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U.S. Forex Market Commentary

Mon, Apr 20 2009, 22:18 GMT
by GCI Financial Team

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EURO

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.2885 level and was capped around the US$ 1.3060 level.  The common currency moved lower after European Central Bank President Trichet firmly telegraphed next month’s rate probable 25bps rate cut to 1.00% from 1.25%.  He added the ECB “has decided already to embark on non-standard measures to cope with the situation since mid-September 2008.”  Many dealers believe the ECB may enact new quantitative easing policies from next month.  Traders are also talking about the Obama administration’s bank stress tests.  Rumours suggest the results will be released on 4 May and that there will be no major surprises regarding the nineteen largest U.S. banks.  Data released in the U.S. today saw the March index of leading economic indicators decline 0.3%, the ninth consecutive decline.  In eurozone news, German ZEW investor confidence data will be released tomorrow followed by eurozone purchasing management data on Thursday and Friday’s Ifo business sentiment data.  Euro bids are cited around the US$ 1.3100 figure.

JPY / CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥97.80 level and was capped around the ¥99.40 level.  Risk aversion returned to the markets overnight as traders shook off better-than-expected earnings data from U.S. financial giants amid new expectations the Obama administration may convert some of its bank shareholdings to equity rights.  Data released in Japan overnight saw the March leading index decline 0.3%, up from a revised -0.2% print in February.  These data suggest the Japanese economy may weaken in the near term.  The Nikkei 225 stock index climbed 0.19% to close at ¥8,924.75.  U.S. dollar offers are cited around the ¥104.15 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥126.15 level and was capped around the ¥129.55 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥141.95 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥83.50 level.  The Chinese yuan depreciated vis-à-vis the U.S. dollar today as the greenback closed at CNY 6.8301 in the over-the-counter market, up from CNY 6.8291.

STERLING

The British pound fell sharply vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.4500 figure and was capped around the $1.4810 level.  Cable came off on expectations that the forthcoming release of the U.K. government’s budget will significantly increase public borrowing. Chancellor of the Exchequer Darling may announce on Wednesday that public sector borrowing is increasing to as much as ₤175 billion in fiscal year 2009-2010.   CBI reported the U.K. economy will contract 3.9% this year and realize growth of just 0.1% in 2010.  Other data saw April Rightmove house prices up 1.8% m/m and decline 7.3% y/y.   Cable bids are cited around the US$ 1.4350 level.  The euro strengthened vis-à-vis the British pound as the single currency tested offers around the ₤0.8915 level and was supported around the ₤0.8795 level.

Published on  Mon, Apr 20 2009, 22:20 GMT

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