DAILY MARKET
COMMENTARY
14 December
2007
Friday
_____________________________________________________________________
GCI Foreign
Exchange Research:
www.gcitrading.com/fxnews/
FX
Research Desk:
fxnews@gcitrading.com
_____________________________________________________________________
Fundamental
Outlook at 1500 GMT (EDT +
0500)
€
The euro depreciated
sharply vis-à-vis the U.S. dollar today as the single currency
tested bids around the US$ 1.4415 level and was capped around the
$1.4655 level. Stops
were reached below the $1.4490 level, representing the 50%
retracement of the move from $1.4015 to $1.4965. Traders drove the common
currency lower on stronger-than-expected U.S. November consumer
price inflation data that saw headline CPI up 0.8% - above forecasts
– while core CPI printed at +0.3%. These data follow
yesterday’s torrid producer price inflation data and collectively,
they suggest the Federal Open Market Committee cannot declare
inflation dead. The
FOMC next deliberates interest rates on 30-31 January and many
traders believe the Fed will lower the fed funds target rate by
another 25bps. Other
data released in the U.S. today saw November
industrial production up 0.3% while capacity utilization gained 0.1%
to close 81.5%. In eurozone news, EMU-13
harmonized inflation was upwardly revised to 3.1% from 3.0%. The European Commission
called this a “clear matter of concern” and eurozone-wide inflation
is now more than 50% above the ECB’s target ceiling rate of
2.0%. ECB’s Mersch sees
inflation at an elevated level “until the end of 2008.” Notably,
German final November CPI was up 0.5% m/m and 3.1% y/y. Euro bids are cited around
the US$ 1.4355 level.
¥/
CNY
The yen depreciated vis-à-vis the U.S.
dollar today as the
greenback tested offers around the ¥113.40 level and was supported
around the ¥112.20 level.
The pair rocketed higher to its strongest showing since 7
November and stops were hit above the ¥112.60 level, representing
the 61.8% retracement of the move from ¥115.90 to ¥107.20. Data released in Japan
overnight saw the December quarterly tankan survey post
disappointing results with the index of sentiment among large
manufacturers fall to +19 from +23 in September, the first decline
in three quarters. This
was also below forecasts and most traders believe Bank of Japan will
not change interest rates next week when its Policy Board
convenes. The big
question on traders’ minds is whether or not the central bank will
downgrade its assessment of the economy in its monthly report. The Nikkei 225 stock index
lost 0.14% to close at ¥15,514.51. Dollar bids are cited around
the ¥110.70 level. The euro came off vis-à-vis
the yen as the single currency tested bids around the ¥163.25 level
and was capped around the ¥164.65 level. The British pound and Swiss
franc weakened vis-à-vis the yen as the crosses tested bids
around the ¥228.30 and ¥98.00 levels, respectively. The Chinese yuan
depreciated vis-à-vis the U.S. dollar as the greenback closed at
CNY 7.3720 in the over-the-counter market, up from CNY 7.3692. Data released in
China today saw urban
fixed-asset investment up 26.8% between January and November.
₤
The British pound
weakened sharply vis-à-vis the U.S. dollar today as cable tested bids
around the US$ 2.0185 level and was capped around the $2.0445
level. Technically,
today’s intraday lows were right around the 76.4% retracement of the
move from $1.9870 to $2.1160.
Bank of England MPC member Baker dovishly said the
U.K. economy is not
moving back to a high inflation environment and added “growth has
been strong.” Most traders believe BoE’s MPC will continue lowering
interest rates in 2008.
Cable bids are cited around the US$ 2.0175 level. The euro came off vis-à-vis
the British pound as the single currency tested bids around the
₤0.7140 level and was capped around the ₤0.7175 level.
CHF
The Swiss franc
depreciated vis-à-vis the U.S. dollar today as the greenback tested
offers around the CHF 1.1545 level and was supported around the CHF
1.1400 figure. The pair
has not been this strong since 5 November 2007 and stops were hit
above the 38.2% retracement of the move from CHF 1.2475 to CHF
1.0885. Swiss National
Bank voted yesterday to keep interest rates unchanged for the first
time in two years. U.S.
dollar offers are cited around the CHF 1.1680 level. The euro and British pound came
off vis-à-vis the Swiss franc as the crosses tested bids around
the CHF 1.6630 and CHF 2.3245 levels, respectively.
