DAILY MARKET
COMMENTARY
22 July 2008
Tuesday
_____________________________________________________________________
GCI Foreign
Exchange Research:
www.gcitrading.com/fxnews/
FX
Research Desk:
fxnews@gcitrading.com
_____________________________________________________________________
Fundamental Outlook at 1400
GMT (EDT + 0400)
€
The euro weakened vis-à-vis the U.S.
dollar today as the
single currency tested bids around the US$ 1.5825 level and was
capped around the $1.5945 level. Technically, today’s
intraday high was right around the 23.6% retracement of the move
from $1.5610 to $1.6040.
The common currency eroded during the North American session
after NYMEX crude oil futures for September delivery slipped nearly
$5.00 to the $126 handle. Comments from
Philadelphia Fed President Plosser also sent the euro lower as
Plosser reported inflationary pressures are “too high” and said
policymakers may need to raise rates “sooner rather than
later.” Plosser added
he isn’t sure the public’s inflation expectations will remain
“well-anchored.” Data
released in the U.S. today saw retail
sales up +1.1% m/m in the first two weeks of July. Traders await the release of
the Fed’s Beige Book tomorrow.
In eurozone news,
European Central Bank member Bini Smaghi noted EMU-15 inflation
would be “higher” without the ECB’s current monetary policy. EMU-15 May new industrial
orders data will be released tomorrow. 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 ¥106.05
level. Technically,
today’s intraday high was just above the 76.4% retracement of the
move from ¥107.75 to ¥103.75.
Data released in Japan overnight saw the
May all-industries index rise 0.4% m/m while the May tertiary index
fell 0.2% in May. Also,
Bank of Japan released its corporate fund demand index overnight and
it fell to -16 from -4, evidencing a decrease in funding from
banks. As expected, the
government revised its fiscal year 2008 economic outlook and growth
forecast to nominal growth of 0.3% from the previous 2.1% rate. The government also
lifted its CPI forecast to 1.7% from 0.3% while the GDP deflator
forecast was downwardly revised to -1.0% from +0.1%. Additionally, the government
sees unemployment rising to 4.0%, industrial output falling to 0.8%,
and the U.S. dollar averaging around ¥106.30 in the year to March
2009. The government
reported “further rises in crude oil prices, the U.S.
economic slowdown and the yen's appreciation have occurred. The
economic recovery appears to be pausing, and weak movement has been
seen recently.” Other
data released today saw June supermarket sales off 0.9%, the third
consecutive monthly decline.
The government also called on households “to take risks” so
that “growth can be attained.”
The Nikkei 225
stock index gained 2.98% to close at ¥13,184.96. Dollar bids are cited around
the ¥103.65 level. The euro moved lower
vis-à-vis the yen as the single currency tested bids around the
¥169.05 level and was capped around the ¥169.70 level. The British pound moved
higher vis-à-vis the yen as sterling tested offers around the
¥213.70 level while the
Swiss franc came off vis-à-vis the yen and tested bids around
the ¥104.45 level. The
Chinese yuan appreciated vis-à-vis the U.S. dollar as the
greenback closed at CNY 6.8217 in the over-the-counter market, down
from CNY 6.8300. Data
released in China overnight saw the
June enterprise commodity price index climb 9.5% y/y. A Chinese government
official reported “the tight credit policy will not change in the
second half.”
₤
The British pound
weakened vis-à-vis the U.S. dollar today as cable tested bids
around the US$ 1.9930 level and was capped around the $2.0075
level. Cable eroded
during the North American session as traders bid the greenback
higher on falling energy prices. Bank of England Governor King
testified today but did not comment on monetary policy. Minutes from Bank of
England’s July Monetary Policy Committee meeting will be released
tomorrow. Most dealers believe MPC’s Blanchflower was the only
policymaker who voted for a rate cut. Cable bids are cited around
the US$ 1.9870/ 1.9360 levels. The euro moved lower
vis-à-vis the British pound as the single currency tested bids
around the ₤0.7920 level and was capped around the ₤0.7960
level.
CHF
The Swiss franc
depreciated vis-à-vis the U.S. dollar today as the greenback tested
offers around the CHF 1.0295 level and was supported around the CHF
1.0135 level.
Technically, today’s intraday low was right around the 50%
retracement of the move from CHF 0.9625 to CHF 1.0625. Data released in
Switzerland saw its trade
surplus print at a new all-time high, up to CHF 2.41 billion from
CHF 1.87 billion in May.
U.S. dollar offers are cited around the CHF 1.0395
level. The euro and British pound
moved higher vis-à-vis the Swiss franc as the crosses tested
offers around the CHF 1.6250 and CHF 2.0510 levels, respectively.
Technical
Outlook at 1230 GMT (EDT + 0400)
(Bid Price)
(Today’s Intraday
Range)
EUR/ USD
1.5872
1.5943,
1.5867
USD/ JPY
106.69
106.83,
106.05
GBP/ USD
1.9993
2.0075,
1.9984
USD/ CHF
1.0198
1.0209,
1.0136
AUD/ USD
0.9751
0.9791,
0.9746
USD/CAD
1.0045 1.0059, 0.9990
NZD/USD
0.7618
0.7631, 0.7598
EUR/
JPY
169.42 169.71,
169.04
EUR/ GBP
0.7939
0.7959,
0.7929
EUR/ CHF
1.6196
1.6208, 1.6160
GBP/
JPY
213.39
213.71,
212.81
CHF/ JPY
104.61 104.77, 104.50
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, 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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