EURO
The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5905 level and was supported around the $1.5825 level. Technically, today’s intraday low was right around the 50% retracement of the move from $1.5610 to $1.6040. Data released in the U.S. today saw the June leading index fall 0.1%, its second consecutive monthly decline. The dollar’s decline was limited by better-than-expected Bank of America Q2 earnings but the euro’s strength was underpinned by a $2.00 climb in NYMEX crude oil futures for September delivery to an intraday high of $132.55. Lack of progress in talks between Iranian, American, and European officials kept the U.S. dollar on the defensive as did a tropical storm in the Caribbean that could enter the Gulf of Mexico later in the day. Traders await remarks from Philadelphia Fed President Plosser tomorrow followed by New York Fed President Geithner on Thursday. The Fed will release its July Beige Book on Wednesday. In eurozone news, Germany’s Bundesbank reported German Q2 GDP is likely to moderate from Q1’s pace. Euro bids are cited around the $1.5645/ $1.5230 levels.
JPY / CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥106.35 level and was capped around the ¥107.15 level. Technically, today’s intraday high and low were right around the 23.6% and 38.2% retracements of the move from ¥102.65 to ¥108.55, respectively. The Japanese media reported Prime Minister Fukuda may reshuffle his cabinet this week to reverse his declining public support and traders are curious to see if any senior Ministry of Finance policymakers are replaced. The May all-industry activity index will be released overnight. The Nikkei 225 stock index lost 0.65% to close at ¥12,803.70. Dollar bids are cited around the ¥103.65 level. The euro gained marginal ground vis-à-vis the yen as the single currency tested offers around the ¥169.90 level and was supported around the ¥169.10 level. The British pound and Swiss franc weakened vis-à-vis the yen as the crosses tested bids around the ¥212.15 and ¥104.25 levels, respectively. The Chinese yuan weakened vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8300 in the over-the-counter market, up from CNY 6.8169. Data released in China overnight saw June CPI growth accelerate to 6.1% y/y. Premier Wen reported there is a “sense of urgency in controlling inflation and promoting stable growth.
STERLING
The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9905 level and was capped around the $1.9985 level. Bank of England Monetary Policy Committee member Blanchflower reported the U.K. economy is “going into a recession” and noted interest rates will probably fall “well below” their current 5.0% level. Data released in the U.K. today saw Rightmove July house prices notch their first annual decline in at least six years. Also, the London Retail Consortium reported June retail sales reached their highest level since February – up 8.7% y/y - while RICS reported the commercial property market weakened. Cable bids are cited around the US$ 1.9870/ 1.9360 levels. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7975 level and was supported around the ₤0.7925 level.
SWISS
The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0180 level and was capped around the CHF 1.0240 level. Technically, today’s intraday high was right around the 38.2% retracement of the move from CHF 0.9645 to CHF 1.0625. Data released in Switzerland today saw June producer and import prices climb 0.6% n/n and 4.5% y/y. U.S. dollar offers are cited around the CHF 1.0395 level. The euro and British pound moved lower vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6195 and CHF 2.0320 levels, respectively.
