe haven play on account of the global sovereign credit crisis.\u00a0 Japanese financial markets were again closed overnight for the ongoing Golden Week holiday.\u00a0 .\u00a0 Last week, Bank of Japan kept monetary policy unchanged overnight and reported it will help lenders provide credit, possibly using methods from 1998-1999 when lenders gave cash to lenders to address the credit squeeze.\u00a0 The headline overnight unsecured call rate target was maintained at 0.1%. BoJ Governor Shirakawa directed the central bank to stimulate lending \u201cwith a view to strengthening the foundations for economic growth.\u201d He added \u201cThe government is also trying to map out an economic growth strategy, and the Bank of Japan hopes to give a boost to such efforts with new policy measures.\u201d Last week\u2019s data released in Japan evidence an improving economy that is mired in a deflationary spiral and the central bank\u2019s enhanced rhetoric last week reflects that dichotomy.\u00a0 The new forecast for inflation suggests deflation will end during the next fiscal year with CPI at +0.1%.\u00a0 April monetary base data will be released tomorrow.\u00a0 The Nikkei 225 stock index climbed 1.21% last Friday to close at \u00a511,057.40.\u00a0 U.S. dollar offers are cited around the \u00a596.85 level.\u00a0 The euro moved lower vis-\u00e0-vis the yen as the single currency tested bids around the \u00a5120.70 level and was capped around the \u00a5123.35 level.\u00a0 The British pound moved lower vis-\u00e0-vis the yen as sterling tested bids around the \u00a5141.85 level while the Swiss franc moved lower vis-\u00e0-vis the yen and tested bids around the \u00a584.25 level. In Chinese news, the U.S. dollar depreciated vis-\u00e0-vis the Chinese yuan as the greenback closed at CNY 6.8263 in the over-the-counter market, down from CNY 6.8268.\u00a0 Data released in China this week saw the April HSBC manufacturing PMI index decline to 55.4 from the prior reading of 57.0.\u00a0 In contrast, the CFLP April PMI measure released last week improved to 55.7 from 55.1.\u00a0 The markets reacted this week by focusing on the weaker number, enhancing global risk aversion.\u00a0 Chinese banks are increasing their reserves after People\u2019s Bank of China raised its bank reserves ratio for the third time this year this weekend and Chinese equities declined to a seven-month low today.\u00a0 There is market chatter that China may lift its reserve ratio as high as 18% in a bid to manage economic growth.\u00a0 People\u2019s Bank of China is expected to revalue its yuan currency at any time.\u00a0 Ratings agency Fitch reported Chinese banks may need to be bailed out \u201cif we do see a pretty serious correction in the property market.\u201d<\/p>\n

\u00a3<\/strong><\/p>\n

The British pound depreciated vis-\u00e0-vis the U.S. dollar today as cable tested bids around the US$ 1.5065 level and was capped around the $1.5170 level.\u00a0 There is a growing consensus that Tory leader Cameron could win tomorrow\u2019s general election and may agree a deal with Ulster unionists that could cement a majority in Parliament, averting a hung Parliament.\u00a0 If Cameron wins the election, his ability to form a majority election will be dictated by the number of seats his Tory party picks up.\u00a0 If he is close to a majority, a deal with the Ulster unionists could be made to avoid having to agree a deal with the Liberal Democrats and Clegg.\u00a0 If he is not close to a majority, he may have to agree a deal with the Liberal Democrats and Clegg to try and consolidate power.\u00a0 Regardless of the outcome, a Cameron victory could push the pound higher as it was the Tories who resisted the Blair initiative several years ago to accede Economic and Monetary Union and join the euro.\u00a0 Data released in the U.K. today saw April PMI construction improve to 58.1 from the prior reading of 53.1.\u00a0 Cable bids are cited around the US$ 1.5030 level.\u00a0 The euro depreciated vis-\u00e0-vis the British pound as the single currency tested bids around the \u00a30.8490 level and was capped around the \u00a30.8575 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 1.1185 level and was supported around the CHF 1.1020 level.\u00a0 There is ongoing talk that the Swiss National Bank continued to protect the CHF 1.4320 level on the EUR\/CHF cross to prevent Swiss exporters.\u00a0 Data to be released in Switzerland tomorrow include April consumer price inflation followed by the April unemployment rate on Friday along with March retail sales.U.S. dollar offers are cited around the CHF 1.1270 level.\u00a0 The euro moved higher vis-\u00e0-vis the Swiss franc as the single currency tested offers around the CHF 1.4325 level while the British pound appreciated vis-\u00e0-vis the Swiss franc and tested offers around the CHF 1.6865 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":"

The European Central Bank this week decided to allow Greek debt for repo-eligible collateral despite the fact that it has been downgraded to junk status. The ECB will announce…<\/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-9173","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/9173","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=9173"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/9173\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=9173"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=9173"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=9173"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}