DAILY MARKET COMMENTARY
30 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 lost marginal ground vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.5740 level and was capped around the $1.5835 level.  Technically, today’s intraday high and low were right around the 76.4% and 61.8% retracements of the move from $1.6020 to $1.5280, respectively.  Traders bid the common currency higher after the release of EMU-15 flash June consumer price inflation data that printed at 4.0%, up from May’s 3.7% level and above expectations.  The European Central Bank is expected to lift its main refinancing rate by 25bps to 4.25% on Thursday and today’s elevated inflation data have many traders speculating the ECB may be forced to raise rates more than one this year. Data released in Germany today saw May wholesale sales down 0.9% m/m and 0.8% y/y. In U.S. news, NYMEX crude oil futures for August delivery traded above the US$ 143 figure, an all-time record high.  Many economists believe the U.S. is on the edge of a technical recession and the elevated prices of oil and gasoline are reducing final private demand.  U.S. Treasury Secretary Paulson reaffirmed the U.S.’s long-standing strong dollar policy saying “I would agree that a strong dollar is a good thing and I believe it is in our nation's interest.”  Paulson will meet European Central Bank member Weber tomorrow in Germany. The Chicago June PMI survey printed stronger-than-expected at 49.6.  Euro bids are cited around the $1.5645/ $1.5230 levels.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥105.00 figure and was capped around the ¥106.45 level.  Technically, today’s intraday low was right around the 61.8% retracement of the move from ¥102.65 to ¥108.55.  Traders await tonight’s Bank of Japan Tankan corporate sentiment survey tonight with most anticipating a further decline in corporate sentiment.  The yen reversed course and appreciated overnight after Moody’s Investors Service raised its credit rating on yen-denominated Japanese government bonds to Aa3 from A1, raising demand for yen.  The Japanese government confirmed it did not officially intervene in the foreign exchange markets this month.  Data released in Japan overnight saw May housing starts fall 6.5% y/y while May construction orders were off 25.2% y/y.  The Nikkei 225 stock index lost 0.46% to close at ¥14,481.38.  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 ¥166.10 level and was capped around the ¥168.10 level.  The British pound and Swiss franc depreciated vis-à-vis the yen as the crosses tested bids around the ¥209.40 and ¥103.45 level, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8543 in the over-the-counter market, down from CNY 6.8622 and the pair’s lowest close since the yuan revaluation of July 2005.  People’s Bank of China Governor Zhou reported “We have several choices of using monetary policy, including open market operations, central bank bills, reserve requirements, interest rates, and the others.”

₤

The British pound moved lower vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.5740 level and was capped around the $1.5835 level.  The pair reached its highest level since 23 April.  Data released in the U.K. today saw Hometrack June house prices decline for the ninth consecutive month, off 1.0% m/m and -3.2% y/y.  Also, Bank of England reported May mortgage approvals came in at 42,000, the lowest number since at least 1999 while BSA reported May mortgage approvals fell to ₤2.34 billion from ₤3.19 billion.  Lastly, final May M4 money supply growth was unrevised at 0.4% m/m and 10.9% y/y.   Cable bids are cited around the US$ 1.9360/ 1.9100 levels.  The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.7895 level and was capped around the ₤0.7935 level.

CHF

The Swiss franc appreciated marginally vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0130 level and was capped around the CHF 1.0205 level.  Technically, today’s intraday low was right around the 50% retracement of the move from CHF 0.9645 to CHF 1.0625.  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 2.0210 levels, respectively.

Technical Outlook at 1230 GMT (EDT + 0400)

             (Bid Price)       (Today’s Intraday Range)                               

EUR/ USD         1.5760                 1.5836, 1.5738
USD/ JPY         105.74                 106.46, 104.99
GBP/ USD        1.9931                 1.9965, 1.9890
USD/ CHF         1.0192                 1.0206, 1.0130
AUD/ USD         0.9613                 0.9667, 0.9599
USD/CAD          1.0135                 1.0158, 1.0060
NZD/USD          0.7640                0.7662, 0.7601
EUR/ JPY         166.72    168.10, 166.08
EUR/ GBP        0.7906                 0.7937, 0.7895
EUR/ CHF         1.6066                 1.6094, 1.6040
GBP/ JPY         210.90                 212.30, 209.40
CHF/ JPY          103.77    104.47, 103.43

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, 29 June 2008

all times GMT

(last release in parentheses)

N/A       Australia           May HIA new home sales (0.1% m/m)

2245     NZ                    May building permits (82.1% m/m)

2301     UK                    June GfK consumer confidence (-29)

2315     Japan                June PMI, manufacturing (47.7)

Monday, 30 June 2008

all times GMT

(last release in parentheses)

