DAILY MARKET COMMENTARY
23 June 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 weakened vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.5470 level and was capped around the $1.5635 level.  Technically, today’s intraday low was right around the 50% retracement of the move from $1.5300 to $1.5650.  The common currency came sold off after the German Ifo business climate index fell to 101.3 in June from 103.5 in May, worse-than-expected, while the expectations sub-index was also weak.  The main headline print of 101.3 was the weakest level since December 2005.  Additionally, the EMU-15 services sector PMI fell to 49.5 from 50.6 while the EMU-15 manufacturing sector PMI fell to 49.1.  These data were reported a little more than a week before the European Central Bank is expected to lift its main refinancing rate by 25bps to 4.25%.  Most traders believe the ECB will only lift rates once but a one-off hike may not be enough.  It was also reported that consumer input price inflation surged to 67.4 from 64.4, its highest level since October 2000, while output price inflation jumped to 55.6 from 54.8.  ECB member Stark hawkishly said it is essential “we seriously examine the current level of the key interest rate.”  In U.S. news, traders are closely monitoring Friday’s downgrades of two U.S. bond insurance companies and Citigroup’s announcement that it is slashing 10% of its investment banking staff.  The Federal Open Market Committee convenes tomorrow and Wednesday and is expected to keep rates unchanged and signal that inflation is more of a threat than a slowdown in economic growth.  Euro bids are cited around the $1.5230 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥108.05 level and was supported around the ¥107.10 level.  The government reported sentiment among large Japanese companies weakened in Q2 for the third consecutive quarter with the business sentiment diffusion index for large companies falling to -15.2.  The print was much worse than expected and suggests next week’s Bank of Japan Tankan corporate sentiment survey could come in on the weak side. Prime Minister Fukuda said Group of Eight policymakers “should consider ways to resolve the problem of inflation” and cited oil and food prices as problem areas. G8 policymakers will convene in Japan between 7-9 July.   Other data released today saw May supermarket sales off 1.1%, the second consecutive monthly decline.  The Nikkei 225 stock index lost 0.61% to close at ¥13,857.47.  Dollar bids are cited around the ¥103.00/ 101.35 levels.  The euro weakened vis-à-vis the yen as the single currency tested bids around the ¥166.85 level and was capped around the ¥167.80 level.  The British pound and Swiss franc came off vis-à-vis the yen as the crosses tested bids around the ¥211.05 and ¥102.95 levels, respectively.  The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8750 in the over-the-counter market. 

₤

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9590 level and was capped around the $1.9755 level.  Technically, today’s intraday high was right around the 38.2% retracement of the move from $2.0395 to $1.9360.    Data released in the U.K. overnight say Rightmove house prices fall 1.2% m/m in June.  Bank of England Monetary Policy Committee member Sentance hawkishly reported “We will need to ensure that the rise in inflation injected by rising oil and commodity prices does not become broad-based. That requires that wage and price increases more generally do not pick up in response to a temporary episode of rising headline inflation. The Monetary Policy Committee cannot influence wage and price increases directly. But we can influence the economic climate in which they take place.”  Cable bids are cited around the US$ 1.9360/ 1.9100 levels.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7920 level and was supported around the ₤0.7890 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0485 level and was supported around the CHF 1.0330 level.  The Swiss government raised its inflation expectations for 2008 and 2009 and reduced its 2009 GDP growth forecast. SECO sees the economy expanding 1.9% in 2008 and 1.3% in 2009 and sees inflation growth around 2.5% this year.  Swiss National Bank kept its target rate for three-month Swiss franc Libor unchanged at 2.75% last week.  SNB sees 2008 inflation growth around 2.7%.  U.S. dollar bids are cited around the CHF 1.0250 level.  The euro and British pound gained ground vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6230 and CHF 2.0540 levels, respectively.

