DAILY MARKET
COMMENTARY
3 December
2007
Monday
_____________________________________________________________________
GCI Foreign
Exchange Research:
www.gcitrading.com/fxnews/
FX
Research Desk:
fxnews@gcitrading.com
_____________________________________________________________________
Fundamental
Outlook at 1500 GMT (EDT +
0500)
€
The euro gained ground
vis-à-vis the U.S. dollar today as the single currency
tested offers around the US$ 1.4710 level and was supported around
the $1.4620 level.
Technically, today’s intraday low was just below the 76.4%
retracement of the move from $1.4520 to $1.4965. Eurozone finance ministers
are meeting tonight to discuss recent strong inflation data in the
eurozone and the euro’s value vis-à-vis the yuan. Data released in the
eurozone today saw the EMU-13 manufacturing PMI survey improve to
52.8 in November from 52.6 in October. Also, the EMU-13
unemployment rate ticked lower to 7.2% from 7.3%. ECB member Gonzalez-Paramo
reported there is a lack of confidence in eurozone money
markets. The U.S.
dollar may be supported for the next couple of weeks as year-end
window-dressing of balance sheets take places and U.S. dollar
proceeds are repatriated to U.S. parent companies ahead of the end
of the year. In U.S. news, the November
ISM manufacturing survey fell to 50.8 from 50.9 in November. Boston Fed President
Rosengren sees mortgage foreclosures worsening before they improve.
Traders are paying close attention to remarks from U.S. Treasury
Secretary Paulson today about plans to bolster the U.S. sub-prime
mortgage market.
Traders are also paying very close attention to a meeting of
the six-nation Gulf Cooperation Council today and tomorrow to
determine if the petrodollar-rich area will de-peg from the U.S.
dollar. Euro bids are
cited around the US$ 1.4605 level.
¥/
CNY
The yen appreciated vis-à-vis the U.S.
dollar today as the
greenback tested bids around the ¥110.10 level and was capped around
the ¥111.00 figure.
Technically, today’s intraday low was just above the 61.8%
retracement of the move from ¥111.75 to ¥107.20. Bank of Japan Governor Fukui
spoke and said “The correction in the housing market is continuing
and if it worsens, or if the situation in financial markets worsens,
it would hurt the confidence of the household and corporate sectors,
trigger the so-called reverse wealth effect and shrink credit, which
would lead to a further slowing of the US economy.” Most traders
believe this means the central bank will abstain from raising rates
for at least a couple more months. An overnight report
confirmed that the combined capital investment of non-financial
Japanese companies fell 1.2% y/y in Q3 and that pre-tax profits
before extraordinary items fell 0.7%, the first decline in 21
quarters. The Nikkei 225 stock index lost 0.33% to close at
¥15,628.97. Dollar bids
are cited around the ¥109.25 level. The euro moved lower
vis-à-vis the yen as the single currency tested bids around the
¥161.40 level and was capped around the ¥162.70 level. The British pound and Swiss
franc weakened vis-à-vis the yen as the crosses tested bids
around the ¥226.50 and ¥97.60 levels, respectively. The Chinese yuan
depreciated vis-à-vis the U.S. dollar as the greenback closed at
CNY 7.4025 in the over-the-counter market, up from CNY 7.4000. Japan asked China to permit
the “fastest possible” appreciation of the yuan. Data released in China
overnight saw the CLSA November PMI survey fall to an eight-month
low of 52.8 while the CFLP November PMI survey improved to
55.4. PBoC is expected
to tighten monetary policy in the near
future.
₤
The British pound
weakened vis-à-vis the U.S. dollar today as cable tested bids
around the US$ 2.0530 level and was capped around the $2.0700
figure. Technically,
today’s intraday high and low were right around the 38.2% and 50.0%
retracement of the move from $1.9870 to $2.1160. Data released in the U.K.
today saw the November manufacturing PMI survey improve to 54.4 from
52.8. Some traders
believe these data may cause Bank of England’s Monetary Policy
Committee to not ease interest rates on Thursday and delay their
rate cut to early 2008.
Other data released today underscore the problems in the U.K.
money markets as the volume of market loans in the banking system
fell from ₤640 billion in August to ₤249 billion at the end of
September. Cable bids
are cited around the US$ 2.0365 level. The euro came off vis-à-vis
the British pound as the single currency tested bids around the
₤0.7090 level and was capped around the ₤0.7135 level.
