DAILY MARKET COMMENTARY
21 July 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 appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5905 level and was supported around the $1.5825 level.  Technically, today’s intraday low was right around the 50% retracement of the move from $1.5610 to $1.6040.  Data released in the U.S. today saw the June leading index fall 0.1%, its second consecutive monthly decline.  The dollar’s decline was limited by better-than-expected Bank of America Q2 earnings but the euro’s strength was underpinned by a $2.00 climb in NYMEX crude oil futures for September delivery to an intraday high of $132.55.  Lack of progress in talks between Iranian, American, and European officials kept the U.S. dollar on the defensive as did a tropical storm in the Caribbean that could enter the Gulf of Mexico later in the day.  Traders await remarks from Philadelphia Fed President Plosser tomorrow followed by New York Fed President Geithner on Thursday. The Fed will release its July Beige Book on Wednesday.  In eurozone news, Germany’s Bundesbank reported German Q2 GDP is likely to moderate from Q1’s pace.  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 ¥106.35 level and was capped around the ¥107.15 level.  Technically, today’s intraday high and low were right around the 23.6% and 38.2% retracements of the move from ¥102.65 to ¥108.55, respectively.  The Japanese media reported Prime Minister Fukuda may reshuffle his cabinet this week to reverse his declining public support and traders are curious to see if any senior Ministry of Finance policymakers are replaced.  The May all-industry activity index will be released overnight.  The Nikkei 225 stock index lost 0.65% to close at ¥12,803.70.  Dollar bids are cited around the ¥103.65 level.  The euro gained marginal ground vis-à-vis the yen as the single currency tested offers around the ¥169.90 level and was supported around the ¥169.10 level. The British pound and Swiss franc weakened vis-à-vis the yen as the crosses tested bids around the ¥212.15 and ¥104.25 levels, respectively.  The Chinese yuan weakened vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8300 in the over-the-counter market, up from CNY 6.8169.  Data released in China overnight saw June CPI growth accelerate to 6.1% y/y.  Premier Wen reported there is a “sense of urgency in controlling inflation and promoting stable growth.

₤

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9905 level and was capped around the $1.9985 level.  Bank of England Monetary Policy Committee member Blanchflower reported the U.K. economy is “going into a recession” and noted interest rates will probably fall “well below” their current 5.0% level.  Data released in the U.K. today saw Rightmove July house prices notch their first annual decline in at least six years.  Also, the London Retail Consortium reported June retail sales reached their highest level since February – up 8.7% y/y -  while RICS reported the commercial property market weakened.  Cable bids are cited around the US$ 1.9870/ 1.9360 levels.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7975 level and was supported around the ₤0.7925 level.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0180 level and was capped around the CHF 1.0240 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 producer and import prices climb 0.6% n/n and 4.5% y/y.  U.S. dollar offers are cited around the CHF 1.0395 level.  The euro and British pound moved lower vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6195 and CHF 2.0320 levels, respectively.

Technical Outlook at 1230 GMT (EDT + 0400)

             (Bid Price)       (Today’s Intraday Range)                               

EUR/ USD         1.5862                 1.5907, 1.5826
USD/ JPY         106.86                 107.15, 106.36
GBP/ USD        1.9967                 1.9981, 1.9906
USD/ CHF         1.0219                 1.0240, 1.0182
AUD/ USD         0.9746                 0.9767, 0.9704
USD/CAD          1.0043    1.0068, 1.0030
NZD/USD          0.7599                0.7632, 0.7592
EUR/ JPY         169.52    169.91, 169.09
EUR/ GBP        0.7943                 0.7941, 0.7926
EUR/ CHF         1.6212                 1.6230, 1.6193
GBP/ JPY         213.42                 213.80, 212.13
CHF/ JPY          104.54    104.70, 104.25

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, 20 July 2008

all times GMT

(last release in parentheses)

2301     UK                    July Rightmove house prices (-1.2% m/m)

2301     UK                    July Rightmove house prices (0.1% y/y)

Monday, 21 July 2008

all times GMT

(last release in parentheses)

