Forex

Forex

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Daily Market Commentary

24 April 2009
Friday

_____________________________________________________________________
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$ 1.3300 figure and was supported around the US$ 1.3110 level. The common currency darted higher following some positive European data and a strong day in the U.S. equity markets on news the Obama administration is extending another US$ 2 billion in loans to General Motors. The Federal Reserve reported the recession and market turbulence have “substantially reduced” reserves at some of the nineteen largest U.S. banks, noting most banks maintain capital “well in excess” of regulatory standards. The Fed also said the government is prepared to aid U.S. banks that are experiencing problems. The Fed’s stress tests results of U.S. banks will be released on 4 May. Group of Seven officials convening this weekend will likely not announce any new actions in their communiqué and will likely not include new verbiage on exchange rate. Data released in the U.S. today saw March new home sales decline 0.6% to an annualized 356,000 rate and fall 30.6% y/y. Also, March durable goods orders were off 0.8% with the ex-transportation component off 0.6%. In eurozone news, the IMF called on the ECB to reduce rates further and “in a timely manner.” The German Ifo business confidence index improved to 83.7 in April from 82.2 in March. Many economists believe the worst may be behind the German economy but today’s print remains recessionary. Additionally, French March consumer spending was up 1.1% m/m and 0.6% y/y. Euro bids are cited around the US$ 1.2765 level.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥96.65 level and was capped around the ¥98.15 level. Data released in Japan overnight saw March corporate service price index climb 0.9% m/m and decline 2.1% y/y. The Nikkei 225 stock index lost 1.57% to close at ¥8,707.99. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥127.25 level and was capped around the ¥129.25 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥141.15 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥85.60 level. The Chinese yuan appreciated vis-à-vis the U.S. dollar today as the greenback closed at CNY 6.8230 in the over-the-counter market, down from CNY 6.8233. People’s Bank of China adviser Fan said China can still record 7-8% growth this year.

₤

The British pound depreciated vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4575 level and was capped around the $1.4770 level. Chancellor of the Exchequer Darling said the markets can support the U.K. government’s planned ₤125 billion of gilts issuance this year. March retail sales were up 0.3% m/m and up 1.5% y/y and Q1 GDP were off 1.9% q/q and 4.1% y/y. Cable bids are cited around the US$ 1.4350 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.9080 level and was supported around the ₤0.8920 level.

Technical Outlook at 1230 GMT (EDT + 0400)

(Bid Price) (Today’s Intraday Range)

EUR/ USD 1.3260 1.3300, 1.3112
USD/ JPY 97.03 98.13, 96.63
GBP/ USD 1.4680 1.4772, 1.4575
USD/ CHF 1.1387 1.1525, 1.1347
AUD/ USD 0.7218 0.7227, 0.7105
USD/CAD 1.2087 1.2266, 1.2070
NZD/USD 0.5714 0.5730, 0.5598
EUR/ JPY 128.62 129.25, 127.24
EUR/ GBP 0.9028 0.9080, 0.8918
GBP/ JPY 142.34 144.49, 141.14
CHF/ JPY 85.18 85.59, 84.25

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

Friday, 24 April 2009
all times GMT
(last release in parentheses)

0400 US Group of Seven finance ministers meet

0645 France March consumer spending (-2.0% m/m)

0645 France March consumer spending (-2.0% y/y)

0800 Germany April Ifo, expectations (81.6)

0800 Germany April Ifo, business climate (82.1)

0800 Germany April Ifo, current assessment (82.7)

0830 UK Q1 gross domestic product (-1.6% q/q)

0830 UK Q1 gross domestic product (-2.0% y/y)

0830 UK March retail sales (-1.9% m/m)

0830 UK March retail sales (0.4% y/y)

1230 US March durable goods orders (3.4%)

1230 US March durable goods, ex-transportation (3.9%)

1400 US March new home sales (337,000)

1400 US March new home sales (4.7% 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 U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Today's Market Update

Today's Market Update

London Session
Published: April 24, 2009 7:27 AM

EUR spiked higher in the London session on the release of the better than expected German IFO survey. Having traded in the 1.3190 area in early European hours, EUR/USD temporarily breached 1.3260 on the data release before it settled around the 1.3240 area. The expectations index of the IFO survey has now risen for three consecutive months. These rises, however, should be viewed as the real economy becoming less pessimistic rather than outright signs of optimism. EUR/GBP also surged on the back of this morning's data releases.

UK economic data was mixed with the impact of the worse than expected Q1 UK GDP data being softened by a decent set of March retail sales data. GDP fell -1.9% q/q, far more than the -1.5% q/q consensus expectation. This will undermine this week's UK budget forecasts further. The Chancellor this week forecast UK growth as recovering to 1.25% next year and then to 3.25% in 2011. The big concern for UK markets at present is whether the UK government will be able to offload to huge increase of gilt supply. Clearly if growth expectations fail to meet will official forecasts (which seem likely in 2011), the official forecasts for public finances, which are already grim, will appear to be optimistic.

The better than expected UK retail sales data at +0.3% m/m does provide a glimmer of hope and suggests that the low interest rate environment may be having an effect. However, many analysts see the Office of National Statistics' credibility as being undermined over the past year since its office move. Next week's CBI distributive trades survey will shine fresh light on the outlook for UK consumption. Given the dire outlook for public finances expect sterling to remain vulnerable in the weeks ahead.

JPY held most of its gains during the European morning having rallied in Asia on talk of a possible downgrade of UK debt. Elsewhere Spanish Q1 unemployment at 17.36% reveals how badly hit by recession that economy has been, though ECB policy decisions will of course continue to be dominated by the economies of Germany and France. US durable goods and new home sales data provide a focus for the US session.

Upcoming Economic Data Releases (Asia Session) expected prior

4/24 12:30 GMT US Durable Goods Orders MAR -1.50% 3.40%

4/24 12:30 GMT US Durables Ex Transportation MAR -1.20% 3.90%

4/24 14:00 GMT US New Home Sales MAR 340K 337K

4/24 14:00 GMT US New Home Sales MoM MAR 0.90% 4.70%

» Asia Session
» New York Session

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Today's Market Update

London Session
Published: April 17, 2009 8:04 AM

The London session saw risk pared despite yet another better than expected earnings report from a major US financial institution. The fact that this included $45 billion of government bailout money was not lost on the market and US stock futures remain in the red in early NY here. Gold remains under pressure while below the 873 short-term pivot. Below the recent 865 lows should open up potential towards 850 next.

Euro was punished overnight as dovish comments from ECB President Trichet couple with yet another credit downgrade on the horizon weighed on the currency. Trichet commented that saying the euro is weak does not reflect the current situation and that he appreciates US comments that a strong dollar is in its interests. If this wasn't bad enough, Moody's credit rating service placed Ireland on review for a potential cut of its Aaa rating. This saw EUR/USD finally make an earnest move through the 1.3090 lows of last week. Now a close below the 55-day moving average at 1.3022 would not be constructive for the pair.

CHF was also one of the bigger movers overnight as the SNB announced it plans to continue intervening in the FX market if the need arises. Swiss central bank President Roth said that already bleak exports will continue to fall and that the bank will ''continue to act in a decisive way if there's a similar development of a franc appreciation''. EUR/CHF rallied 70 pips despite overall euro weakness towards 1.5220 while USD/CHF jumped more than 100 points into the 1.1670 area.