DAILY MARKET COMMENTARY
25 March 2009

Wednesday

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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$ 1.3430 level and was capped around the US$ 1.3675 level.  President Obama spoke last night and defended his budget proposal.  Obama also noted the U.S. dollar is “extraordinarily strong right now” and said he doesn’t see a need for a global reserve currency, an idea being promoted by China and Russia.  In contrast, U.S. Treasury Secretary Geithner today said he is open to the proposal but later clarified his remarks after the dollar fell sharply, noting the U.S. dollar would remain the main global reserve currency.  Some traders expect the proposal will gain some traction at the Group of Twenty meeting on 2 April.  Data released in the U.S. today saw Febuary headline durable goods orders climb an unexpected 3.4%, defying expectations of a modest decline, while February new home sales were up 4.7% to an annualized 337,000 last month - the first improvement in seven months.  On an annualized basis, however, new home sales were off 41.1% and durables were off 28.4% y/y.  Notably, orders for non-defense capital goods excluding aircraft were up 6.6% after falling 11.3% in January abd February building permits were upwardly revised to +6.2% from +3.0%.  Recent economic data in the U.S. have been encouraging but it is premature to say an economic recovery is afoot.  In eurozone news, French February unemployment was up 3.5% to 2.385 million and up 19% y/y.  Also, the German March Ifo index of business sentiment fell to a record low of 82.1, indicating a worsening recession in the eurozone’s largest economy.  Eurogroup chairman Juncker talked about reported U.S. pressure on the eurozone to increase fiscal stimulus spending saying “It is out of the question that we increase our economic stimulus plans.  I see a timid recovery towards the end of 2010.”  Euro bids are cited around the US$ 1.3245 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥96.90 level and was capped around the ¥98.35 level.  Bank of Japan Deputy Governor Yamaguchi reported the BoJ’s focus “will be placed, for the time being, on securing market stability and facilitating corporate financing.  The bank will continue to examine carefully developments in financial markets and corporate financing and to take necessary measures in a decisive manner without any predetermined view.”  Yamaguchi was pessimistic on Japan’s export outlook and said recently announced quantitative easing measures such as purchasing more bonds outright and providing subordinated loans to banks through the fiscal year-end next week may not be sufficient.  Furthermore, he said consumer prices may soon begin declining on a year-over-year basis.  BoJ Governor Shirakawa today testified “The country's economy is facing downside risks and prices will likely soon start falling. But right now the country is not going through a vicious cycle where economic contraction and price falls reinforce each other.” The Nikkei 225 stock index lost 0.23% to close at ¥8,479.99.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥132.85 level and was supported around the ¥130.75 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥140.95 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥87.20 level.  The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8304 in the over-the-counter market, up from CNY 6.8294.

₤

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4515 level and was capped around the $1.4735 level.  Bank of England purchased corporate bonds worth ₤85.525 million in the secondary market today, part of its quantitative easing plan to ease credit strains.  U.K. Business Secretary Mandelson today reported the “era of the G8 is over.”  London will host the Group of Twenty meeting on 2 April.  Chancellor of the Exchequer Darling is expected to downgrade his growth forecasts and increase his borrowing estimates when he presents his budget on 22 April.  Prime Minister Brown today reported “The U.K. government will do whatever is necessary to revive growth, with global deflation the main danger in the short term.”  Cable bids are cited around the US$ 1.4410 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9375 level and was supported around the ₤0.9160 level.

Technical Outlook at 1230 GMT (EDT + 0400)

             (Bid Price)       (Today’s Intraday Range)                                

EUR/ USD        1.3587                1.3650, 1.3418
USD/ JPY           97.40                   98.35,   96.91
GBP/ USD        1.4547                 1.4733, 1.4513
USD/ CHF         1.1197                 1.1327, 1.1167
AUD/ USD        0.6973                 0.7050, 0.6903
USD/CAD         1.2276                 1.2354, 1.2218
NZD/USD         0.5659                0.5718, 0.5584
EUR/ JPY         132.45    132.87, 130.76
EUR/ GBP        0.9338                 0.9374, 0.9159
GBP/ JPY         141.80                 144.59, 140.94
CHF/ JPY           87.01                   87.21,   86.01

Support                        Resistance                   Support                     Resistance

EUR/ USD                                                              USD/ JPY

L1.        1.2465                          1.3205                             87.05               92.70 

L2.        1.2350                          1.3315                             86.00               96.05
L3.        1.2130                          1.3595                             84.50               98.90

