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U.S. Forex Market Commentary

Sun, Jun 28 2009, 23:04 GMT
by GCI Financial Team

GCI

EURO

The euro extended recent gains vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4115 level and was supported around the $1.3980 level.  The common currency has been well-bid from the $1.3890 level during yesterday’s North American session and was higher again today on China’s latest call to lessen its reliance on the U.S. dollar by advocating a new supranational currency.  Data released in the U.S. today saw May personal income rise 1.4% while May personal spending up 0.3%.  These data suggest U.S. consumers have raised their marginal savings rate substantially, to the detriment of countries like China that export heavily into the U.S.  Despite China’s latest calls for a new global currency and despite the unprecedented level of debt being sold by the U.S., recent Treasury auctions have performed very well with a high percentage of indirect bidders – suggesting China may still be recycling its massive current account surplus back into U.S. assets.  The May PCE deflation was up 0.1% and final June University of Michigan consumer sentiment printed at 70.8, up from 68.7 in May. The improvement in consumer sentiment took confidence levels to their highest level since September.  In eurozone news, German consumer prices were unexpectedly higher in June, up 0.4% m/m and 0.1% y/y.  Bank of Italy reported the eurozone’s economic contraction eased in June with the EuroCoin indicator falling to -0.61 from -0.89 in May – the fourth consecutive increase. France’s finance ministry reported it expects more joblessness over the next several quarters.  Euro bids are cited around the US$ 1.3435 level.

JPY / CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥95.05 level and was capped around the ¥96.05 level.  The pair ceded more ground today following yesterday’s sell-off in the North American session.  Data released in Japan overnight saw the May nationwide consumer price index off 0.2% m/m and 1.1% y/y while the June Tokyo-area consumer price index was off 0.4% m/m and 1.5% y/y.  The Nikkei 225 stock index climbed 0.83% to close at ¥9,877.39.  U.S. dollar offers are cited around the ¥104.15 level.  The euro weakened vis-à-vis the yen as the single currency tested bids around the ¥133.70 level and was capped the ¥134.95 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥158.25 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥88.15 level. In Chinese news, the U.S. dollar moved higher vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8360 in the over-the-counter market, up from CNY 6.8337.  China called on the world to create a “super sovereign currency.” Data released in China saw stronger-than-expected PMI data.

STERLING

The British pound appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6560 level and was supported around the $1.6365 level.  Cable came within 60 pips this week of establishing a multi-month high dating to November 2008.  Cable bids are cited around the US$ 1.6125 level.  The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8505 level and was capped around the ₤0.8570 level.

SWISS

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0795 level and was capped around the CHF 1.0945 level.  Data released in Switzerland saw the June KOF leading indicator climb to -1.65 from -1.85 in May.  U.S. dollar offers are cited around the CHF 1.1165 level.  The euro and British pound came off vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.5210 and CHF 1.7850 levels, respectively.

Published on  Sun, Jun 28 2009, 23:06 GMT