{"id":9192,"date":"2010-05-06T14:08:38","date_gmt":"2010-05-06T18:08:38","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=9192"},"modified":"2010-05-06T14:08:38","modified_gmt":"2010-05-06T18:08:38","slug":"forex-daily-market-commentary-56","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/05\/06\/forex-daily-market-commentary-56\/","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$ 1.2690 level and was capped around the $1.2855 level. The common currency reached its lowest level since March 2009 as traders found big stops below the US$ 1.2740 level, representing a major technical retracement level.\u00a0 Dealers dumped the pair after European Central Bank President Trichet reported the Governing Council did not discuss bailouts for other eurozone countries including Spain and Portugal and did not discuss buying eurozone debt in the secondary market in a new quantitative easing policy.\u00a0 Trichet countered that Spain and Portugal \u201care not Greece\u201d yet the spread between Greek bunds and Spanish 10-year debt continues to widen.\u00a0 The threat of additional sovereign credit contagion in the eurozone is significant and may eventually require additional ECB policies, an International Monetary Fund bailout, or other measures.\u00a0 Moody\u2019s warned sovereign credit risk may spread to other banking systems including Spain, Italy, Portugal, Ireland, and the United Kingdom.\u00a0 Eurozone officials continue to signal that Greece will not default on its debt and the IMF indicated its bailout package gives Greece about eighteen months of financial assistance.\u00a0 Money is moving into U.S. Treasuries on the heels of the European debt crisis with the yields on 10-year U.S. Treasury Notes at a four-month low of 3.53%.\u00a0 As expected, the European Central Bank kept its main refinancing rare unchanged at 1.00% overnight.\u00a0 Data released in Germany today saw March factory orders up 5.0% m\/m and 26.1% y\/y, an improvement from February\u2019s prints.\u00a0 March industrial production data will be released tomorrow.\u00a0 In U.S. news, data released today saw Q1 non-farm productivity print at 3.6%, down from the downwardly-revised +6.3% prior reading.\u00a0 Q1 unit labour costs came in at -1.6%, up from the revised -5.6%.\u00a0 Weekly initial jobless claims printed at 444,000, down from the revised prior reading of 451,000, and continuing jobless claims printed at 4.594 million, down from the revised prior reading of 4.653 million.\u00a0 Also, ICSC chain store sales fell significantly to +0.8% from the prior reading of +9.0%.\u00a0 Tomorrow\u2019s April non-farm payrolls data will be closely scrutinized.\u00a0 Non-farm payrolls growth is expected to print around +190,000 while the unemployment rate is expected to print around 9.7%.\u00a0 Fed Chairman Bernanke reported he \u201csees some reasons for optimism\u201d even though bank credit remains tight.\u00a0 Richmond Fed President Lacker noted \u201cMy worry is that we will let the obvious slack in the economy lull us into a false sense of security regarding inflation.\u201d\u00a0 Boston Fed President Rosengren warned it \u201cis likely to take years\u201d before the economy attains \u201cfull employment\u201d again.\u00a0 Euro bids are cited around the US$ 1.2295 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 \u00a593.30 level and was capped around the \u00a593.95 level.\u00a0 Japanese financial markets reopened after the Golden Week holiday.\u00a0 Some Democratic Party of Japan legislators indicated the government should send the message that it will require Bank of Japan to continue \u201cbold\u201d monetary easing to counter deflation.\u00a0 Traders continue to move into yen as a safe haven play on account of the global sovereign credit crisis.\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 tonight.\u00a0 The Nikkei 225 stock index lost 3.27% to close at \u00a510,695.69.\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 \u00a5118.85 level and was capped around the \u00a5120.70 level.\u00a0 The British pound moved lower vis-\u00e0-vis the yen as sterling tested bids around the \u00a5140.20 level while the Swiss franc moved higher vis-\u00e0-vis the yen and tested offers around the \u00a584.70 level. In Chinese news, the U.S. dollar depreciated vis-\u00e0-vis the Chinese yuan as the greenback closed at CNY 6.8266 in the over-the-counter market, up from CNY 6.8263.\u00a0 The State Administration of Foreign Exchange reported \u201cAs the global economy recovers, cross-border capital inflows will increase in 2010 because of yuan appreciation expectations, interest rate differentials between Chinese and foreign currencies, and domestic asset prices.\u00a0 China will prevent abnormal capital inflows from enlarging asset bubbles through in-depth analysis and precise crackdowns.\u201d\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$ 1.4925 level and was capped around the $1.5145 level.\u00a0 Attention is focused on today\u2019s General Election in the U.K. with most pollsters predicting David Cameron and the Tory party will win a minority government.\u00a0 If Cameron wins, the size of his victory will become crucial and will likely determine which party he tries to form a majority government with.\u00a0 At the very least, today\u2019s likely election result suggests the Blair-Brown Labour movement of the past fifteen years has runs its course. A Cameron victory could be positive for sterling as the Tories voted against the Labour initiative years ago to join the euro and accede Economic and Monetary Union.\u00a0 Data released in the U.K. today saw April PMI services fall back to 55.3 from the prior reading of 56.5.\u00a0 Cable bids are cited around the US$ 1.4335 level.\u00a0 The euro depreciated vis-\u00e0-vis the British pound as the single currency tested bids around the \u00a30.8425 level and was capped around the \u00a30.8520 level.<\/p>\n

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

The Swiss franc appreciated vis-\u00e0-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1085 level and was capped around the CHF 1.1245 level.\u00a0 The franc went on a rampage today as the Swiss National Bank was deemed to have been absent from the market.\u00a0 The central bank may have deemed that euro sentiment is so negative that it would have been futile to buy euro for francs today.\u00a0 The CHF 1.4320 level on the cross has been talked about a lot as a key level the SNB has supported recently.\u00a0 Data released in Switzerland today saw April consumer price inflation climb 0.9% m\/m and 1.4% y\/y.\u00a0 Higher inflation rates are troubling for the SNB because if they lead to higher interest rates, they could engender further strength in the franc.\u00a0 April unemployment and March retail sales data will be released tomorrow.\u00a0 U.S. dollar offers are cited around the CHF 1.1270 level.\u00a0 The euro moved lower vis-\u00e0-vis the Swiss franc as the single currency tested bids around the CHF 1.4105 level while the British pound depreciated vis-\u00e0-vis the Swiss franc and tested bids around the CHF 1.6705 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":"

By GCI Forex Research Fundamental Outlook at 1400 GMT (EDT + 0400) \u20ac The euro depreciated sharply vis-\u00e0-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2690 level and was capped around the $1.2855 level. The common currency reached its lowest level since March 2009 as traders found big stops … <\/p>\n

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