DAILY MARKET COMMENTARY
29 September 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 fell sharply vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4300 figure and was capped around the $1.4565 level.  The U.S. dollar rocketed as U.S dollar liquidity sharply plummeted around the world on account of the ongoing financial crisis.  The Federal Reserve sharply increased the size its 84-day Term Auction Facility and lifted its swap lines with Bank of Japan, the European Central Bank, Bank of Canada, Swiss National Bank, Reserve Bank of Australia, and Scandinavian central banks.  Data released in the U.S. today saw the August Chicago Fed’s manufacturing index fall 2.6% m/m. Also, August consumer spending was unchanged and August personal income was up 0.5%.  The core personal consumption expenditure price index was up +0.2% m/m and 2.6% y/y, matching its largest annual increase since January 1995.  U.S. legislators are said to be close to agreeing on the US$ 700 bailout to aid troubled financial institutions.  In eurozone news, France’s jobless total jumped to 1.95 million in August and the European Central Bank lent banks €120 billion in a special term tender to smooth liquidity pressures.  In eurozone news, EMU-15 economic sentiment fell sharply in September.  European financial giant Fortis received an emergency €11.2 billion capital infusion from Benelux governments and is selling most of its stake in ABN AMRO.  Euro bids are cited around the US$ 1.3840 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥104.55 level and was capped around the ¥106.95 level.  Bank of Japan Governor Shirakawa reported the central bank doubled its offers of three-month liquidity to US$ 20 billion, noting “dollar liquidity has almost dried up.” The Fed also increased its maximum aggregate U.S. dollar swap line with Bank of Japan to US$ 120 billion.  BoJ Deputy Governor Nishimura said recent market turmoil has been “extraordinary” and said the BoJ will not rule any policy options out but added the central bank will maintain a neutral policy for the time being.  The cabinet approved a supplementary budget of US$ 17 billion to fund an economic package. New Prime Minister Aso said “the most urgent agenda of all is to restore Japan’s economic health.”  Data released in Japan overnight saw August retail sales climb +0.7% y/y.  The Nikkei 225 stock index lost 1.26% to close at ¥11,743.61. U.S. dollar bids are cited around the ¥102.45 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥150.90 level and was capped around the ¥155.10 level. The British pound and Swiss franc depreciated vis-à-vis the yen as the crosses tested bids around the ¥189.10 and ¥95.70 levels, respectively.

₤

The British pound depreciated sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.7955 level and was capped around the $1.8365 level.  U.K. lender Bradford & Bingley was nationalized this weekend on account of the global credit market turmoil.  Retail deposits and branches were purchased by Banco Santander’s Abbey National Plc.  Data released in the U.K. saw August net mortgage lending collapse with mortgage approvals lower at 32,000.  Also, M4 sterling lending increased to ₤22.5 billion in August from ₤12.4 billion in July and August net consumer credit edged higher to ₤1.2 billion.  Cable bids are cited around the $1.7730 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8025 level and was supported around the ₤0.7905 level.

Technical Outlook at 1230 GMT (EDT + 0400)

             (Bid Price)       (Today’s Intraday Range)                               

EUR/ USD         1.4378                 1.4563, 1.4301
USD/ JPY         105.06                 106.97, 104.53
GBP/ USD        1.8041                 1.8366, 1.7957
USD/ CHF         1.0963                 1.1089, 1.0897
AUD/ USD         0.8132    0.8330, 0.8106
USD/CAD          1.0395                 1.0449, 1.0337
NZD/USD          0.6778                0.6887, 0.6737
EUR/ JPY         151.11    155.08, 150.99
EUR/ GBP        0.7966                 0.7985, 0.7907
GBP/ JPY         189.60                 195.43, 189.38
CHF/ JPY            95.84      97.39,   95.74

Support                        Resistance                   Support                     Resistance