Technical Outlook at 1230 GMT (EDT + 0400)

             (Bid Price)       (Today’s Intraday Range)                               

EUR/ USD         1.5487                 1.5635, 1.5479
USD/ JPY         107.95                 108.03, 107.10
GBP/ USD        1.9599                 1.9754, 1.9591
USD/ CHF         1.0473                 1.0480, 1.0330
AUD/ USD         0.9499                 0.9559, 0.9494
USD/CAD          1.0183                 1.0190, 1.0127
NZD/USD          0.7567                0.7636, 0.7565
EUR/ JPY         167.19    167.79, 166.86
EUR/ GBP        0.7902                 0.7918, 0.7892
EUR/ CHF         1.6218                 1.6229, 1.6154
GBP/ JPY         211.54                 212.19, 211.06
CHF/ JPY          103.07    103.75, 103.02

Support                        Resistance                   Support                     Resistance

EUR/ USD                                                              USD/ JPY

L1.        1.5225                          1.5645                            101.95                        106.60 

L2.        1.5035                          1.5840                            100.60                        109.95
L3.        1.4805                          1.6020                             98.75             113.30

   GBP/ USD                                                          USD/ CHF

L1.        1.9520                          1.9760                          1.0135                          1.0565

L2.        1.9395                          1.9880                          0.9990                          1.0730

L3.        1.9100                          2.0000                          0.9875                          1.1040

 AUD/ USD                                                           USD/ CAD

L1.        0.9380                          0.9655                          0.9870                          1.0175

L2.        0.9215                          0.9735                          0.9715                          1.0370

L3.        0.9005                          1.0115                          0.9465                          1.0520

 NZD/ USD                                                           EUR/ JPY

L1.        0.7700                          0.8105                          160.60                          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.        0.7740                          0.8120                          1.5975                          1.6250

L2.        0.7555                          0.8310                          1.5855                          1.6470

L3.        0.7440                          0.8570                          1.5730                          1.6760

  GBP/ JPY                                                           CHF/ JPY

L1.        200.60                          208.50                            98.70                         103.30

L2.        197.55                          211.35                            97.00                         105.40

L3.        192.70                          217.15                            95.85                         107.70

SCHEDULE

Sunday, 22 June 2008

all times GMT

(last release in parentheses)

2301     UK                    June Rightmove house prices (1.2% m/m)

2301     UK                    June Rightmove house prices (2.2% y/y)

2350     Japan                Q2 BSI large manufacturing (-12.9% q/q)

2350     Japan                Q2 BSI large manufacturing (-9.3% q/q)

Monday, 23 June 2008

all times GMT

(last release in parentheses)

0300     NZ                    May credit card spending (8.3% y/y)

0500     Japan                May supermarket sales (-0.8% y/y)

0545     CH                    June SECO 2008 economic forecasts

0700     France              June PMI, manufacturing (51.5)

0700     France              June PMI, services (50.5)

0730     Germany           June PMI, manufacturing (53.6)

0730     Germany           June PMI, services (53.8)

0800     Germany           June Ifo, business climate (103.5)

0800     Germany           June Ifo, current assessment (110.1)

0800     Germany           June Ifo, expectations (97.3)

0800     Eurozone          June PMI, manufacturing (50.5)

0800     Eurozone          June PMI, services (50.6)

Tuesday, 24 June 2008

all times GMT

(last release in parentheses)

N/A       US                    Federal Open Market Committee meeting begins

0610     Germany           July GfK consumer confidence (4.9)

0645     France              May housing starts

0645     France              May housing permits

0645     France              May consumer spending (-0.8% m/m)

0645     France              May consumer spending (0.4% y/y)

0650     France              June business confidence (102)

0650     France              June production outlook (-15)

0730     Italy                  June consumer confidence (103.2)

0800     CH                    May UBS consumption indicator (2.179)

0830     UK                    May BBA loans for house purchases

1230     US                    Former Federal Reserve Chairman Greenspan speaks

1300     US                    April S&P/ Case Shiller home price index (172.2)

1400     US                    April house price index (-0.4% m/m)

1400     US                    June Richmond Fed manufacturing index (-3)

1400     US                    June consumer confidence (57.2)

2350     Japan                May merchandise trade balance (¥485.0 billion)

2350     Japan                May corporate services prices (0.5% y/y)

Wednesday, 25 June 2008

all times GMT

(last release in parentheses)

N/A       Germany           June CPI (0.6% m/m)

N/A       Germany           June CPI (3.0% y/y)

N/A       Germany           June CPI, harmonized (0.7% m/m)

N/A       Germany           June CPI, harmonized (3.1% y/y)

N/A       UK                    June Nationwide house prices (-2.5% m/m)

N/A       UK                    June Nationwide house prices (-4.4% y/y)

