DAILY MARKET COMMENTARY
29 April 2008

Tuesday 

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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 lost ground vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.5540 level and was capped around the $1.5660 level.  The common currency fell to its weakest level since 3 April as traders continued to price in the likelihood of a pause in the Federal Reserve’s interest rate cuts after tomorrow’s likely 25bps monetary easing to 2.00% in the federal funds target rate.  Dealers will pay very close attention to what the Federal Open Market Committee states in its policy statement.  Traders are also awaiting this Friday’s April non-farm payrolls report.  New jobs creation in the U.S. economy has been quite weak lately and there have been multiple downward revisions to monthly estimates, possibly concurrent with the beginning of an economic recession.  Data released in the U.S. today saw April consumer confidence fall to 62.3 from 65.9 in March.  In eurozone news, the German government reported that negotiated salaries and wages in Germany expanded at their fastest pace in twelve years since the beginning of 2008, up 3.3% y/y in January.  Also, German March new machinery, plant orders were off 5.0% y/y.  Euro bids are cited around the US$ 1.5345 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥103.75 level and was capped around the ¥104.35 level.  Technically, today’s intraday low was right around the 61.8% retracement of the move from ¥108.60 to ¥95.70.  Most traders do not expect Bank of Japan’s Policy Board will change the overnight call rate from 0.50% during its two-day policy deliberations today and tomorrow.  Manufacturing, employment, household spending, and industrial production data will be released overnight.  Japanese financial markets were closed today for a national holiday.  Dollar bids are cited around the ¥101.35 level.  The euro weakened vis-à-vis the yen as the single currency tested bids around the ¥161.55 level and was capped around the ¥163.20 level.  The British pound and Swiss franc came off vis-à-vis the yen as the crosses tested bids around the ¥204.80 and ¥99.95 levels, respectively.  The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.9850 in the over-the-counter market, down from CNY 7.0014. 

₤

The British pound depreciated sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9710 level and was capped around the $1.9915 level.  Sterling has traded in a $1.9675 to $2.0025 range over the past several days.   Many data were released today that contributed to sterling’s pullback.  First, the U.K. today saw the CBI April high street sales balance fall sharply to -26% from +1% in March, the lowest level since November 2005 and much worse than estimated.  Second, March total net consumer lending expanded ₤8.2 billion from a downwardly revised ₤9.6 billion in February.  Third, BSA reported March gross lending fell to ₤3.6 billion from ₤5.4 billion one year ago.  Fourth, M4 money supply growth eased in March to its slowest rate in nearly two years.  Fifth, it was reported that March mortgage approvals fell significantly to their lowest level since records began.  Parliament’s Treasury Select Committee has endorsed the appointment of Bank of England Governor King for a second term.  King spoke about the central bank’s current policymaking dilemma saying “We must balance the risk of a sharp slowing in activity this year, which would pull inflation below target next year, against the risk that without some slowing in the pace of activity, above-target inflation in the short term might have some tendency to persist.”  King also warned that inflation could surpass 3.0% like it did in 2007 and cautioned that consumer spending will likely slow further.  Cable bids are cited around the US$ 1.9505 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7895 level and was supported around the ₤0.7830 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0400 figure and was supported around the CHF 1.0330 level.  The pair continue to orbit the CHF 1.0385 level, representing the 50% retracement of the move from CHF 1.1105 to CHF 0.9650.  Data released in Switzerland today saw the March UBS consumption indicator fall to 2.29 from 2.32 in February.  U.S. dollar offers are cited around the CHF 1.0550 level.  The euro and British pound came off vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6135 and CHF 2.0450 levels, respectively.