EUR/ USD                                                              USD/ JPY

L1.        1.3840                          1.4975                            106.60                        113.30 

L2.        1.3320                          1.5175                            102.45                        115.90
L3.        1.2675                          1.5380                            101.95                        117.45

   GBP/ USD                                                          USD/ CHF

L1.        1.7420                          1.9135                          1.0705                          1.1475

L2.        1.6450                          1.9525                          1.0505                          1.1610

L3.        1.5445                          1.9835                          1.0340                          1.1910

 AUD/ USD                                                           USD/ CAD

L1.        0.8095                          0.8885                          1.0440                          1.0940

L2.        0.7910                          0.9220                          1.0130                          1.1205

L3.        0.7685                          0.9370                          0.9720                          1.1870

 NZD/ USD                                                           EUR/ JPY

L1.        0.6590                          0.7275                          153.00                          164.35

L2.        0.6440                          0.7520                          153.30                          165.40

L3.        0.5930                          0.8105                          145.65                          167.80

  EUR/ GBP                                                           EUR/ CHF

L1.        0.7730                          0.8310                          1.5895                          1.6250

L2.        0.7555                          0.8570                          1.5730                          1.6470

L3.        0.7440                          0.8790                          1.5610                          1.6760

  GBP/ JPY                                                           CHF/ JPY

L1.        188.55                          200.50                            94.15                         100.15

L2.        181.15                          206.00                            91.30                         103.30

L3.        173.75                          214.65                            87.40                        105.30

SCHEDULE

Sunday, 28 September 2008

all times GMT

(last release in parentheses)

2145     NZ                    August trade balance (-NZ$ 781.0 million)
2350     Japan                August retail trade (0.0% m/m)

2350     Japan                August retail trade (1.9% y/y)

2350     Japan                August large retailers’ sales (-0.7%)

Monday, 29 September 2008

all times GMT

(last release in parentheses)

0200     NZ                    August M3 money supply (7.6% y/y)

0800     Eurozone          October PMI, retail (47.7)

0800     Italy                  July large company employment (-0.3% y/y)

0830     UK                    August net consumer credit (₤1.1 billion)

0830     UK                    August net lending secured on dwellings (₤3.2 billion)

0830     UK                    August mortgage approvals (33,000)

0830     UK                    August M4 money supply

0830     UK                    August M4 sterling lending

0900     Eurozone          September business climate indicator (-0.33)

0900     Eurozone          October consumer confidence (-19)

0900     Eurozone          September economic confidence (88.8)

0900     Eurozone          September industrial confidence (-10)

0800     Eurozone          September services confidence (3)

1230     US                    August personal consumption expenditure, core (0.3% m/m)
1230     US                    August personal consumption expenditure, core (2.4% y/y)

1230     US                    August personal consumption expenditure deflator (4.5% y/y)

1230     US                    August personal income (-0.7%)

1230     US                    August personal spending (0.2%)

2145     NZ                    August building permits (4.7% m/m)

2301     UK                    September GfK consumer confidence (-36)

2330     Japan                August jobless rate (4.0%)

2330     Japan                August household spending (-0.5% y/y)

2350     Japan                August industrial production

Tuesday, 30 September 2008

all times GMT

(last release in parentheses)

N/A       Germany           August retail sales (-1.5% m/m)

N/A       Germany           August retail sales (0.0% y/y)

