{"id":9703,"date":"2010-05-25T14:26:01","date_gmt":"2010-05-25T18:26:01","guid":{"rendered":"http:\/\/countingpips.com\/fx\/?p=9703"},"modified":"2010-05-25T14:26:01","modified_gmt":"2010-05-25T18:26:01","slug":"forex-daily-market-commentary-69","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/fx\/2010\/05\/25\/forex-daily-market-commentary-69\/","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$ 1.2175 level and was capped around the $1.2370 level.\u00a0 The situation in Europe worsened dramatically overnight.\u00a0 First, yieds on German government 10-year bunds reached a record low, reflecting the safe haven play that many nervous investors and traders are seeking.\u00a0 Yields on French 10-year debt also reached a record low overnight.\u00a0 Second, the German government has now proposed a ban on the naked short-selling of all German equities, a broad expansion of the plan announced two weeks ago.\u00a0 In addition, Germany\u2019s plan calls for a ban on the short-selling of certain types of eurozone bonds and certain types of credit default swaps.\u00a0 Other eurozone countries have not yet followed suit with similar banks and the common currency is suffering as a result of the perception of a lack of cohesion with regard to policymaking.\u00a0 Third, there is a sense that more European banks will fail.\u00a0 Yesterday, four regional Spanish savings banks announced a plan to combine forces to stave off concerns\u00a0 following the nationalization of one savings bank.\u00a0 The yield spread between Spanish 10-year bonds and German 10-year bunds widened fourteen basis points to 154 bps, the highest levels since 7 May.\u00a0 Fourth, there is talk the European Union will introduce a new up-front tax on banks to help stabilize the financial system.\u00a0 European Central Bank member Nowotny reiterated the ECB is \u201cfiercely independent\u201d and said it is not engaging in quantitative easing.\u00a0 Data released in the eurozone today saw EMU-16 March industrial new orders up 5.2% m\/m and 19.8% y\/y.\u00a0 In U.S. news, the March Case-Sehiller home price index was off a marginal 0.05% m\/m and up 2.35% y\/y.\u00a0 Other data to be released today include the May Richmond Fed manufacturing index and March house price index.\u00a0 St. Louis Fed President Bullard reported the trajectory of U.S. interest rates depends on the economic recovery into 2011.\u00a0 Euro offers are cited around the US$ 1.2620 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 \u00a589.25 level and was capped around the \u00a590.30 level.\u00a0 Dealers added to long yen positions on escalating concerns about the European debt crisis and a worsening regional situation involving the two Koreas.\u00a0 North Korean leader Kim Jong-Il is said to have ordered his military on \u201ccombat footing\u201d while South Korea is said to have restarted \u201cpsychological warfare\u201d against the north.\u00a0 These measures are in response to the sinking of a South Korean submarine, allegedly by North Korea.\u00a0 Japan strategy minister Sengoku warned the European economy will not recover soon.\u00a0 Three-month Libor rates for yen loans grew to 0.2456% and three-month U.S. dollar Libor is now 0.50969%, the highest level since 16 July.\u00a0 Traders await the release of April Bank of Japan Policy Board meeting minutes overnight along with the April corporate service price index.\u00a0 The Nikkei 225 stock index lost 3.06% to close at \u00a59,459.89.\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 \u00a5108.80 level and was capped around the \u00a5111.65 level.\u00a0 The British pound moved lower vis-\u00e0-vis the yen as sterling tested bids around the \u00a5127.65 level while the Swiss franc moved lower vis-\u00e0-vis the yen and tested bids around the \u00a576.40 level. In Chinese news, the U.S. dollar appreciated vis-\u00e0-vis the Chinese yuan as the greenback closed at CNY 6.8315 in the over-the-counter market, up from CNY 6.8287.\u00a0 Data released in China overnight saw the April leading index decline to 104.36.\u00a0 The State Administration of Foreign Exchange indicates China has not had large-scale \u201chot money\u201d inflows ahead of the possible revaluation and appreciation of the yuan.\u00a0 People\u2019s Bank of China sold one-year bills at an unchanged yield of 1.9264% in open-market operations today, the seventeenth consecutive time it has not changed yields.\u00a0 Some dealers believe PBoC will increase the yield on its bills to absorb excess liquidity in the money markets. Chinese yuan forwards came off their most in fifteen months on the European debt crisis today, bringing into question whether or not China will revalue the yuan with the global economy on a relatively weak footing.\u00a0 U.S. Treasury Secretary Geithner characterized U.S.-Chinese talks on the yuan as \u201cencouraging.\u201d\u00a0 Yesterday, People\u2019s Bank of China adviser Li Daokui today said \u201cPolitically it is worthwhile, it makes sense, for the two sides \u2013 China and the U.S. \u2013 to see some progress in renminbi reform in the near future.\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$ 1.4255 level and was capped around the $1.4420 level.\u00a0 Data released in the U.K. today saw Q1 gross domestic product up 0.3% q\/q and off 0.2% y\/y.\u00a0 Bank of England Monetary Policy Committee member Posen said he cannot rule out deflationary pressures in the U.S. and U.K. economies.\u00a0 Chancellor of the Exchequer Osborne yesterday reported the new Cameron government hopes to decrease fiscal spending by at least \u00a36 billion in what would be an abrupt shift from the policies of former Prime Minister Brown.\u00a0 Outgoing Bank of England Monetary Policy Committee member Barker reported more difficult times are ahead for the U.K. economy.\u00a0 Cable bids are cited around the US$ 1.4110 level.\u00a0 The euro depreciated vis-\u00e0-vis the British pound as the single currency tested bids around the \u00a30.8510 level and was capped around the \u00a30.8585 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 1.1695 level and was supported around the CHF 1.1580 level.\u00a0 Data released in Switzerland today saw the April UBS consumption indicator improve to 1.763 from the revised print of 1.682 in March.\u00a0 There is a growing sense among traders that Swiss National Bank may be unable to keep up with market speculation and may be forced at some point to abandon its franc-selling intervention operations on account of the major global bearish sentiment that overhangs the common currency.\u00a0 U.S. dollar bids are cited around the US$ 1.1110 level.\u00a0 The euro lost ground vis-\u00e0-vis the Swiss franc as the single currency tested bids around the CHF 1.4205 level while the British pound lost ground vis-\u00e0-vis the Swiss franc and tested bids around the CHF 1.6585 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 situation in Europe worsened dramatically overnight. First, yieds on German government 10-year bunds reached a record low, reflecting the safe haven play that many nervous investors and traders are seeking…<\/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-9703","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/9703","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=9703"}],"version-history":[{"count":0,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/posts\/9703\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/media?parent=9703"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/categories?post=9703"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/fx\/wp-json\/wp\/v2\/tags?post=9703"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}