DAILY MARKET COMMENTARY
13 April 2008

Monday 

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GCI Foreign Exchange Research:         www.gcitrading.com/fxnews/
FX Research Desk:                                 fxnews@gcitrading.com
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Fundamental Outlook at 1400 GMT (EDT + 0400)

€

The euro gained ground vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5885 level and was supported around the $1.5670 level.  Traders lifted the common currency on doubts that concerted global foreign exchange market intervention would materialize from this week’s Group of Seven communiqué in which policymakers surprised markets by acknowledging there have been “sharp fluctuation in major currencies” since the last G7 meeting.  Policymakers added they are concerned about the implications for economic and financial stability but the markets doubt there will be sufficient follow-through in actual intervention.  The shift in sentiment in the G7’s communiqué underscores the extent to which exchange rate fluctuations have moved beyond “disorderly.”  The greenback also erased early intraday gains following a surprise announcement that U.S. banking giant Wachovia lost money in Q1.  Data released in the U.S. today saw March retail sales rise 0.2% m/m and 2.0% y/y while the ex-autos component was up 0.1%.  Also, February business inventories came in around expectations at +0.6%.  In eurozone news, European Central Bank member Noyer was quoted as saying recent price increases have risen to levels that are “clearly outside our price stability objective… we must ensure that actions do not maintain inflation at the abnormally high level that it has reached for what should be a short period.” Traders interpreted Noyer’s comments as an indication that the ECB will not be reducing interest rates anytime soon.  Similarly, ECB’s Quaden reported eurozone inflation will remain over 2% for months.  Data released in the eurozone today saw EMU-15 February industrial output up 0.3% m/m and 3.1% y/y.  It was also reported that core EMU-15 PPI was up 0.4% m/m and 3.1% y/y.  Euro bids are cited around the US$ 1.5345 level.

¥/ CNY

The yen appreciated marginally vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥100.30 level and was capped around the ¥101.50 level.  Minutes from Bank of Japan’s Policy Board meeting from 6-7 March were released overnight in which policymakers stressed the need to monitor downside Japanese economic risks caused by the U.S. economic slowdown and global financial turbulence.  There was no explicit statement from policymakers that they may consider a rate cut but comments from the central bank have become noticeably more pessimistic in recent weeks.  Vice finance minister Tsusa said he would “refrain from elaborating” on exchange rates, indicating the G7 adequately covered the topic in its communiqué.   The Nikkei 225 stock index lost 3.05% to close at ¥12,917.51.  Dollar offers are cited around the ¥103.65 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥159.95 level and was supported around the ¥158.25 level.  The British pound and Swiss franc appreciated vis-à-vis the yen as the crosses tested offers around the ¥200.80 and ¥101.30 levels, respectively.  The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.9990 in the over-the-counter market, down from CNY 7.0065.  Data released in China today saw the March consumer price index rise 8.3%, down from February’s 8.7% level.  Q1 economic data will be released by China on Wednesday.

₤

The British pound moved appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.9890 level and was supported around the $1.9650 level.  Data released in the U.K. today saw March factory gate prices escalate at their fastest rate since April 1991, up 0.9% m/m and an annualized 6.2% from 5.9% in February.  The increase in producer prices renders it more difficult for Bank of England to reduce interest rates.  Prime Minister Brown announced he will meet business leaders tomorrow to discuss ongoing financial market dislocations ahead of a trip to the U.S.  Cable bids are cited around the US$ 1.9605 levels.  The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.7960 level and was capped around the ₤0.8010 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 0.9925 level and was capped around the CHF 1.0075 level.  Swiss National Bank President Roth was quoted as saying the central bank will be more firm in the future in warning about possible future threats to the financial system.  U.S. dollar offers are cited around the CHF 1.0375 level.  The euro weakened vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.5760 level while the British pound moved higher vis-à-vis the Swiss franc and tested offers around the 1.9835 level.