Technical Outlook at 1230 GMT (EDT + 0400)

             (Bid Price)       (Today’s Intraday Range)                                

EUR/ USD        1.5567                 1.5662, 1.5539
USD/ JPY         103.87                 104.36, 103.75
GBP/ USD        1.9739                 1.9915, 1.9721
USD/ CHF         1.0375                 1.0398, 1.0329
AUD/ USD        0.9316                 0.9392, 0.9300
USD/CAD         1.0129                 1.0153, 1.0115
NZD/USD         0.7744                0.7856, 0.7729
EUR/ JPY         161.68    163.21, 161.56
EUR/ GBP        0.7888                 0.7890, 0.7829
EUR/ CHF         1.6152                 1.6196, 1.6135
GBP/ JPY         205.02                 207.62, 204.82
CHF/ JPY         100.10    100.83,   99.98

Support                        Resistance                   Support                     Resistance

EUR/ USD                                                              USD/ JPY

L1.        1.5545                          1.6020                            94.20                          105.55 

L2.        1.5320                          1.6125                            88.75                          106.95
L3.        1.5260                          1.6650                            85.25                          108.60

   GBP/ USD                                                          USD/ CHF

L1.        1.9605                          2.0395                          1.0105                          1.0375

L2.        1.9395                          2.0525                          0.9990                          1.0565

L3.        1.9100                          2.0885                          0.9875                          1.1040

 AUD/ USD                                                           USD/ CAD

L1.        0.9145                          0.9550                          0.9960                          1.0370

L2.        0.9005                          0.9735                          0.9715                          1.0520

L3.        0.8750                          1.0115                          0.9465                          1.0745

 NZD/ USD                                                           EUR/ JPY

L1.        0.7800                          0.8105                          161.85                          166.65

L2.        0.7595                          0.8420                          158.35                          167.75

L3.        0.7275                          0.8665                          154.80                          168.95

  EUR/ GBP                                                          EUR/ CHF

L1.        0.7825                          0.8120                          1.6450                          1.6760

L2.        0.7625                          0.8310                          1.6255                          1.6955

L3.        0.7440                          0.8570                          1.6100                          1.7180

  GBP/ JPY                                                           CHF/ JPY

L1.        197.20                          209.90                            97.00                         103.30

L2.        186.75                          215.50                            95.85                         105.40

L3.        172.35                          226.75                            92.15                         107.70

SCHEDULE

Tuesday, 29 April 2008

all times GMT

(last release in parentheses)

N/A       Australia           March HIA new home sales (-5.3% m/m)

N/A       Japan               Bank of Japan Policy Board meeting

N/A       US                    Federal Open Market Committee meeting begins

0130     Australia           Q1 NAB business confidence (6.0)

0300     NZ                    March money supply (6.0%)

0645     France              April consumer confidence indicator (-36.0)

0645     France              March housing starts (-0.6%)

0645     France              March housing permits (-12.7%)

0730     Italy                  April retailers’ confidence (110.7)

0730     Italy                  April services survey (3.0)

0800     Eurozone          April PMI, retail (48.2)

0800     Germany           April PMI, retail (51.5)

0800     CH                    March UBS consumption indicator (2.321)

0800     France              April PMI, retail (53.3)

0800     Italy                  April PMI, retail (36.4)

0800     Italy                  March hourly wages (3.1% y/y)

0830     UK                    March M4 money supply (12.0% y/y)

0830     UK                    March M4 sterling lending (₤17.7 billion)

0830     UK                    March net consumer credit (₤2.4 billion)

0830     UK                    March net lending secured on dwellings (₤7.4 billion)

0830     UK                    March mortgage approvals (73,000)

0900     Italy                  March producer price index (0.7% m/m)

0900     Italy                  March producer price index (5.7% y/y)

1000     UK                    April CBI distributive trades

1200     Germany           April Ifo business climate survey

1300     US                    February S&P/ Case Shiller home price index

1400     US                    April consumer confidence (64.5)

2245     NZ                    March building permits (-6.5% m/m)

2315     Japan               April PMI, manufacturing (49.5)

2330     Japan               March jobless rate (3.9%)

2330     Japan               March household spending (0.0% y/y)

2330     Japan               March industrial production (1.6% m/m)

2330     Japan               March industrial production (5.1% y/y)

Wednesday, 30 April 2008

all times GMT

(last release in parentheses)

N/A       Japan               Official foreign reserves (¥1.015 trillion)

