DAILY MARKET
COMMENTARY
3 July 2008
Thursday
_____________________________________________________________________
GCI Foreign
Exchange Research:
www.gcitrading.com/fxnews/
FX
Research Desk:
fxnews@gcitrading.com
_____________________________________________________________________
Fundamental Outlook at 1400
GMT (EDT + 0400)
€
The euro depreciated
vis-à-vis the U.S. dollar today as the single currency
tested bids around the US$ 1.5735 level and was capped around the
$1.5910 level. The
common currency dove in the North American session after European
Central Bank President Trichet’s news conference revealed he is not
pre-committing to another rate hike. The ECB lifted its main
refinancing rate by 25bps to 4.25% today as expected. Trichet indicated
policymakers have a “strong determination” to anchor inflation
expectations and pledged to “closely monitor” developments. In
contrast to last month’s media conference in which he strongly
telegraphed today’s rate hike.
Consumer and producer price inflation data in the eurozone
remain significantly elevated thus many traders anticipate another
ECB monetary tightening before the end of the year. Data released in the
eurozone today saw EMU-15 May retail sales rise 1.2% m/m and 0.2%
y/y. German June final
services PMI printed at 52.1, down from 53.8 in May, while the
EMU-15 June services PMI measure fell to 49.1 from 50.6 in May. In U.S. news, June non-farm
payrolls declined by 62,000 while the unemployment rate was steady
at 5.5% and average hourly earnings were up 3.4% y/y The jobs report
was weak including a cumulative 52,000 downward revision to April’s
and May’s non-farm payrolls numbers. Notably, June was the first
time since May 2002 that the economy has lost jobs for six
consecutive months.
Other data released today saw weekly initial jobless claims
climb 16,000 to 404,000 in the week ending 28 June. President Bush verbally
intervened to support the U.S. dollar yesterday but traders doubt
there will be an actual concerted global intervention to buy the
U.S. dollar. Euro bids
are cited around the $1.5645/ $1.5230 levels.
¥/
CNY
The yen depreciated
vis-à-vis the U.S. dollar today as the greenback tested
offers around the ¥106.90 level and was supported around the ¥105.75
level. Traders lifted
the pair to intraday highs during the North American session after
the release of disappointing U.S.
non-farm payrolls data and initial jobless claims data. Group of Eight policymakers
will convene in Hokkaido next week and a German
government source indicated inflation will be the number one topic
for discussion, especially with oil topping $146 today. Capital flows data saw
foreigners as net sellers of Japanese equities for the first time in
seven weeks. The Nikkei
225 stock index lost 0.16% to close at ¥13,265.40. Dollar bids are cited around
the ¥103.00/ 101.35 levels. The euro moved higher
vis-à-vis the yen as the single currency tested offers around the
¥169.10 level and was supported around the ¥168.00 figure. The British pound and Swiss
franc appreciated vis-à-vis the yen as the crosses tested offers
around the ¥211.90 and ¥105.05 levels, respectively. The Chinese yuan
appreciated vis-à-vis the U.S. dollar as the greenback closed at
CNY 6.8510 in the over-the-counter market, down from CNY 6.8530 and
the pair’s lowest close since the yuan revaluation of July 2005.
₤
The British pound
weakened vis-à-vis the U.S. dollar today as cable tested bids
around the US$ 1.9810 level and was capped around the $1.9935
level. Cable extended
yesterday’s sell-off and stops were reached below the $1.9865 level,
representing the 23.6% retracement of the move from $1.9405 to
$2.0005. The pair moved
lower after it was reported that the U.K.
services sector PMI fell to 47.1 in June from 49.8 in May, below
expectations and the weakest print in five years. On a positive note on the
inflation front, the prices charged sub-index rose modestly to
56.0. Also, Bank of
England released its quarterly Credit Conditions Survey today that
reported the availability of credit to individuals and corporations
has declined since March and will likely fall through the end of
Q3. IDS reported pay
deals were stable in the quarter to May, up 3.5% in the three months
to the end of May. Bank
of England Deputy Governor
Bean reported the market’s dislocation will probably continue. Cable bids are cited around
the US$ 1.9360/ 1.9100 levels.
The euro weakened
vis-à-vis the British pound as the single currency tested bids
around the ₤0.7940 level and was capped around the ₤0.8000
figure.
CHF
The Swiss franc
depreciated vis-à-vis the U.S. dollar today as the greenback tested
offers around the CHF 1.0250 level and was supported around the CHF
1.0110 level.
Technically, today’s intraday high was right around the 38.2%
retracement of the move from CHF 0.9645 to CHF 1.0625. Data released in
Switzerland today saw
June consumer prices rise 0.2% m/m and 2.9% y/y, below economists’
forecasts for a 3.1% increase.
U.S. dollar bids are cited around the CHF 1.0020 level. The euro and British pound
gained ground vis-à-vis the Swiss franc as the crosses tested
offers around the CHF 1.6135 and CHF 2.0320 levels,
respectively.
A$/
NZ$
The Australian dollar
came off vis-à-vis the U.S. dollar today as the Aussie tested
bids around the US$ 0.9580 level and was capped around the $0.9630
level. Technically,
today’s intraday low was right around the 23.6% retracement of the
move from $0.9325 to $0.9665.
Data released in Australia overnight saw
the May trade balance print at –A$ 965 million. It was also reported
that activity in Australia’s services
sector fell in June.
Australian dollar bids are cited around the US$ 0.9495. The New
Zealand dollar weakened
vis-à-vis the U.S. dollar as the kiwi tested bids around the US$
0.7550 level and was capped around the $0.7605 level. New
Zealand dollar bids are cited
around the $0.7530 level.
C$
The Canadian dollar
depreciated vis-à-vis the U.S. dollar today as the greenback tested
offers around the C$ 1.0195 level and was supported around the C$
1.0110 level.
Technically, today’s intraday low was right around the 38.2%
retracement of the move from C$ 0.9055 to C$ 1.0380. U.S. dollar offers are cited
around the C$ 1.0440 level.
Technical
Outlook at 1230 GMT (EDT + 0400)
(Bid Price)
(Today’s Intraday
Range)
EUR/ USD
1.5798
1.5908,
1.5792
USD/ JPY
106.40
106.65,
105.77
GBP/ USD
1.9829
1.9936,
1.9809
USD/ CHF
1.0184
1.0196,
1.0109
AUD/ USD
0.9595
0.9631,
0.9584
USD/CAD
1.0178
1.0183, 1.0108
NZD/USD
0.7560
0.7606, 0.7556
EUR/
JPY
168.27 169.12,
168.00
EUR/ GBP
0.7967
0.8001,
0.7963
EUR/ CHF
1.6106
1.6129, 1.6079
GBP/
JPY
211.23
211.65,
210.56
CHF/ JPY
104.46 105.07, 104.32
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
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.
Back to newsletter list