0030     Australia           June TD Securities inflation (0.3% m/m)

0030     Australia           June TD Securities inflation (4.5% y/y)

0130     Australia           May private sector credit (0.4% m/m)

0130     Australia           May private sector credit (14.1% y/y)

0300     NZ                    June NBNZ business confidence (-49.7)

0500     Japan                May housing starts (-8.7% y/y)

0500     Japan                May housing starts, annualized (1.151 million)

0500     Japan                May construction orders (-8.4% y/y)

0800     Italy                  May producer price index (0.4% m/m)

0800     Italy                  May producer price index (6.3% y/y)

0830     UK                    May M4 money supply (0.4% m/m)

0830     UK                    May M4 money supply (10.0% y/y)

0830     UK                    May M4 sterling lending (₤4.8 billion)

0830     UK                    May net consumer credit (₤900 million)

0830     UK                    May net lending secured on dwellings (₤6.4 billion)

0830     UK                    May mortgage approvals (58,000)

0830     UK                    April index of services

0900     Eurozone          June consumer price index, estimate (3.6% y/y)

0900     Italy                  June consumer price index, harmonized (3.7% y/y)

1230     Canada             April gross domestic product (-0.2% m/m)

1345     US                    June Chicago PMI (49.1)

2330     Australia           June performance of manufacturing index (51.2)

2350     Japan                Q2 Tankan large manufacturers’ index (11)

2350     Japan                Q2 Tankan large manufacturers’ outlook (7)

2350     Japan                Q2 Tankan non-manufacturing index (12)

2350     Japan                Q2 Tankan non-manufacturing outlook (13)

2350     Japan                Q2 Tankan large all-industry capital expenditures (-1.6%)

Tuesday, 1 July 2008

all times GMT

(last release in parentheses)

0130     Japan                May labour cash earnings (0.6% y/y)

0430     Australia           Reserve Bank of Australia interest rate decision

0600     Germany           May retail sales (-1.7% m/m)

0600     Germany           May retail sales (-1.0% y/y)

0600     Germany           May ILO unemployment rate (7.4%)

0600     UK                    June Nationwide house prices (-4.4% y/y)

0630     Australia           June Reserve Bank of Australia commodity index (28.6% y/y)

0730     CH                    June purchasing managers’ index (55.7)

0750     France              June purchasing managers’ index, manufacturing (49.2)

0755     Germany           June unemployment rate (7.9%)

0755     Germany           June unemployment change (4,000)

0800     Germany           June PMI, manufacturing (52.3)

0800     Eurozone          June PMI, manufacturing (49.1)

0830     UK                    June PMI, manufacturing (50.0)

0900     Eurozone          May unemployment rate (7.1%)

1400     US                    June ISM manufacturing (49.6)

1400     US                    June ISM, prices paid (87.0)

1400     US                    May construction spending (-0.4% m/m)

2200     US                    Atlanta Fed President Lockhart speaks

2350     Japan                June monetary base (-0.9% y/y)

Wednesday, 2 July 2008

all times GMT

(last release in parentheses)

0100     Australia           June DEWR skilled vacancies (-0.1% m/m)

0130     Australia           May retail sales (-0.2%)

0130     Australia           May building approvals (7.8% m/m)

0130     Australia           May building approvals (5.2% y/y)

0830     UK                    June PMI, construction (43.9)

0900     Eurozone          May PPI (0.8% m/m)

0900     Eurozone          May PPI (6.1% y/y)

1100     US                    MBA mortgage applications (-9.3%)

1130     US                    June Challenger job cuts (45.6% y/y)

1215     US                    June ADP employment change (40,000)

1400     US                    May factory orders (1.1%)

1500     UK                    U.S. Treasury Secretary Paulson speaks

1600     Israel                Federal Reserve Governor Mishkin speaks

2330     Australia           June AIG performance of service index (49.7)

2350     Japan                Foreign purchases of Japanese equities and bonds

2350     Japan                Japanese purchases of foreign equities and bonds

Thursday, 3 July 2008

all times GMT

(last release in parentheses)

N/A       UK                    June HBOS house prices (-2.4% m/m)

0130     Australia           May trade balance (-A$ 957 million)

0300     NZ                    June ANZ commodity prices (1.0%)

0545     CH                    June consumer price index (0.8% m/m)

0545     CH                    June consumer price index (2.9% y/y)

0750     France              June PMI, services (49.2)

0755     Germany           June PMI, services (53.3)

0800     Eurozone          June PMI, services (49.5)

0830     UK                    Q2 Bank of England credit conditions survey

0830     UK                    June PMI, services (49.8)

0900     Eurozone          May retail sales (-0.6% m/m)

0900     Eurozone          May retail sales (-2.9% y/y)

1145     Eurozone          European Central Bank interest rate decision

1230     US                    June unemployment rate (5.5%)

1230     US                    Weekly initial jobless claims (384,000)

1230     US                    Continuing jobless claims (3.139 million)

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

1230     US                    June average hourly earnings (3.5% y/y)

1230     US                    June non-farm payrolls, change (-49,000)

1400     US                    June ISM non-manufacturing (51.7)

2200     NZ                    May tax receipts

Friday, 4 July 2008

all times GMT

(last release in parentheses)

N/A       US                    U.S. markets closed

0500     Japan                May leading index (92.8%)

0500     Japan                May coincident index (101.7%)

1000     Germany           May factory orders (-1.8% m/m)

1000     Germany           May factory orders (15.0% y/y)

1400     Canada             June Ivey PMI (62.5)

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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