Technical Outlook at 1230 GMT (EDT + 0400)

             (Bid Price)       (Today’s Intraday Range)                                

EUR/ USD        1.5841                 1.5887, 1.5669
USD/ JPY         100.88                 101.49, 100.29
GBP/ USD        1.9866                 1.9892, 1.9650
USD/ CHF         0.9971                 1.0076, 0.9926
AUD/ USD        0.9246                 0.9264, 0.9205
USD/CAD         1.0207                 1.0273, 1.0196
NZD/USD         0.7911                0.7921, 0.7851
EUR/ JPY         159.79    159.87, 158.23
EUR/ GBP        0.7972                 0.8009, 0.7962
EUR/ CHF         1.5795                 1.5819, 1.5761
GBP/ JPY         200.47                 200.56, 198.07
CHF/ JPY         101.14    101.23, 100.33

Support                        Resistance                   Support                     Resistance

EUR/ USD                                                              USD/ JPY

L1.        1.5545                          1.5855                            94.20                          100.10 

L2.        1.5320                          1.6125                            88.75                          101.75
L3.        1.5260                          1.6650                            85.25                          104.85

   GBP/ USD                                                          USD/ CHF

L1.        2.0000                          2.0395                          0.9555                          1.0295

L2.        1.9880                          2.0525                          0.9230                          1.0565

L3.        1.9755                          2.0885                          0.8870                          1.1040

 AUD/ USD                                                           USD/ CAD

L1.        0.9005                          0.9500                          0.9650                          1.0130

L2.        0.8890                          0.9735                          0.9475                          1.0370

L3.        0.8750                          1.0115                          0.9060                          1.0770

 NZD/ USD                                                           EUR/ JPY

L1.        0.7870                          0.8420                          152.05                          157.65

L2.        0.7595                          0.8665                          149.60                          159.35

L3.        0.7275                          0.8970                          144.30                          161.25

  EUR/ GBP                                                          EUR/ CHF

L1.        0.7625                          0.7940                          1.5485                          1.5770

L2.        0.7440                          0.8120                          1.5310                          1.5970

L3.        0.7155                          0.8570                          1.5200                          1.6295

  GBP/ JPY                                                           CHF/ JPY

L1.        197.20                          205.65                            97.00                         101.20

L2.        186.75                          215.50                            95.85                         103.30

L3.        172.35                          226.75                            92.15                         105.40

SCHEDULE

Sunday, 13 April 2008

all times GMT

(last release in parentheses)

N/A       NZ                    March QV house prices (7.7% y/y)

N/A       Japan               March Tokyo department store sales (2.8% y/y)

2245     NZ                    February retail sales (0.3% m/m)

2245     NZ                    February retail sales, ex-autos (0.3% m/m)

2350     Japan               Bank of Japan Policy Board meeting minutes

Monday, 14 April 2008

all times GMT

(last release in parentheses)

N/A       Japan               March nationwide department store sales (0.9% y/y)

0000     NZ                    March performance of services index

0130     Australia           February home loans (2.3%)

0130     Australia           February investment lending (8.3%)

0630     France              March Bank of France business sentiment (107.0)

0830     UK                    March producer price index, input (1.7% m/m)

0830     UK                    March producer price index, input (19.4% y/y)

0830     UK                    March producer price index, output (0.3% m/m)

0830     UK                    March producer price index, output (5.7% y/y)

0830     UK                    March producer price index, core output (0.2% m/m)

0830     UK                    March producer price index, core output (3.0% y/y)

0900     Eurozone          February industrial production (0.9% m/m)

0900     Eurozone          February industrial production (3.8% y/y)

1230     US                    March advance retail sales (-0.6%)

1230     US                    March retail sales, ex-autos (-0.2%)

1400     US                    February business inventories (0.8%)

2245     NZ                    March food prices (0.8% m/m)

2245     NZ                    Q1 consumer prices (1.2% q/q)

2245     NZ                    Q1 consumer prices (3.2% y/y)

2301     UK                    March BRC retail sales monitor

2301     UK                    March RICS house price balance (-64.1%)

Tuesday, 15 April 2008

all times GMT

(last release in parentheses)

