{"id":9636,"date":"2010-05-21T17:45:13","date_gmt":"2010-05-21T21:45:13","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=9636"},"modified":"2010-05-21T17:45:13","modified_gmt":"2010-05-21T21:45:13","slug":"forex-daily-market-commentary-67","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/05\/21\/forex-daily-market-commentary-67\/","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$ 1.2670 level and was supported around the $1.2455 level.\u00a0 Dealers continued to cover shorts ahead of the weekend, fearful that the European Central Bank could intervene by buying euro for dollars.\u00a0 Market rumours circulated yesterday that the ECB was on the bid for euro to prevent further depreciation.\u00a0 The common currency has appreciated more than 330 pips over the past three trading days, underscoring how technically oversold the pair has been for weeks.\u00a0 The common currency\u2019s recent sell-off may moderate until there is a market perception that the eurozone credit crisis has intensified.\u00a0 A stabilization in global financial markets may unwind elevated volatilities in the market but a stabilization would not necessarily improve the crisis of confidence in the eurozone or remedy its massive fiscal imbalances.\u00a0 ECB President Trichet reported \u201cLet us be clear: it is not the euro that is in danger, but the fiscal policy of some countries that has to be, and is being, addressed.\u201d ECB member Nowotny said the euro\u2019s exchange rate \u201cis clearly within the historical range and gives no reason for special concern.\u201d ECB member Stark said the \u201ceuro is secure and will remain so.\u201d\u00a0 Data released in the eurozone today saw the March current account improve to \u20ac1.7 billion while May EMU-16 PMI services improved to 56.0, EMU-16 PMI manufacturing fell to 55.9, and May composite PMI moved lower to 56.2.\u00a0 German Q1 GDP was up 0.2% q\/q and 1.7% y\/y and the May Ifo business climate index ticked lower to 101.5.\u00a0 Also, the Ifo current assessment fell to 99.4 and the May Ifo expectations index fell to 103.7.\u00a0 Finally, French May PMI services improved to 61.9 and PMI manufacturing fell to 56.2.\u00a0 In U.S. news, the U.S. Senate passed a financial services overhaul bill overnight that maintains the Fed\u2019s oversight over 5,000 banks but reduces the influence of regional Federal Reserve directors.\u00a0 The bill also creates a new customer protection agency, imposes restrictions on banks\u2019 proprietary trading, and creates a new group of regulators to monitor economic threats.\u00a0 Outgoing Fed Vice Chairman Kohn today reported the Fed \u201cwill be able to raise interest rates when it is appropriate for macroeconomic stability.\u00a0 Exit tools are very important.\u201d\u00a0 Euro bids are cited around the US$ 1.2140 level.<\/p>\n

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

The yen depreciated vis-\u00e0-vis the U.S. dollar today as the greenback tested offers around the \u00a590.45 level and was supported around the \u00a589.00 figure.\u00a0 As expected, Bank of Japan\u2019s Policy Board kept its main overnight unsecured call rate target unchanged at 0.10%.\u00a0 The central bank also outlined plans to stimulate corporate loans and increase growth.\u00a0 BoJ Governor Shirakawa reported it will \u201ctake time\u201d for the European Central Bank\u2019s efforts to improve the markets, and noted the European crisis has had a \u201climited\u201d impact on Japan so far. Finance minister Kan verbally intervened against the yen, saying he wants to prevent the yen\u2019s gains from becoming \u201cexcessive.\u201d BoJ injected \u00a51 trillion on same-day funds into the banking system today to expand liquidity, the third such operation since 7 May. Notably, the central bank upgraded its assessment of the economy, noting it is \u201cstarting to recover moderately.\u201d\u00a0 The Hatoyama government is likely to continue pressuring the central bank to ease policy further.\u00a0 Data released in Japan overnight saw the March leading index tick lower to 102.7 and the March coincident index improved to 101.5.\u00a0 The Nikkei 225 stock index lost 2.45% to close at \u00a59,784.54.\u00a0 U.S. dollar offers are cited around the \u00a596.85 level.\u00a0 The euro moved higher vis-\u00e0-vis the yen as the single currency tested offers around the \u00a5114.40 level and was supported around the \u00a5111.00 figure.\u00a0 The British pound moved higher vis-\u00e0-vis the yen as sterling tested offers around the \u00a5130.80 level while the Swiss franc moved higher vis-\u00e0-vis the yen and tested offers around the \u00a578.80 level. In Chinese news, the U.S. dollar appreciated vis-\u00e0-vis the Chinese yuan as the greenback closed at CNY 6.8278 in the over-the-counter market, up from CNY 6.8277.\u00a0 Market talk suggests the U.S. and China will deemphasize a revaluation of the yuan when officials meet soon.\u00a0 Many dealers believe PBoC may delay its yuan revaluation and further interest rate increases on account of the global market turmoil.\u00a0 Former PBoC adviser said the yuan\u2019s revaluation should be \u201cgradual.\u201d<\/p>\n

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

The British pound appreciated vis-\u00e0-vis the U.S. dollar today as cable tested offers around the US$ 1.4495 level and was supported around the $1.4315 level.\u00a0 Yesterday, Bank of England Monetary Policy Committee member Posen reported eurozone problems will reduce the U.K.\u2019s consumer price inflation despite \u201cupside risks to inflation.\u201d\u00a0 MPC member Tucker warned the sharp monetary easing may lead to exuberance.\u00a0 Data released in the U.K. today saw Q1 total business investment grow 0.6% q\/q and decline 11.0% y\/y. Also, the April public sector net cash requirement came in at \u00a38.8 billion and April public sector net borrowing came in at \u00a310.0 billion.\u00a0 Also, April mortgage approvals growth decelerated to 47,000 from the revised prior reading of 51,000.\u00a0 Cable bids are cited around the US$ 1.4110 level.\u00a0 The euro appreciated vis-\u00e0-vis the British pound as the single currency tested offers around the \u00a30.8770 level and was supported around the \u00a30.8650 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 1.1450 level and was capped around the CHF 1.1580 level.\u00a0 Data released in Switzerland today saw the April M3 money supply expand 5.4% y\/y.\u00a0 Swiss National Bank Vice Chairman Jordan this week reported the central bank is \u201cdecisively\u201d averting an appreciation of the franc, leading to speculation the SNB\u2019s actions prompted today\u2019s massive short covering in the euro.\u00a0 It was reported today that the Swiss National Bank\u2019s foreign currency holdings rose to CHF 153.6 billion in April from CHF 125.1 billion in March, the latest evidence of SNB intervention.\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 1.4585 level while the British pound gained ground vis-\u00e0-vis the Swiss franc and tested offers around the CHF 1.6660 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":"

Dealers continued to cover shorts ahead of the weekend, fearful that the European Central Bank could intervene by buying euro for dollars. Market rumours circulated yesterday…<\/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-9636","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/9636","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=9636"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/9636\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=9636"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=9636"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=9636"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}