DAILY MARKET COMMENTARY
12 May 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 appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5545 level and was supported around the US$ 1.5365 level.  Technically, today’s intraday high was just below the 38.2% retracement of the move from $1.6020 to $1.5280.  Chicago Fed President Evans reported the U.S. economy will begin to expand in H1 2008 “but not enough to prevent economic activity from still running at a relatively sluggish pace.”  Many Fed officials will speak this week and traders will closely monitor their latest assessment of monetary policy.  The dollar received a little jolt from a Wall Street Journal article that quoted an unnamed U.S. Treasury official who said the Bush administration is promoting a stronger dollar with G7 counterparts. Consumer price inflation data will be closely watched this week.  In eurozone news, traders await comments from European Central Bank President Trichet later this afternoon.  ECB member Gonzalez-Paramo reported the liquidity operations of the world’s largest central banks have reduced volatility in the financial markets.  Euro bids are cited around the US$ 1.5230 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥102.55 level and was capped around the ¥104.05 level.  The pair retraced about 50% of last week’s intraweek losses.   Bank of Japan Governor Shirakawa spoke today and said the central bank needs to raise interest rates but reiterated downside economic risks remain in the near-term.  BoJ last month moved to a neutral bias from a rate normalization bias.  Data released in Japan overnight saw the April economy watchers’ index decline for the first time in three months.  Also, April corporate failures were off 10.1% m/m and the April money supply growth slowed to +1.9%.  Additionally, April bank lending was up 1.3%.  The Nikkei 225 stock gained 0.64% to close at ¥13,743.36.  Dollar bids are cited around the ¥101.35 levels.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥160.95 level and was supported around the ¥158.60 level.  The British pound and Swiss franc appreciated vis-à-vis the yen as the crosses tested offers around the ¥203.70 and ¥99.25 levels, respectively.  The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.9882 in the over-the-counter market, down from CNY 6.9918.  Data released in China today saw April consumer price inflation up 8.5% y/y.  People’s Bank of China announced it will lift its reserve requirement ratio by 50bps on 20 May.

₤

The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.9630 level and was supported around the $1.9440 level.  Cable reached its lowest level since 21 February.  Sterling shot higher after it was reported that U.K. producer input prices rose 2.4% and an annualized 23.0% gain while April output producer price inflation was up 7.5% y/y, the highest level on record.  Other data released today saw the March trade balance improve to -₤7.4 billion.  Today’s data may render it more difficult for the central bank to ease monetary policy next month.  BoE will release its quarterly inflation report on Wednesday and consumer price inflation data tomorrow.  Cable bids are cited around the US$ 1.9360 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7950 level and was supported around the ₤0.7875 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0510 level and was supported around the CHF 1.0405 level.  Technically, today’s intraday low was right around the 23.6% retracement of the move from CHF 0.9645 to CHF 1.0625.  U.S. dollar offers are cited around the CHF 1.0760 level.  The euro and British pound moved higher vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6225 and CHF 2.0570 levels, respectively.

Technical Outlook at 1230 GMT (EDT + 0400)

             (Bid Price)       (Today’s Intraday Range)                               

EUR/ USD         1.5450                 1.5484, 1.5364
USD/ JPY         103.78                 104.04, 102.56
GBP/ USD        1.9580                 1.9601, 1.9440
USD/ CHF         1.0497                 1.0510, 1.0405
AUD/ USD         0.9417                 0.9454, 0.9355
USD/CAD          1.0049                 1.0105, 1.0042
NZD/USD          0.7669                0.7696, 0.7628
EUR/ JPY         160.41    160.73, 158.60
EUR/ GBP        0.7888                 0.7930, 0.7876
EUR/ CHF         1.6221                 1.6223, 1.6094
GBP/ JPY         203.28                 203.72, 200.16
CHF/ JPY            98.87      99.16,   98.43

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

Sunday, 11 May 2008

all times GMT

(last release in parentheses)

N/A       NZ                    April REINZ house prices

2350     Japan                April M2+CD money supply (2.2% y/y)

2350     Japan                April broad liquidity (3.1% y/y)

2350     Japan                April bank lending (1.1% y/y)

Monday, 12 May 2008

all times GMT

(last release in parentheses)

0130     Australia           March home loans (-5.9%)

0130     Australia           March investment lending (-9.5%)

0130     Australia           April NAB business confidence (-4.0)

0130     Australia           April NAB business conditions (7.0)

0430     Japan                April bankruptcies (8.0% y/y)

0500     Japan                April economy watchers’ survey, outlook (38.2)

0500     Japan                April economy watchers’ survey, current (36.9)

0600     Japan                April machine tool orders (3.3% y/y)

0800     Italy                  March industrial production (-0.8% y/y)

0830     UK                    March visible trade balance (-₤7.487 billion)

0830     UK                    April PPI, input (1.8% m/m)

0830     UK                    April PPI, input (20.6% y/y)

0830     UK                    April PPI, output (0.9% m/m)

0830     UK                    April PPI, output (6.2% y/y)

0830     UK                    April PPI, core output (0.3% m/m)

0830     UK                    April PPI, core output (3.1% y/y)

1230     Canada             March new housing price index (0.3% m/m)

2245     NZ                    April food prices (0.7% m/m)

2301     UK                    April BRC retail sales monitor

2301     UK                    April RICS house price balance

Tuesday, 13 May 2008

all times GMT

(last release in parentheses)