CHF
The Swiss franc appreciated vis-à-vis the
U.S. dollar today as the
greenback tested bids around the CHF 1.1250 level and was capped
around the CHF 1.1310 level.
Data released in Switzerland today saw November PMI improve
to 63.4 from 60.7 in December.
Credit Suisse reported Swiss inflation should remain below 2%
despite Friday’s data that saw CPI up 1.8% y/y in November, the
sharpest increase since May 2001. Some traders believe SNB
will tighten monetary policy further on 13 December. SNB reported it
will continue to supply money markets with “generous liquidity” to
reduce liquidity constraints.
Dollar offers are cited around the CHF 1.1390 level. The euro moved lower
vis-à-vis the Swiss franc as the single currency tested bids around
the CHF 1.6510 level while the British pound gained
ground vis-à-vis the Swiss franc and tested offers around the
CHF 2.3340 level.
Technical
Outlook at 1330 GMT (EDT + 0500)
(Bid Price)
(Today’s Intraday
Range)
EUR/ USD
1.4658
1.4708,
1.4619
USD/ JPY
110.30 111.01, 110.12
GBP/ USD
2.0646
2.0666,
2.0520
USD/ CHF
1.1287 1.1309, 1.1250
AUD/ USD
0.8829
0.8853,
0.8785
USD/CAD
1.0021
1.0041, 0.9974
NZD/USD
0.7663
0.7666, 0.7607
EUR/
JPY
161.64 162.71,
161.40
EUR/
GBP
0.7098
0.7136,
0.7092
EUR/
CHF
1.6541
1.6571, 1.6512
GBP/
JPY
227.54
228.47,
226.52
CHF/
JPY
97.68
98.27, 97.60
Support
Resistance
Support
Resistance
EUR/ USD
USD/ JPY
L1.
1.4160
1.4780
111.40
116.55
L2.
1.4045
1.4870
110.25
118.35
L3.
1.3950
1.4990
106.95
120.55
GBP/ USD
USD/ CHF
L1.
2.0600
2.1140
1.1160
1.1465
L2.
2.0445
2.1230
1.1030
1.1575
L3.
2.0240
2.1350
1.0900
1.1715
AUD/ USD
USD/
CAD
L1.
0.9010
0.9410
0.9020
0.9570
L2.
0.8925
0.9500
0.8940
0.9665
L3.
0.8805
0.9615
0.8830
0.9825
NZD/
USD
EUR/
JPY
L1.
0.7625
0.7890
163.85
168.00
L2.
0.7555
0.7970
162.90
168.80
L3.
0.7415
0.8080
161.75
169.95
EUR/
GBP
EUR/ CHF
L1.
0.6915
0.7020
1.6510
1.6850
L2.
0.6840
0.7070
1.6400
1.6920
L3.
0.6710
0.7140
1.6290
1.7040
GBP/ JPY
CHF/ JPY
L1.
232.50
243.55
98.15
100.70
L2.
231.60
246.95
96.95
101.85
L3.
230.20
251.10
94.45
102.90
SCHEDULE
Sunday, 2
December 2007
all times
GMT
(last release
in parentheses)
2230
Australia
November AIG performance of manufacturing index
(53.3)
2330
Australia
November TD securities inflation (0.3%
m/m)
2330
Australia
November TD securities inflation (3.3%
y/y)
2350 Japan
Q3 capital spending (-4.9%)
Monday, 3
December 2007
all times
GMT
(last release
in parentheses)
N/A
Australia
Reserve Bank of Australia interest rate
meeting
0030
Australia
October trade balance (-A$ 1.862
billion)
0030
Australia
Q3 inventories (0.4%)
0100 Japan
Bank of Japan Governor Fukui
speaks
0130 Japan
October labour cash earnings (1.4%
y/y)
0130 Japan
October overtime earnings (1.4%
y/y)
0745 France
October producer prices (2.7%
y/y)
0830 CH
November purchasing managers index
(60.7)
0850 France
November PMI, manufacturing
(50.5)
0855
Germany
November PMI, manufacturing
(51.7)
0900
Eurozone
November PMI, manufacturing
(52.6)
0930
Eurozone
European Central Bank President Trichet
speaks
0930 UK
November PMI, manufacturing
(52.9)
1000
Eurozone
October unemployment rate (7.3%)
1300 Italy
European Central Bank member Gonzalez-Paramo
speaks
1300 US
Boston Fed President Rosengren
speaks
1500 US
November ISM, manufacturing
(50.9)
1500 US
November ISM, prices paid (63.0)
1530 US
Treasury Secretary Paulson
speaks
1900
Belgium
European Central Bank member Bini Smaghi
speaks
2030 US
San Francisco Fed President Yellen
speaks
2350 Japan
November monetary base (0.5%
y/y)
Tuesday, 4
December 2007
all times
GMT
(last release
in parentheses)
0001 UK
November BRC retail sales
