EURO
The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4815 level and was supported around the $1.4680 level. Another positive day for U.S. equities added to the U.S. dollar’s woes along with the pervasive believe that global demand for the U.S. dollar will continue to weaken. Data released in the U.S. today saw weekly initial jobless claims print at 521,000, down from the revised prior reading of 554,000, while continuing jobless claims came in lighter-than-expected a 6.040 million. Also, August wholesale inventories were off 1.3%, an improvement from the downwardly revised -1.6% decline in July but also better-than-expected. Federal Reserve Governor Tarullo reported the strength of the recovering U.S. economy should not be “overstated, “reiterating rates are likely to remain low for “an extended period.” Richmond Fed President Lacker optimstically reported the risk of the U.S. economy sliding back into a recession “has diminished quite substantially since several months ago,” adding the risk “is not entirely zero.” In eurozone news, the European Central Bank kept interest rates unchanged as expected with its main refinancing rate steady at 1.0%. ECB President Trichet characterized the rate as “appropriate” and there is a general sense the ECB may keep rates steady through at least early 2010. Trichet added the economic “recovery is expected to be rather uneven” and added “it will be supported in the short term by temporary factors but will be hampered in the medium term by balance sheet issues at financial and non-financial institutions.” Data released in the eurozone today saw German August industrial production climb 1.7% m/m and decline 16.8% y/y. Germany’s economy is likely to evidence its worst annual performance since World War II, possibly resulting in a contraction of about 5%. Coalition talks between Chancellor Merkel’s Christian Democrats and junior partners could result in tax cuts. Euro bids are cited around the US$ 1.4445 level.
JPY / CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥88.15 level and was capped around the ¥88.70 level. Traders continue to eye lower levels with the ¥87.10 level remaining the key technical level dating to January 2009 and December 2008. Finance minister Fujii was not on the tape overnight talking down the yen, unlike recent days when he said he is “closely watching” for “extremely abnormal” moves. Data released in Japan overnight saw September corporate bankruptcy cases off 15.7% y/y while September machine tool orders off 61.9% y/y. Also, it was reported the August current account surplus was up 10.4% y/y to ¥1.717 trillion. Traders are also paying close attention to any decisions from Bank of Japan’s Policy Board regarding an end to its emergency asset purchase programs. The Nikkei 225 stock index climbed 0.34% to close at ¥9,832.47. U.S. dollar offers are cited around the ¥94.75 level. The euro moved higher vis-à-vis the yen as the single currency tested bids around the ¥129.95 level and was capped around the ¥130.95 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥142.50 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥86.30 level. In Chinese news, the U.S. dollar was unchanged vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8220 in the over-the-counter market. Chinese officials have recently indicated they will stimulate domestic final private demand to reduce China’s dependence on foreign trade.
STERLING
The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6120 level and was supported around the $1.5945 level. As expected, Bank of England’s Monetary Policy Committee kept its main Bank Rate unchanged at 0.5% and maintained its program to purchase ₤175 billion in government bonds. A pay survey released overnight saw September average take-home pay fall to +1.7% from 2.0% in August. Cable bids are cited around the US$ 1.5720 level. The euro moved lower vis-à-vis the British pound as the single currency tested offers around the ₤0.9230 level and was supported around the ₤0.9160 level.