0400     Japan               March Tokyo condominium sales (-28.0% y/y)

0600     Eurozone          European Central Bank President Trichet speaks

0645     France              March consumer price index (0.2% m/m)

0645     France              March consumer price index (2.8% y/y)

0645     France              March consumer price index, harmonized (0.2% m/m)

0645     France              March consumer price index, harmonized (3.2% y/y)

0800     Italy                  March CPI, harmonized

0830     UK                    March consumer price index (0.7% m/m)

0830     UK                    March consumer price index (2.5% y/y)

0830     UK                    March consumer price index, core (1.2% y/y)

0830     UK                    March retail price index (0.8% m/m)

0830     UK                    March retail price index (4.1% y/y)

0830     UK                    February DCLG house prices (8.0% y/y)

0900     Germany           April ZEW survey, economic sentiment (-32.0)

0900     Germany           April ZEW survey, current situation (32.1)

0900     Eurozone          April ZEW survey, economic sentiment (-35.0)

1130     US                    March producer price index (0.3% m/m)

1130     US                    March producer price index (6.4% y/y)

1230     US                    March producer price index, ex-food and energy (0.5% m/m)

1230     US                    March producer price index, ex-food and energy (2.4% y/y)

1230     US                    April Empire manufacturing index (-22.2)

1300     US                    February net long-term TIC flows (US$ 62.0 billion)

1300     US                    February total net TIC flows (US$ 37.4 billion)

1500     Germany           European Central Bank members Trichet and Weber speak

1700     US                    April NAHB housing market index (20.0)

1730     Greece              European Central Bank member Papademos speaks

Wednesday, 16 April 2008

all times GMT

(last release in parentheses)

0030     Australia           February Westpac leading index (0.0% m/m)

0600     Japan               March machine tool orders

0600     Greece              European Central Bank member Garganas speaks

0600     Germany           March consumer price index (0.5% m/m)

0600     Germany           March consumer price index (3.1% y/y)

0600     Germany           March consumer price index, harmonized (0.5% m/m)

0830     UK                    March claimant count rate (2.5%)

0830     UK                    March jobless claims, net chance (-2,800)

0830     UK                    February average earnings, bonus (3.7%)

0830     UK                    February ILO unemployment rate (5.2%)

0900     Eurozone          March consumer price index (0.3% m/m)

0900     Eurozone          March consumer price index (3.3% y/y)

0900     Eurozone          March consumer price index, core (1.8% y/y)

1100     US                    MBA mortgage applications

1230     US                    March consumer price index (0.0% m/m)

1230     US                    March consumer price index (4.0% y/y)

1230     US                    March CPI, ex-food and energy (0.0% m/m)

1230     US                    March CPI, ex-food and energy (2.3% y/y)

1230     US                    March housing starts (1.065 million)

1230     US                    March building permits (984,000)

1230     Canada             February manufacturing shipments (1.3% m/m)

1315     US                    March industrial production (-0.5%)

1315     US                    March capacity utilization (80.4%)

1630     US                    Philadelphia Federal Reserve President Plosser speaks

1800     US                    Federal Reserve Beige Book

2350     Japan               Foreign equities and bonds purchases

Thursday, 17 April 2008

all times GMT

(last release in parentheses)

0130     Australia           March balance of payments imports (0.3% m/m)

0430     Japan               February industrial production (-1.2% m/m)

0430     Japan               February industrial production (4.2% y/y)

0430     Japan               February capacity utilization (-2.5% m/m)

0700     Germany           Economic institutes economic growth forecast

0715     CH                    February retail sales (1.3% y/y)

0800     Eurozone          April European Central Bank monthly report

0900     Eurozone          February trade balance (-€10.7 billion)

0900     CH                    April ZEW survey, expectations (-71.7)

1100     Canada             March consumer price index (0.4% m/m)

1100     Canada             March consumer price index (1.8% y/y)

1100     Canada             March consumer price index, core (0.5% m/m)

1100     Canada             March consumer price index, core (1.5% y/y)

1230     US                    Weekly initial jobless claims

1230     US                    Continuing jobless claims

1345     US                    Federal Reserve Vice Chairman Kohn speaks

1400     US                    April Philadelphia Federal Reserve manufacturing index (-17.4)

1400     US                    March leading indicators (-0.3%)

Friday, 18 April 2008

all times GMT

(last release in parentheses)

0130     Australia           Q1 import price index (0.2% q/q)

0130     Australia           Q1 export price index (-0.6% q/q)

0500     Japan               March consumer confidence (36.4)

0600     Germany           March producer prices (0.7% m/m)

0600     Germany           March producer prices (3.8% y/y)

0800     Italy                  February industrial orders (2.6% m/m)

0800     Italy                  February industrial orders (6.9% y/y)

0800     Italy                  February industrial sales (4.6% m/m)

0800     Italy                  February industrial sales (6.1% y/y)

0830     UK                    March public sector net cash requirement (₤2.9 billion)

0830     UK                    March public sector net borrowing (₤2.7 billion)

0830     UK                    March M4 money supply

0830     UK                    March M4 sterling lending

0900     Eurozone          February construction output (1.6% m/m)

0900     Eurozone          February construction output (1.6% y/y)

1230     US                    Richmond Federal Reserve President Lacker speaks

1230     US                    Boston Federal Reserve President Rosengren speaks

1230     Canada             March leading indicators (-0.3% m/m)

1230     Canada             February wholesale sales (2.6% m/m) 

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.