DAILY MARKET COMMENTARY
8 July 2008

Tuesday 

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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 depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.5640 level and was capped around the $1.5740 level.  The common currency retreated after NYMEX crude oil futures of August delivery extended recent gains and tested the $135 handle on reduced concerns over supply constraints.  The Group of Eight summit in Hokkaido was largely a non-event for the exchange rates market.  President Bush reaffirmed the U.S.’s long-standing strong dollar policy and the G8 expressed “strong concern” about oil and food prices, noting they “pose a serious challenge to stable growth worldwide, have serious implications for the most vulnerable and increase global inflationary pressure.”  Federal Reserve Chairman Bernanke suggested the Fed may extend its credit facilities for primary dealers “beyond year-end.”  Data released in the U.S. today saw May pending home sales fall 4.7% m/m and 14% y/y, the latest indication of the sector’s struggles. Also, May wholesale inventories were off 0.8%. In eurozone news, European Central Bank member Papademos reiterated the ECB will take steps to ensure price stability.  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 ¥107.45 level and was supported around the ¥106.25 level.  Technically, today’s intraday low was just below the 38.2% retracement of the move from ¥102.65 to ¥108.55.  Data released in Japan overnight saw the economy watchers; index decline for the third straight month in June as the current conditions index weakened to 29.5 from 32.1 in May, the lowest reading since October 2001.  Also, June bank lending was up 2.0%, the fastest rise in two years, while the M2 money supply rose 2.3% in June and.  Additionally, June corporate failures were up 7.1% and the trade deficit was ¥230 billion in the first 20 days of June.  The Nikkei 225 stock index lost 2.45% to close at ¥13,033.10.  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 ¥167.20 level and was capped around the ¥168.55 level. The British pound and Swiss franc moved lower vis-à-vis the yen as the crosses tested bids around the ¥210.25 and ¥103.90 levels, respectively.

₤

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9675 level and was capped around the $1.9795 level.  Traders await Thursday’s interest rate decision by Bank of England’s Monetary Policy Committee.  Most dealers believe the MPC will keep rates unchanged but there may be some votes for a decline in rates despite significantly elevated rates of inflation because there is mounting evidence the U.K. economy is facing a broad slowdown.  BCC reported there is a “serious risk” the U.K. economy could be in a recession by the end of the summer in its quarterly survey.  Government housing data reported annual house prices slowed to their weakest level in more than two years while CML reported house loans increased slightly in May. Cable bids are cited around the US$ 1.9360/ 1.9100 levels.  The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.7940 level and was capped around the ₤0.7965 level.

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0340 level and was supported around the CHF 1.0220 level.  U.S. dollar bids are cited around the CHF 1.0020 level.  The euro and British pound moved higher vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6165 and CHF 2.0345 levels, respectively.

Technical Outlook at 1230 GMT (EDT + 0400)

             (Bid Price)       (Today’s Intraday Range)                               

EUR/ USD         1.5654                 1.5738, 1.5652
USD/ JPY         107.36                 107.42, 106.24
GBP/ USD        1.9691                 1.9795, 1.9686
USD/ CHF         1.0315                 1.0318, 1.0218
AUD/ USD         0.9527                 0.9564, 0.9501
USD/CAD          1.0223                 1.0225, 1.0155
NZD/USD          0.7502                0.7542, 0.7483
EUR/ JPY         168.13    168.54, 167.20
EUR/ GBP        0.7948                 0.7964, 0.7939
EUR/ CHF         1.6149                 1.6157, 1.6079
GBP/ JPY         211.47                 211.81, 210.23
CHF/ JPY          104.05    104.42, 103.89

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

Tuesday, 8 July 2008

all times GMT

(last release in parentheses)

0130     Australia           June NAB business confidence (-4)

0130     Australia           June NAB business conditions (7)

0430     Japan                June bankruptcies (-1.5% y/y)

0500     Japan                June economy watchers’ survey, current (32.1)

0500     Japan                June economy watchers’ survey, outlook (35.1)

0830     UK                    May DCLG house prices (4.9% y/y)

1230     US                    Federal Reserve Chairman Bernanke speaks

1400     US                    May pending home sales (6.3% m/m)

1400     US                    May wholesale inventories (1.3%)

1630     US                    Richmond Fed President Lacker speaks

1900     US                    May consumer credit (C$ 8.9 billion)

2301     UK                    June Nationwide consumer confidence (69)

2350     Japan                May machine orders (5.5% m/m)

2350     Japan                May machine orders (0.5% y/y)

Wednesday, 9 July 2008

all times GMT

(last release in parentheses)

0030     Australia           July Westpac consumer confidence (-5.6%)

0130     Australia           May home loans (-3.0%)

0130     Australia           May investment lending (1.4%)

0130     Australia           May value of loans

0600     Germany           May trade balance (€18.7 billion)

0600     Germany           May current account (€14.5 billion)

0600     Japan                June machine tool orders (1.4% y/y)

0645     France              May trade balance

0830     UK                    May visible trade balance (-₤7.594 billion)

0830     UK                    May total trade balance (-₤4.325 billion)

0900     Eurozone          Q1 GDP (0.8% q/q)

0900     Eurozone          Q1 GDP (2.2% y/y)

0930     UK                    June BRC shop price index

1199     US                    MBA mortgage applications

1215     Canada             June housing starts (221,300)

2350     Japan                Foreign purchases of Japanese equities and bonds

2350     Japan                Japanese purchases of foreign equities and bonds

2350     Japan                June domestic corporate goods price index (1.1% m/m)

2350     Japan                June domestic corporate goods price index (4.7% y/y)

2350     Japan                May current account total (¥1.38 trillion)

Thursday, 10 July 2008

all times GMT

(last release in parentheses)

0000     NZ                    June PMI (49.3)

0100     Australia           July consumer inflation expectations (5.9%)

0130     Australia           June unemployment rate (4.3%)

0130     Australia           June employment change (-19,700)

0645     France              May industrial production (1.4% m/m)

0645     France              May industrial production (3.2% y/y)

0800     Italy                  May industrial production (2.0% y/y)

0800     Eurozone          July European Central Bank monthly report

1100     UK                    Bank of England interest rate decision (5.00%)

1230     US                    Weekly initial jobless claims (404,000)

1230     US                    Continuing jobless claims (3.116 million)

1400     US                    Federal Reserve Chairman Bernanke testifies

1400     US                    U.S. Treasury Secretary Paulson speaks

1930     US                    San Francisco Fed President Yellen speaks

Friday, 11 July 2008

all times GMT

(last release in parentheses)

0430     Japan                May industrial production (2.9% m/m)

0430     Japan                May industrial production (1.2% y/y)

0430     Japan                May capacity utilization (-0.7% m/m)

0430     Japan                June consumer confidence (34.1)

1100     Canada             June unemployment rate (6.1%)

1100     Canada             June employment, net change (8,400)

1230     US                    May trade balance (-US$ 60.9 billion)

1230     US                    June import price index (2.3% m/m)

1230     US                    June import price index (17.8% y/y)

1230     Canada             May international merchandise trade (C$ 5.1 billion)

1230     Canada             May new housing price index

1400     US                    July University of Michigan consumer sentiment (56.4) 

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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