   GBP/ USD                                                          USD/ CHF

L1.        1.4070                          1.4615                          1.1400                          1.1815

L2.        1.3500                          1.4890                          1.1205                          1.2250

L3.        1.3290                          1.5340                          1.0880                          1.2430

 AUD/ USD                                                           USD/ CAD

L1.        0.6305                          0.6780                          1.2030                          1.2615

L2.        0.6015                          0.6965                          1.1805                          1.2785

L3.        0.5535                          0.7260                          1.1445                          1.3375

 NZD/ USD                                                           EUR/ JPY

L1.        0.4975                          0.5545                          111.25                          122.45

L2.        0.4620                          0.5730                          105.30                          131.10

L3.        0.4380                          0.6055                            93.10                          140.60

  EUR/ GBP                                                          EUR/ CHF

L1.        0.8745                          0.9805                          1.4590                          1.5260

L2.        0.8495                          1.0140                          1.4300                          1.5560

L3.        0.8185                          1.0310                          1.4110                          1.5855

  GBP/ JPY                                                           CHF/ JPY

L1.        125.30                          134.40                            76.30                           81.75

L2.        119.45                          137.15                            73.20                           84.00

L3.        115.20                          141.80                            70.80                           87.30

SCHEDULE

Wednesday, 25 March 2009

all times GMT

(last release in parentheses)

N/A       Germany           February import price index

0100     NZ                    Q1 Westpac consumer confidence (101.3)

0200     Japan               Bank of Japan Deputy Governor Yamaguchi speaks

0730     Australia           Reserve Bank of Australian Governor Stevens speaks

0830     Italy                  March consumer confidence

0900     Germany           March Ifo, expectations (80.9)

0900     Germany           March Ifo, business climate (82.6)

0900     Germany           March Ifo, current assessment (84.3)

1100     UK                    March CBI distributive trades (-25)

1100     US                    MBA mortgage applications

1230     US                    February durable goods orders (-4.5%)

1230     US                    February durable goods, ex-transportation (-3.0%)

1400     US                    February new home sales (309,000)

1400     US                    February new home sales (-10.2% m/m)

1620     US                    Cleveland Federal Reserve President Pianalto speaks

1700     France              French total jobseekers

1700     US                    San Francisco Federal Reserve President Yellen speaks

2145     NZ                    Q4 current account balance (-NZ$ 5.994 billion)

2300     Australia           January leading index (-0.9%)

2350     Japan               February corporate service prices (-2.2% y/y)

2350     Japan               Foreign purchases of Japanese equities and bonds

2350     Japan               Japanese purchase of foreign stocks and equities

Thursday, 26 March 2009

all times GMT

(last release in parentheses)

0030     Australia           Reserve Bank of Australia Financial Stability Review

0710     Germany           April GfK consumer confidence (2.6)

0830     Italy                  March business confidence

0900     Eurozone          February M3 money supply (5.9% y/y)

0930     UK                    February retail sales (0.7% m/m)

0930     UK                    February retail sales (3.6% y/y)

0930     UK                    Q4 total business investment (-3.9% q/q)

0930     UK                    Q4 total business investment (-7.7% y/y)

1230     US                    Q4 gross domestic product, annualized (-6.2%)

1230     US                    Q4 gross domestic product price index (0.5%)

1230     US                    Q4 personal consumption expenditure, core (0.8%)

1230     US                    Weekly initial jobless claims (646,000)

1230     US                    Continuing jobless claims (5.473 million)

1325     US                    Richmond Federal Reserve President Lacker speaks

1400     US                    Treasury Secretary Geithner speaks

1600     US                    Dallas Federal Reserve President Fisher speaks

1630     US                    Richmond Federal Reserve President Lacker speaks

1700     US                    Minneapolis Federal Reserve President Stern speaks

2145     NZ                    Q4 gross domestic product (-0.4% q/q)

2145     NZ                    Q4 gross domestic product (-0.1% y/y)

2145     NZ                    February trade balance (-NZ$ 187.0 million)

2330     Japan               March Tokyo-area consumer price index (0.5% y/y)

2330     Japan               March Tokyo-area CPI, ex-food, energy (-0.1% y/y)

2330     Japan               February consumer price index (0.0% y/y)

2330     Japan               February CPI, ex-food, energy (0.0% y/y)

2350     Japan               February retail trade (-0.1% m/m)

2350     Japan               February retail trade (-2.4% y/y)

2350     Japan               February large retailers’ sales (-5.5%)

Friday, 27 March 2009

all times GMT

(last release in parentheses)

N/A       Germany           March consumer price index

0745     France              Q4 gross domestic product (-1.2% q/q)

0745     France              Q4 gross domestic product (-1.0% y/y)

0900     Italy                  January industrial orders

0900     Italy                  January industrial sales

0930     UK                    Q4 gross domestic product (-1.5% q/q)

0930     UK                    Q4 gross domestic product (-1.9% y/y)

0930     IK                     Q4 current account

1000     Eurozone          January industrial new orders (-5.2% m/m)

1000     Eurozone          January industrial new orders (-22.3% y/y)

1030     CH                    March KOF leading indicator (-1.41)

1230     US                    February personal consumption expenditure, core (0.1% m/m)

1230     US                    February PCE, core (1.6% y/y)

1230     US                    February PCE deflator (0.7% y/y)

1230     US                    February personal income (0.4%)

1230     US                    February personal spending (0.6%)

1400     US                    March University of Michigan consumer sentiment (56.6) 

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.