DAILY MARKET
COMMENTARY
27 June 2008
Friday
_____________________________________________________________________
GCI Foreign
Exchange Research:
www.gcitrading.com/fxnews/
FX
Research Desk:
fxnews@gcitrading.com
_____________________________________________________________________
Fundamental Outlook at 1400
GMT (EDT + 0400)
€
The euro lost marginal
ground vis-à-vis the U.S. dollar today as the single currency
tested bids around the US$ 1.5720 level and was capped around the
$1.5780 level. The
common currency reached its highest level since 9 June before coming
off. Data released in
the U.S. today saw May
personal income double following an increase in personal
income. May personal
consumption expenditures were up 0.8%, up from 0.4% in April and the
largest gain since September 2005. Personal income rose 1.9%,
much more than expected.
The core personal consumption expenditures price index was up
0.1% m/m excluding food and energy and was up 2.1% y/y – just above
the Federal Reserve’s perceived upper limit comfort zone of 2.0%.
Also, the final June University of Michigan consumer sentiment index
receded to 56.4 from 59.8 in May. Most traders believe the Fed will
keep interest rates unchanged through the end of the year following
this week’s Federal Open Market Committee interest rate
announcement. In eurozone news, German
June consumer price inflation was up 0.3% m/m and 3.3% y/y. Also, the eurozone current
account balance improved in April to -€300 million while the EMU-15
June economic sentiment indicator fell to 94.9 from 97.6 in
May. Additionally,
French Q1 GDP was revised to 0.5% and French May PPI was up 1.3% m/m
and 6.7% y/y. European
Central Bank member Ordonez managed interest rate expectations by
saying a series of rate hikes is not foreseen. Euro bids are cited
around the $1.5230 level.
¥/
CNY
The yen appreciated
vis-à-vis the U.S. dollar today as the greenback tested
bids around the ¥106.05 level and was capped around the ¥107.20
level. Technically, today’s intraday high was right around the 23.6%
retracement of the move from ¥102.65 to ¥108.55. Many data were released in
Japan overnight
and some of them raised the chances of a recession taking root in
Japan. First, May household
spending fell 3.2% y/y, the third consecutive monthly decline. Most traders believe these
data render it highly unlikely Bank of Japan’s Policy Board will be
able to lift interest rates this year. Second, core inflation was up
at its fastest pace in more than ten years, rising 1.5% y/y in May.
Many economists are speculating core CPI will reach the 2.0% upper
limit of BoJ’s “understanding of stable prices.” Third, the May unemployment
rate was steady at 4.0%, matching forecasts. Fourth, May industrial
output beat expectations while rising 2.9%. BoJ’s Q2 Tankan survey of
corporate sentiment will be released on Tuesday and is expected to
evidence a deterioration in confidence. BoJ’s Policy Board convenes
on 14-15 July. The
Nikkei 225 stock index lost 2.01% to close at ¥13,544.36. Dollar bids are cited around
the ¥103.00/ 101.35 levels. The euro came off vis-à-vis
the yen as the single currency tested bids around the ¥167.00 figure
and was capped around the ¥168.60 level. The British pound and Swiss
franc weakened vis-à-vis the yen as the crosses tested bids
around the ¥210.55 and ¥104.00 levels, respectively. The Chinese yuan
appreciated vis-à-vis the U.S. dollar as the greenback closed at
CNY 6.8622, down from CNY 6.8657 and the pair’s weakest close since
the yuan revaluation of July 2005. Data released in
China overnight saw
industrial firms’ profits up 20.9% y/y between January and
May.
₤
The British pound moved
higher vis-à-vis the U.S. dollar today as cable tested offers
around the US$ 1.9950 level and was supported around the $1.9800
figure. Cable reached
its highest level since 28 April as traders continued to reduce
exposure to the U.S. dollar.
Data released in the U.K. today saw Q1 GDP
downwardly revised to +0.3% q/q from the previous estimate of 0.4%
and represented the lowest growth rate since Q1 2005. On a yearly basis, the
economy was up 2.3%.
Cable bids are cited around the US$ 1.9360/ 1.9100
levels. The euro weakened vis-à-vis
the British pound as the single currency tested bids around the
₤0.7895 level and was capped around the ₤0.7945
level.
CHF
The Swiss franc
appreciated vis-à-vis the U.S. dollar today as the greenback tested
bids around the CHF 1.0165 level and was capped around the CHF
1.0265 level. The pair
reached its lowest level since 9 June and the Swiss franc was bid
higher on a report that the Central Bank of the Russian
Federation may increase the
proportion of Swiss francs in its reserve portfolio. Data released in
Switzerland today saw the
KOF June leading index fall to 1.01 from 1.08 in May. U.S. dollar
bids are cited around the CHF 1.0135 level. The euro and British pound
weakened vis-à-vis the Swiss franc as the crosses tested bids
around the CHF 1.6040 and CHF 2.0200 levels, respectively.
Technical
Outlook at 1230 GMT (EDT + 0400)
(Bid Price)
(Today’s Intraday
Range)
EUR/ USD
1.5743
1.5781,
1.5719
USD/ JPY
106.29
107.20,
106.06
GBP/ USD
1.9869
1.9901,
1.9800
USD/ CHF
1.0204
1.0266,
1.0165
AUD/ USD
0.9593
0.9628,
0.9540
USD/CAD
1.0068
1.0142, 1.0046
NZD/USD
0.7585
0.7613, 0.7530
EUR/
JPY
167.37 168.58,
167.01
EUR/ GBP
0.7924
0.7947,
0.7912
EUR/ CHF
1.6072
1.6153, 1.6038
GBP/
JPY
211.11
212.95,
210.56
CHF/ JPY
104.09 104.55, 103.98
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
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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