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U.S. Forex Market Commentary

Sun, May 10 2009, 22:04 GMT
by GCI Financial Team

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EURO

The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3570 level and was supported around the US$ 1.3250 level.   The April U.S. non-farm payrolls reports was released today and payrolls were off 539,000 last month with the unemployment rate higher at 8.9%, the highest level since 1983.  March’s and April’s jobless tallies were downwardly revised by a combined 66,000 workers. The U.S. economy has now lost 5.7 million jobs since the beginning of the recession in December 2007 with 4.7 million job losses in the last four months.  The rate of marginally attached and involuntary part-time workers unemployment level reached 15.8% and average hourly earnings were up 3.2% y/y to $18.51.  U.S. equities reacted positively to the news and there is a growing optimism in the market that suggests the U.S. economy may have already bottomed out.  Other data released in the U.S. saw March wholesale inventories improve to -1.6%.  The markets easily absorbed yesterday’s results of U.S. banks’ stress tests.  The U.S. Treasury reported banks will need to raise at least another US$ 65 billion to remain well-capitalized.  In eurozone news, German March industrial production was off 20.4% y/y and the March trade surplus improved to €11.3 billion from €8.6 billion. Germany’s Economy Ministry today predicted unemployment will peak in 2010.  Euro bids are cited around the US$ 1.2765 level.

JPY / CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥98.70 level and was capped around the ¥99.55 level.  Minutes from Bank of Japan’s Policy Board were released overnight and evidenced a consensus among policymakers that the central bank’s Japanese government bond purchases should be limited.   The central banks also voted unanimously to keep interest rates unchanged at 0.1% and expanded its range of collateral for its liquidity provision operations.  The Nikkei 225 yesterday stock index climbed 0.50% to close at ¥9,432.83.  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 ¥134.00 figure and was supported around the ¥132.15 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥150.15 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.85 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8250 in the over-the-counter market, up from CNY 6.8220.

STERLING

The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5145 level and was supported around the $1.4965 level.  Data released in the U.K. today saw April factory gate prices rise at their slowest pace in five years as output producer prices up 1.2% y/y, down from March’s 2.0% gain.  Core output prices were up 0.4% m/m and 2.4% y/y. April input producer prices were off 5.0% y/y and off 1.0% m/m.  Confederation of British Industry called on called on the U.K. government to enact immediate cuts in public spending.  Cable bids are cited around the US$ 1.4735 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8975 level and was supported around the ₤0.8895 level.

SWISS

The Swiss franc appreciated sharply vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1335 level and was supported around the CHF 1.1080 level.  Data released in Switzerland today saw the April unemployment rate climb to 3.4%.  U.S. dollar bids are cited around the CHF 1.0975 level.  The euro moved lower vis-à-vis the Swiss franc as the single currency tested bids around the CHF 1.5060 level while the British pound came off vis-à-vis the Swiss franc and tested bids around the CHF 1.6790 level.

Published on  Sun, May 10 2009, 22:06 GMT

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