0130     Australia           August retail sales trend (0.1%)

0130     Australia           August private sector credit (0.5% m/m)

0130     Australia           August private sector credit (11.2% y/y0

0130     Australia           August building approvals (-2.3% m/m)

0130     Australia           August building approvals (-3.7% y/y)

0300     NZ                    September NBNZ business confidence (-20.5)

0500     Japan                September business confidence (41.4)

0500     Japan                August housing starts (19.0% y/y)

0500     Japan                August annualized housing starts (1.144 million)

0500     Japan                August construction orders (42.3% y/y)

0600     Germany           August ILO unemployment rate (7.3%)

0645     France              August producer prices (0.7% m/m)

0645     France              August producer prices (7.3% y/y)

0645     France              August housing starts (-11.8%)

0645     France              August housing permits (-16.6%)

0755     Germany           September unemployment change (-40,000)

0800     Italy                  August producer price index (0.5% m/m)

0800     Italy                  August produce price index (8.3% y/y)

0800     CH                    August UBS consumption indicator (1.848)

0830     UK                    Q2 GDP (0.2% q/q)

0830     UK                    Q2 GDP (1.4% y/y)

0830     UK                    Q2 current account (-₤8.4 billion)

0830     UK                    Q2 total business investment (1.9% y/y)

0900     Eurozone          September consumer price index (3.8% y/y)

0900     Italy                  September consumer price index

1230     Canada             July GDP (0.1% n/n)

1230     Canada             August industrial product prices (0.4% m/m)

1230     Canada             August raw materials price index (1.4% m/m)

1300     US                    July S&P/ Case-Shiller home price index

1345     US                    September University of Michigan PMI (57.9)

1300     US                    September consumer confidence (56.9)

2330     Australia           September performance of manufacturing index (47)

2350     Japan                Q3 tankan, large manufacturers’ index

2350     Japan                Q3 tankan, non-manufacturing index

2350     Japan                Q3 tankan, large all-industry capital expenditures

Wednesday, 1 October 2008

all times GMT

(last release in parentheses)

0130     Japan                August labour cash earnings (0.3%)

0730     CH                    September PMI (52.5)

0745     Italy                  September PMI (47.1)

0750     France              September PMI

0755     Germany           September PMI

0800     Eurozone          September PMI

0830     UK                    September PMI, manufacturing (45.9)

0900     Eurozone          August unemployment rate (7.3%)

1100     US                    MBA mortgage applications

1130     US                    September Challenger job cuts (11.7% y/y)

1215     US                    September ADP employment change (-33,000)

1400     US                    September ISM manufacturing (49.9)

1400     US                    September ISM, prices paid (77)

1400     US                    August construction spending (-0.6% m/m)

2350     Japan                September monetary base (-0.2% y/y)

2350     Japan                Foreign purchases of Japanese equities and bonds

2350     Japan                Japanese purchases of foreign equities and bonds

Thursday, 2 October 2008

all times GMT

(last release in parentheses)

0130     Australia           August trade balance (-A$ 717 million)

0200     NZ                    September ANZ commodity prices (-3.3%)

0545     CH                    September SECO economic forecasts

0830     UK                    Q2 Bank of England credit conditions

0830     UK                    September PMI, construction (40.5)

0900     Eurozone          August PPI (1.1% m/m)

0900     Eurozone          August PPI (9.0% y/y)

1145     Eurozone          European Central Bank interest rate decision

1230     US                    Weekly initial jobless claims

1230     US                    Continuing jobless claims

1400     US                    August factory orders (1.3%)

2330     Australia           September AIG performance of service index (39.3)

Friday, 3 October 2008

all times GMT

(last release in parentheses)

0000     US                    St. Louis Fed President Bullard speaks

0030     Australia           September TD Securities inflation (0.1% m/m)

0030     Australia           September TD Securities inflation (4.2% y/y)

0545     CH                    September consumer price index (-0.3% m/m)

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

0800     Eurozone          September PMI, services

0830     UK                    September PMI, services (49.2)

0830     UK                    Q2 Bank of England housing equity withdrawal (₤5.0 billion_

0800     Eurozone          August retail sales (-0.4% m/m)

0900     Eurozone          August retail sales (-2.8% y/y)

1230     US                    Weekly initial jobless claims (-84,000)

1230     US                    September unemployment rate (6.1%)

1230     US                    September average hourly earnings (0.4% m/m)

1230     US                    September average hourly earnings (3.6% y/y)

1230     US                    September ISM, non-manufacturing (50.6%)

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