monitor
0030
Australia
October retail sales (0.8%)
0030
Australia
October building approvals (4.2%
y/y)
0930 UK
November PMI, construction
(57.4)
1000
Eurozone
October PPI (0.4% m/m)
1000
Eurozone
October PPI (2.7% y/y)
1400 Canada
Bank of Canada interest rate
decision
2230
Australia
November AIG performance of service index
(53.2)
2230
Australia
Reserve Bank of Australia interest rate
decision
Wednesday, 5
December 2007
all times
GMT
(last release
in parentheses)
N/A
UK
Bank of England Monetary Policy Committee
meets
0001 UK
November Nationwide consumer confidence
(98.0)
0030
Australia
Q3 GDP (0.9% q/q)
0030
Australia
Q3 GDP (4.3% y/y)
0200 NZ
November ANZ commodity prices
(1.8%)
0830
Germany
European Central Bank President Trichet
speaks
0850 France
November PMI, services (58.5)
0855
Germany
November PMI, services (55.1)
0900
Eurozone
November PMI, services (53.7)
0930 UK
November PMI, services (53.1)
1000
Eurozone
October retail sales (0.3% m/m)
1000
Eurozone
October retail sales (1.6% y/y)
1030 UK
November BRC shop price index
1200 US
MBA mortgage applications
(-4.3%)
1230 US
November Challenger job cuts (-8.8%
y/y)
1315 US
November ADP employment change
(106,000)
1330 US
Q3 non-farm productivity (4.9%)
1330 US
Q3 unit labour costs (-0.2%)
1500 US
October factory orders (0.2%)
1500 US
November ISM, non-manufacturing
(55.8)
2000 NZ
Reserve Bank of New Zealand interest rate
decision
2350 Japan
Net equities and bonds
investment
Thursday, 6
December 2007
all times
GMT
(last release
in parentheses)
N/A
Eurozone
European Central Bank member Mersch
speaks
N/A
US
November ICSC chain store sales (1.6%
y/y)
0500 Japan
October leading economic index
(0.0%)
0500 Japan
October coincident index (60.0%)
0600 Japan
November machine tool orders (16.6%
y/y)
0645 CH
November unemployment rate
(2.6%)
0930 UK
October industrial production (-0.4%
m/m)
0930 UK
October industrial production (-0.2%
y/y)
0930 UK
October manufacturing production (-0.6%
m/m)
0930 UK
October manufacturing production (-0.1%
y/y)
1000
Germany
October factory orders (-2.5%
m/m)
1000
Germany
October factory orders (1.1%
y/y)
1200 UK
Bank of England interest rate
decision
1245
Eurozone
European Central Bank interest rate
decision
1330
Eurozone
European Central Bank President Trichet
speaks
1330 US
Weekly initial jobless claims
(352,000)
1330 US
Continuing jobless claims (3.665
million)
1330 Canada
October building permits (-1.7%
m/m)
1415
Germany
European Central Bank member Stark
speaks
1500 Canada
November Ivey purchasing managers index
(57.1)
2230
Australia
November AIG performance of construction index
(57.4)
2350 Japan
Q3 GDP (0.6% q/q)
2350 Japan
Q3 GDP, annualized (2.6%)
2350 Japan
Q3 GDP deflator (-0.3% y/y)
2350 Japan
November official reserve assets (US$ 954.5
billion)
Friday, 7
December 2007
all times
GMT
(last release
in parentheses)
0001 UK
November NIESR GDP estimate
(0.7%)
0900 Italy
Q3 GDP (1.9% y/y)
1100
Germany
October industrial production (0.3%
m/m)
1100
Germany
October industrial production (6.0%
y/y)
1200 Canada
November employment, net chance
(63,000)
1200 Canada
November unemployment rate
(5.8%)
1330 US
November change in non-farm payrolls
(166,000)
1330 US
November unemployment rate
(4.7%)
1330 US
November average hourly earnings (0.2%
m/m)
1330 US
November average hourly earnings (3.8%
y/y)
1500 US
December preliminary U. of Michigan consumer sentiment
(76.1)
1700
Germany
European Central Bank President Trichet
speaks
DISCLAIMER: GCI’s 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.
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