{"id":9587,"date":"2010-05-19T16:54:30","date_gmt":"2010-05-19T20:54:30","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=9587"},"modified":"2010-05-19T16:54:30","modified_gmt":"2010-05-19T20:54:30","slug":"forex-daily-market-commentary-65","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/05\/19\/forex-daily-market-commentary-65\/","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 appreciated vis-\u00e0-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2365 level and was supported around the $1.2140 level.\u00a0 One catalyst for the move higher was a rumour \u2013 later denied by the Greek government \u2013 that Greece was considering leaving the European Union and the eurozone.\u00a0 Even though Greece only accounts for 2% to 3% of economic output in the European Union, its bailout package represents a considerably higher and disproportionate share of the total financial assistance package that has been announced by the European Union and the International Monetary Fund.\u00a0 Most traders believe the expulsion or removal of a eurozone country would precipitate a run on the euro as confidence and sentiment would be badly damaged.\u00a0 Many dealers are struggling to reconcile why the euro moved higher in the face of the Greek rumour but technicians note that the common currency is significantly oversold and with sentiment so poor, the slightest positive news or data can engender a move higher by the common currency.\u00a0 Another reason being cited for the euro\u2019s rise is a market rumour that the European Central Bank may intervene and purchase euro whereas some traders are indicating Swiss National Bank sold francs for euro today.\u00a0\u00a0 Also, the common currency gained ground on a plea from ECB member and Bundesbank President Weber that Germany\u2019s parliament approve Germany\u2019s contribution to the European Union rescue fund.\u00a0 ECB member Bini-Smaghi said EMU-16 inflation expectations remain well-anchored and added the ECB will \u201cnot bail out states.\u201d IMF official Lipsky reported the euro is \u201cnear equilibrium\u201d and its level is not a problem.\u00a0 Data released in the eurozone today saw EMU-16 March construction output up 7.6% m\/m and off 5.2% y\/y.\u00a0 In U.S. news, U.S. Treasury Secretary Geithner was on the tape yesterday and reported the U.S.\u2019s economic recovery is \u201cmuch stronger than expected\u201d and said the European Union has the capacity to manage its challenges.\u00a0 Data released in the U.S. today saw MBA mortgage applications off 1.5% with the April headline consumer price index off 0.1% m\/m and up 2.2% y\/y. The ex-food and energy core CPI rate was up 0.0% m\/m and 0.9% y\/y.\u00a0 U.S. equities reacted negatively to news that MBA mortgage foreclosures reached their highest level in years at +10.06% in Q1.\u00a0 Dealers await the release of Federal Open Market Committee meeting minutes later in the North American session.\u00a0 Former Fed Governor Mishkin called Europe\u2019s fiscal situation \u201cvery dangerous\u201d and said the European Union should have \u201clet Greece go and say we are going to ringfence the rest of the system. Ringfence the banks, protect the other countries that have problems such as Portugal, Italy, and Spain, which have not been fiscally irresponsible the way the Greeks have been.\u201d Euro bids are cited around the US$ 1.2140 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 \u00a591.05 level and was capped around the \u00a592.20 level.\u00a0 Former Bank of Japan Policy Board member Mizuno was critical of the central bank\u2019s plans to stimulate lending in certain economic areas saying \u201cThe bank is treading a delicate line. The division between fiscal policy and monetary policy, as well as industry-financing policy and monetary policy, should be maintained, even if it\u2019s a small one.\u201d\u00a0 The International Monetary Fund reported it is \u201ccritical\u201d for Japan to adopt a credible debt plan.\u00a0 First quarter gross domestic product data will be released in Japan tomorrow and most estimates suggest the economy expanded during that time.\u00a0 Japan has approximately \u00a5882.9 trillion in debt and a strong print would allow the government some breadth to address this large fiscal imbalance.\u00a0 Prime Minister Hatoyama is likely to unveil a strategy in June that addresses Japan\u2019s mammoth debt position.\u00a0 Mizuno also warned that the yen could appreciate further.\u00a0 Data released in Japan overnight saw March industrial production up 1.2% m\/m and 31.8% y\/y while March capacity utilization was up 0.6% m\/m.\u00a0 The Nikkei 225 stock index lost 0.54% to close at \u00a510,186.84.\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 \u00a5110.85 level and was capped around the \u00a5112.90 level.\u00a0 The British pound moved lower vis-\u00e0-vis the yen as sterling tested bids around the \u00a5129.70 level while the Swiss franc moved lower vis-\u00e0-vis the yen and tested bids around the \u00a579.15 level. In Chinese news, the U.S. dollar appreciated vis-\u00e0-vis the Chinese yuan as the greenback closed at CNY 6.8275 in the over-the-counter market, up from CNY 6.8274.\u00a0 People\u2019s Bank of China is said to be limiting orders for tomorrow\u2019s three-year bill sale to prevent money-market rates from moving too high.\u00a0 PBoC also issued a report that indicates they plan to tighten credit.\u00a0 The report dropped the indication that China will \u201cguide money and credit supply to grow rationally\u201d and changed it to \u201cmaintain moderate growth of money and credit supply.\u201d\u00a0 PBoC adviser Li Daokui reported now is the optimal time to adjust the value of the yuan.\u00a0 Some traders, however, now believe China will delay its revaluation of the yuan on account of growth concerns in Europe.<\/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$ 1.4235 level and was capped around the $1.4400 figure.\u00a0 Bank of England released the minutes from its Monetary Policy Committee meeting in May in which policymakers unanimously agreed to keep its main Bank Rate unchanged at 0.5% and kept its asset purchase facility unchanged at \u00a3200 billion.\u00a0 Data released this week indicated that consumer price inflation has rocketed higher to 3.7% but the central bank sees this spike as temporary.\u00a0 The minutes, however, revealed a division between some members who are concerned with higher inflation and some members who are more concerned with European credit constraints.\u00a0 Data to be released in the U.K. tomorrow include April retail sales.\u00a0 Cable bids are cited around the US$ 1.4110 level.\u00a0 The euro appreciated vis-\u00e0-vis the British pound as the single currency tested offers around the \u00a30.8585 level and was supported around the \u00a30.8495 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 1.1415 level and was capped around the CHF 1.1530 level.\u00a0\u00a0 Swiss National Bank is said to have sold francs for euro today according to some European banks.\u00a0 Swiss National Bank President Hildebrand this week reported the central bank is \u201cready to act\u201d against the current strengthening of the franc, noting it is jeopardizing the economic recovery and Swiss price stability.\u00a0 Hildebrand warned that Europe\u2019s \u201cdramatic\u201d situation is \u201cvery difficult\u201d and might worsen, pledging action in a \u201cdecisive manner.\u201d\u00a0 U.S. dollar bids are cited around the US$ 1.1110 level.\u00a0 The euro gained ground vis-\u00e0-vis the Swiss franc as the single currency tested offers around the CHF 1.4050 level while the British pound lost ground vis-\u00e0-vis the Swiss franc and tested bids around the CHF 1.6340 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":"

Even though Greece only accounts for 2% to 3% of economic output in the European Union, its bailout package represents a considerably higher and disproportionate share of the total financial assistance package…<\/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-9587","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/9587","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=9587"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/9587\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=9587"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=9587"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=9587"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}