0645     France              March current account (-€600 million)

0830     UK                    April consumer price index (0.4% m/m)

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

0830     UK                    April CPI, core (1.2% y/y)

0830     UK                    April retail price index (0.3% m/m)

0830     UK                    April retail price index (3.8% y/y)

0830     UK                    April RPIX (3.5% y/y)

0830     UK                    March DCLG house prices (6.7% y/y)

1230     US                    April import price index (2.8% m/m)

1230     US                    April import price index (14.8% y/y)

1230     US                    April advance retail sales (0.2%)

1230     US                    April retail sales, ex-autos (0.1%)

1400     US                    March business inventories (0.6%)

2350     Japan                April domestic corporate goods price index (0.5% m/m)

2350     Japan                April domestic corporate goods price index (3.9% y/y)

2350     Japan                March current account (¥2.467 trillion)

2350     Japan                March trade balance (¥1.035 trillion)

2350     Japan                April domestic corporate goods price index (0.5% m/m)

2350     Japan                April domestic corporate goods price index (3.9% y/y)

2350     Japan                March current account (¥2.467 trillion)

Wednesday, 14 May 2008

all times GMT

(last release in parentheses)

0030     Australia           May Westpac consumer confidence (-1.3%)

0130     Australia           Q1 wage cost index (1.1% q/q)

0130     Australia           Q1 wage cost index (4.2% y/y)

0640     France              April CPI (0.8% m/m)

0640     France              April CPI (3.2% y/y)

0640     France              April CPI, harmonized (0.8% m/m)

0640     France              April CPI, harmonized (3.5% y/y)

0800     Italy                  April CPI (0.1% m/m)

0800     Italy                  April CPI (3.3% y/y)

0800     Italy                  April CPI, harmonized (0.5% m/m)

0800     Italy                  April CPI, harmonized (3.5% y/y)

0830     UK                    April claimant count rate (2.5%)

0830     UK                    April jobless claims change (-1,200)

0830     UK                    March average earnings, bonus (3.7%)

0830     UK                    March ILO unemployment rate (5.2%)

0930     UK                    Bank of England quarterly inflation report

1100     US                    MBA mortgage applications

1230     US                    April consumer price index (0.3% m/m)

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

1230     US                    April CPI, ex-food and energy (0.2% m/m)

1230     US                    April CPI, ex-food and energy (2.4% y/y)

2245     NZ                    March retail sales, ex-autos (0.2% m/m)

2350     Japan                March machine orders (-12.7% m/m)

2350     Japan                March machine orders (2.4% y/y)

Thursday, 15 May 2008

all times GMT

(last release in parentheses)

N/A       South Africa      Reserve Bank of Australia Deputy Governor Debelle speaks

0000     NZ                    April PMI (48.3)

0030     Australia           May consumer inflation expectations (11.2%)

0130     Australia           February average weekly wages (0.6% q/q)

0130     Australia           February average weekly wages (4.7% y/y)

0400     Japan                April Tokyo-area condominium sales (-17.8% y/y)

0545     CH                    April SECO consumer climate (14.0)

0600     Germany           Q1 GDP (0.3% q/q)

0600     Germany           Q1 GDP (1.8% y/y)

0600     Germany           April CPI (-0.2% m/m)

0600     Germany           April CPI (2.4% y/y)

0600     Germany           April CPI, harmonized (0.5% m/m)

0600     Germany           April CPI, harmonized (2.6% y/y)

0645     France              Q1 GDP (0.4% q/q)

0645     France              Q1 GDP (2.1% y/y)

0930     Australia           Reserve Bank of Australia Governor Stevens speaks

1230     US                    Weekly initial jobless claims (365,000)

1230     US                    Continuing jobless claims (3.020 million)

1230     US                    May Empire State manufacturing index (0.6)

1230     Canada             March manufacturing shipments (1.6% m/m)

1300     US                    March net long-term TIC flows (US$ 72.5 billion)

1300     US                    March total net TIC flows (US$ 64.1 billion)

1315     US                    April industrial production (0.3%)

1315     US                    April capacity utilization (80.5%)

1400     US                    May Philadelphia Fed manufacturing survey (-24.9)

1700     US                    May NAHB housing market index (20.0)

2245     NZ                    Q1 PPI, input (1.3% q/q)

2245     NZ                    Q1 PPI, output (1.5% q/q)

2350     Japan                Q1 GDP (0.9% q/q)

2350     Japan                Q1 GDP, annualized (3.5%)

2350     Japan                Q1 GDP deflator (-1.3% y/y)

Friday, 16 May 2008

all times GMT

(last release in parentheses)

0400     Japan                April consumer confidence (37.0)

0400     Japan                March industrial production (-3.1% m/m)

0400     Japan                March industrial production (-0.4% y/y)

0430     Japan                March capacity utilization (1.8% m/m)

0600     Japan                April machine tool orders

0645     France              Q1 wages (0.3% q/q)

0715     CH                    March retail sales (3.3% y/y)

1230     US                    April housing starts (947,000)

1230     US                    April building permits (927,000)

1400     US                    May University of Michigan consumer sentiment (62.6) 

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.