0130     Australia           March private sector credit (0.7% m/m)

0130     Australia           March private sector credit (15.5% y/y)

0300     NZ                    April NBNZ business confidence (-57.9)

0500     Japan               March housing starts (-5.0% y/y)

0500     Japan               March construction orders (18.4% y/y)

0500     Japan               April business confidence (46.6)

0600     Germany           March ILO unemployment (7.4%)

0755     Germany           April unemployment rate (7.8%)

0755     Germany           April unemployment change (-55,000)

0900     Italy                  April consumer price index, harmonized (1.6% m/m)

0900     Italy                  April consumer price index, harmonized (3.6% y/y)

0900     Eurozone          April consumer price index, flash (3.5%)

0900     Eurozone          March unemployment rate (7.1%)

0900     Eurozone          April business climate indicator (0.80)

0900     Eurozone          April consumer confidence (-12.0)

0900     Eurozone          April economic confidence (99.6)

0900     Eurozone          April industrial confidence (0.0)

0900     Eurozone          April services confidence (9.0)

0930     CH                    April KOF leading indicator (1.54)

1100     US                    MBA mortgage applications

1155     Germany           European Central Bank President Trichet speaks

1215     US                    April ADP employment change (8,000)

1230     US                    April employment change (8,000)

1230     US                    Q1 personal consumption expenditures, core (2.5% q/q)

1230     US                    Q1 GDP, annualized (0.6%)

1230     US                    Q1 employment cost index (0.8%)

1230     Canada             March industrial product prices (0.1% m/m)

1230     Canada             February GDP (0.6% m/m)

1230     Canada             March raw materials price index (0.5% m/m)

1345     US                    April Chicago PMI (48.2)

1530     UK                    European Central Bank member Garganas speaks

1815     US                    Federal Open Market Committee interest rate decision

2330     Australia           April performance of manufacturing index (51.2)

Thursday, 1 May 2008

all times GMT

(last release in parentheses)

0130     Australia           March building approvals (0.1% m/m)

0130     Australia           March building approvals (-1.6% y/y)

0130     Japan               March labour cash earnings (1.3% y/y)

0630     Australia           April RBA commodity index (9.5% y/y)

0830     UK                    April PMI, manufacturing (51.3)

1130     US                    April Challenger job cuts (9.4% y/y)

1230     US                    Weekly initial jobless claims (342,000)

1230     US                    Continuing jobless claims (2.934 million)

1230     US                    March personal income (0.5%)

1230     US                    March personal spending (0.1%)

1230     US                    March personal consumption expenditures, core (0.1% m/m)

1230     US                    March personal consumption expenditures, core (2.0% y/y)

1230     US                    March personal consumption expenditures deflator (3.4% y/y)
1400     US                    March construction spending (-0.3% m/m)

1400     US                    April ISM manufacturing (48.6)

1400     US                    April ISM prices paid (83.5)

2350     Japan               April monetary base (0.0% y/y)

2350     Japan               Foreign purchases of Japanese equities and bonds

Friday, 2 May 2008

all times GMT

(last release in parentheses)

0130     Australia           March retail sales (-0.1%)

0130     Australia           Q1 retail sales, ex-inflation (1.6% q/q)

0600     Germany           March retail sales (-1.6% m/m)

0600     Germany           March retail sales (-0.3% y/y)

0645     France              March producer prices (0.4% m/m)

0645     France              March producer prices (4.9% y/y)

0730     CH                    April PMI (55.3)

0745     Italy                  April PMI, manufacturing (49.4)

0750     France              April PMI, manufacturing (51.5)

0755     Germany           April PMI, manufacturing (53.6)

0800     Eurozone          April PMI, manufacturing (50.8)

0830     UK                    April PMI, construction (47.2)

1230     US                    April non-farm payrolls, change (-80,000)

1230     US                    April unemployment rate (5.1%)

1230     US                    April average hourly earnings (0.3% m/m)

1230     US                    April average hourly earnings (3.6% y/y)

1400     US                    March factory orders (-1.3%)  

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.