EURO
The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5750 level and was supported around the $1.5660 level. Data released in the U.S. today saw June new home sales fall 0.6% to an annualized 530,000 units, the lowest level since March and further evidence of the beleaguered condition of the housing sector. Other data released today saw the July University of Michigan consumer sentiment indicator improve to 61.2 from 56.4 at the end of June, exceeding expectations. Also, June building permits were revised to +16.4% from +11.6% and June durable goods orders were up 0.8% with the ex-transportation component up 2.0%. Notably, the core capital goods index rose 1.4%, the largest monthly increase since April. The November federal funds futures contract is pricing in about an 88% chance the Fed will lift the federal funds target rate by 25bps to 2.25% at the 5 August Federal Open Market Committee meeting. Dealers also cited some U.S. dollar selling pressure related to comments from PIMCO managing director Gross who said securities owners should expect about US$ 1 trillion in losses related to risky mortgage loans. In eurozone news, EMU-15 M3 money supply growth moderated to 9.5% from 10.0% in May. European Central Bank member Liebscher reported there is still room to tighten monetary policy. It was also reported that German June import prices were up 1.5% m/m and 8.9% y/y. Euro bids are cited around the $1.5230 level.
JPY / CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥107.90 level and was supported around the ¥106.60 level. Data released in Japan overnight saw June core consumer price inflation climb 1.9% y/y on soaring oil and commodity prices. This is just below Bank of Japan’s 2.0% “understanding of price stability.” Most traders believe the central bank will keep the overnight call rate unchanged at 0.50% for a few months but policymakers are concerned inflation could reach as much as 2.5%. BoJ Governor Shirakawa and finance minister Nukaga discussed the economy today and economy minister Ota said she is worried prices could impact spending. Other data released overnight saw the June corporate services price index up 1.2%. The Nikkei 225 stock index lost 1.97% to close at ¥13,334.76. Dollar bids are cited around the ¥103.65 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥169.30 level and was supported around the ¥167.50 level. The British pound and Swiss franc gained ground vis-à-vis the yen as the crosses tested offers around the ¥214.80 and ¥104.00 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8189 in the over-the-counter market, down from CNY 6.8289.
STERLING
The British pound gained ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.9975 level and was supported around the $1.9830 level. Data released in the U.K. today saw Q2 gross domestic product increase 0.2%, less-than-expected and its slowest rate in three years. Many economists believe the U.K. economy may be in a recession by the end of the year. Cable bids are cited around the $1.9360 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7920 level and was supported around the ₤0.7870 level.
SWISS
The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0405 level and was supported around the CHF 1.0315 level. Technically, today’s intraday high was right around the 23.6% retracement of the move from CHF 0.9645 to CHF 1.0625. Most traders expect Swiss National Bank will keep official interest rates unchanged for the foreseeable future. U.S. dollar offers are cited around the CHF 1.0515 level. The euro and British pound gained ground vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6310 and CHF 2.0715 levels, respectively.