Technical
Outlook at 1330 GMT (EDT + 0500)
(Bid Price)
(Today’s Intraday
Range)
EUR/ USD
1.4469
1.4655,
1.4464
USD/ JPY
112.95 113.17, 112.19
GBP/ USD
2.0245
2.0446,
2.0215
USD/ CHF
1.1499
1.1508,
1.1400
AUD/ USD
0.8622
0.8792,
0.8619
USD/CAD
1.0220
1.0248, 1.0158
NZD/USD
0.7722
0.7853, 0.7718
EUR/
JPY
163.33 164.64,
163.31
EUR/
GBP
0.7148
0.7177,
0.7145
EUR/
CHF
1.6639
1.6714, 1.6638
GBP/
JPY
228.41
230.05,
228.28
CHF/
JPY
98.14
98.58, 98.03
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
Thursday, 13
December 2007
all times
GMT
(last release
in parentheses)
0001 UK
November RICS house price balance
(-22.2%)
0030
Australia
November employment change
(12,900)
0030
Australia
November unemployment rate
(4.3%)
0400 Japan
November Tokyo-area condominium sales (-9.1%
y/y)
0430 Japan
October industrial production (1.6%
m/m)
0430 Japan
October industrial production (4.7%
y/y)
0430 Japan
October capacity utilization
0700 Japan
Bank of Japan Deputy Governor Iwata
speals
0745 France
November CPI (2.0% y/y)
0745 France
November CPI, harmonized (0.3%
m/m)
0745 France
November CPI, harmonized (2.1%
y/y)
0830 CH
Swiss National Bank interest rate
decision
0900
Eurozone
December ECB monthly report
0900 Italy
November CPI, harmonized (2.5%
y/y)
1000
Eurozone
Q3 labour costs (2.5% y/y)
1330 UK
December CBI industrial trends
1330 US
Weekly initial jobless claims
(338,000)
1330 US
Continuing jobless claims (2.599
million)
1330 US
November PPI (0.1% m/m)
1330 US
November PPI (6.1% y/y)
1330 US
November PPI, ex-food and energy (0.0%
m/m)
1330 US
November PPI, ex-food and energy (2.5%
y/y)
1330 US
November advance retail sales
(0.2%)
1330 US
November retail sales, ex-autos
(0.2%)
1330 Canada
October new housing price index (0.3%
m/m)
1330 Canada
October manufacturing shipments (-0.9%
m/m)
1330 Canada
Q3 labour productivity (0.2%
q/q)
1500 US
October business inventories
(0.4%)
2145 NZ
Q3 manufacturing activity (1.7%)
2350 Japan
Q4 tankan, large manufacturers index
(23)
2350 Japan
Q4 tankan, large manufacturers outlook
(19)
2350 Japan
Q4 tankan, non-manufacturing index
(20)
2350 Japan
Q4 tankan, non-manufacturing index
(21)
2350 Japan
Q4 large all-industrial capital expenditures
(8.7%)
Friday, 14
December 2007
all times
GMT
(last release
in parentheses)
0700
Germany
November CPI (0.4% m/m)
0700
Germany
November CPI (3.0% y/y)
0700
Germany
November CPI, harmonized (0.4%
m/m)
0700
Germany
November CPI, harmonized (3.3%
y/y)
0800
Luxembourg ECB
member Mersch speaks
0900
Austria
ECB member Liebscher speaks
1000
Eurozone
November CPI (0.5% m/m)
1000
Eurozone
November CPI (2.6% y/y)
1000
Eurozone
November CPI, core (1.9% y/y)
1330 US
Q3 capacity utilization rate
(83.0%)
1330 US
November consumer price index (3.5%
y/y)
1330 US
November CPI, ex-food and energy (0.2%
m/m)
1330 US
November CPI, ex-food and energy (2.2%
y/y)
1415 US
November industrial production
(-0.5%)
1415 US
November capacity utilization
(81.7%)
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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