0130     Australia           Q2 producer price index (1.9% q/q)

0130     Australia           Q2 producer price index (4.8% y/y)

0300     NZ                    June credit card shopping (5.9% y/y)

0700     CH                    June M3 money supply (2.6% y/y)

0715     CH                    June producer and import prices (1.2% m/m)

0715     CH                    June producer and import prices (3.9% y/y)

1400     US                    June leading indicators (0.1%)

2350     Japan                May all-industry activity index (0.8% m/m)

Tuesday, 22 July 2008

all times GMT

(last release in parentheses)

0615     CH                    June trade balance (CHF 1.87 billion)

1230     Canada             May retail sales (0.6% m/m)

1230     Canada             May retail sales, ex-autos (1.1% m/m)

1400     US                    July Richmond Fed manufacturing index (-12)

1400     US                    May house price index (-0.8% m/m)

Wednesday, 23 July 2008

all times GMT

(last release in parentheses)

0100     Australia           July DEWR skilled vacancies

0130     Australia           Q2 consumer price index (1.3% q/q)

0130     Australia           Q2 consumer price index (4.2% y/y)

0645     France              June consumer spending (2.0% m/m)

0645     France              June consumer spending (3.1% y/y)

0800     Italy                  May retail sales (0.0% m/m)

0800     Italy                  May retail sales (-2.3% y/y)

0830     UK                    Bank of England Monetary Policy Committee meeting minutes

0830     UK                    June BBA loans for house purchase

0900     Eurozone          May industrial new orders (2.5% m/m)

0900     Eurozone          May industrial new orders (11.7% y/y)

1100     US                    MBA mortgage applications

1100     Canada             June consumer price index (1.0% m/m)

1100     Canada             June consumer price index (2.2% y/y)

1100     Canada             June Bank of Canada CPI (0.3% m/m)

1100     Canada             June Bank of Canada CPI (1.5% y/y)

1300     Canada             Federal Reserve Governor Mishkin speaks

1515     US                    Federal Reserve Vice Chairman Kohn speaks

1800     US                    Federal Reserve Beige Book

2100     NZ                    Reserve Bank of New Zealand interest rate decision

2350     Japan                June merchandise trade balance (¥365 billion)

Thursday, 24 July 2008

all times GMT

(last release in parentheses)

0645     France              July business confidence (102)

0645     France              July production outlook

0730     Germany           July PMI, manufacturing (52.6)

0730     Germany           July PMI, services (52.1)

0800     Germany           July Ifo, business climate (101.3)

0800     Germany           July Ifo, expectations (94.7)

0800     Eurozone          July PMI, manufacturing (49.2)

0800     Eurozone          July PMI, services (49.1)

0800     Eurozone          May current account (-€300 million)

0830     UK                    June retail sales (3.5% m/m)

0830     UK                    June retail sales (8.1% y/y)

1230     US                    Weekly initial jobless claims (366,000)

1230     US                    Continuing jobless claims (3.122 million)

1400     US                    June existing home sales (4.99 million)

1400     US                    June existing home sales (2.0% m/m)

1400     US                    New York Federal Reserve President Geithner testifies

2330     Japan                July Tokyo-area consumer price index (1.5% y/y)

2330     Japan                July Tokyo-area CPI, ex-food, energy (0.3% y/y)

2330     Japan                National consumer price index (1.3% y/y)

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

2350     Japan                Foreign purchases of Japanese equities and bonds

2350     Japan                Japanese purchases of foreign equities and bonds

2350     Japan                June corporate service prices (0.6% y/y)

Friday, 25 July 2008

all times GMT

(last release in parentheses)

0800     Eurozone          July M3 money supply (10.4%)

0800     Eurozone          July M3 money supply (10.5% y/y)

0830     UK                    Q2 GDP (0.3% q/q)

0830     UK                    Q2 GDP (2.3% y/y)

0830     UK                    May index of services (0.3%)

1230     US                    June durable goods orders (0.0%)

1230     US                    June durable goods orders, ex-transportation (-0.9%)

1400     US                    July University of Michigan consumer sentiment (56.6)

1400     US                    June new home sales (512,000)

1400     US                    June new home sales (-2.5% m/m)

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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