0500     Japan                June small business confidence (42.2)

0800     Italy                  April retail sales (-0.5% m/m)

0800     Italy                  April retail sales (-1.0% y/y)

0900     Eurozone          April industrial new orders (-1.0% m/m)

0900     Eurozone          April industrial new orders (-2.5% y/y)

1000     UK                    June CBI distributive trades report

1100     US                    MBA mortgage applications (-8.8%)

1230     US                    May durable goods orders (-0.5%)

1230     US                    May durable goods orders, ex-transportation (2.5%)

1400     US                    May new home sales (526,000)

1400     US                    May new hone sales (3.3% m/m)

1815     US                    Federal Open Market Committee interest rate decision

2245     NZ                    Q1 current account balance (-NZ$ 3.41 billion)

2350     Japan                Foreign purchases of Japanese equities and bonds

2350     Japan                Japanese purchases of foreign equities and bonds

Thursday, 26 June 2008

all times GMT

(last release in parentheses)

0000     Australia           April leading index (-0.4%)

0130     Australia           May job vacancies (-2.5%)

0600     Germany           May import price index (0.9% m/m)

0600     Germany           May import price index (5.7% y/y)

0645     France              June consumer confidence (-41)

0730     Italy                  June business confidence (89.6)

0800     Eurozone          May M3 money supply (10.7%)

0800     Eurozone          May M3 money supply (10.6% y/y)

0830     UK                    Q1 total business investment (-1.4% q/q)

0830     UK                    Q1 total business investment (3.7% y/y)

1130     Eurozone          Federal Reserve Vice Chairman Kohn speaks

1230     US                    Q1 GDP, annualized (0.9% q/q)

1230     US                    Q1 GDP price index (2.6%)

1230     US                    Q1 personal consumption expenditures (2.1% q/q)

1230     US                    Weekly initial jobless claims (381,000)

1230     US                    Continuing jobless claims (3.060 million)

1400     US                    May existing home sales (4.89 million)

1400     US                    May existing home sales (-1.0% m/m)

2245     NZ                    Q1 GDP (3.7% y/y)

2245     NZ                    May trade balance

2330     Japan                May jobless rate (4.0%)

2330     Japan                June Tokyo-area CPI (0.9% y/y)

2330     Japan                June Tokyo-area CPI, ex-fresh food (0.9% y/y)

2330     Japan                June Tokyo-area CPI, ex-food, energy (0.1% y/y)

2330     Japan                May CPI (0.8% y/y)

2330     Japan                May CPI, ex-fresh food (0.9% y/y)

2330     Japan                May CPI, ex-food, energy (-0.1% y/y)

2350     Japan                May large retailers’ sales (-2.2%)

2350     Japan                May retail trade (-0.1% m/m)

2350     Japan                May retail trade (0.1% y/y)

2350     Japan                May household spending (-2.7% y/y)

2350     Japan                May industrial production (-0.2% m/m)

2350     Japan                May industrial production (1.9% y/y)

2350     Japan                May retail trade (-0.1% m/m)

2350     Japan                May retail trade (0.1% y/y)

Friday, 27 June 2008

all times GMT

(last release in parentheses)

N/A       Germany           June Ifo business climate survey

0300     NZ                    May M3 money supply (4.5% y/y)

0430     Australia           Reserve Bank of Australia Assistant Governor Debelle speaks

0645     France              May PPI (5.4% y/y)

0650     France              Q1 GDP (2.1% y/y)

0800     Italy                  June PMI, retail

0800     France              June PMI, retail

0800     Germany           June PMI, retail

0800     Eurozone          June PMI, retail (53.1)

0800     Eurozone          April current account (-€15.3 billion)

0830     UK                    Q1 GDP (0.4% q/q)

0830     UK                    Q1 GDP (2.5% y/y)

0830     UK                    Q1 current account (-₤8.5 billion)

0900     Italy                  May hourly wages (2.8% y/y)

0900     Eurozone          June business climate (0.54)

0900     Eurozone          June consumer confidence (-15)

0900     Eurozone          June economic confidence (97.1)

0900     Eurozone          June industrial confidence (-2)

0900     Eurozone          June services confidence (8)

0930     CH                    June KOF leading indicator (1.09)

1230     US                    May personal income (0.2%)

1230     US                    May personal spending (0.2%)

1230     US                    May PCE, core (0.1% m/m)

1230     US                    May PCE, core (2.1% y/y)

1230     US                    May PCE deflator (3.2% y/y)

1230     Canada             May industrial product price (1.4% m/m)

1230     Canada             May raw materials price index (5.1% m/m)

1400     US                    June University of Michigan consumer sentiment (56.7)

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 used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

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