EURO
The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3805 level and was capped around the US$ 1.4000 figure. The common currency was driven to intraday lows during the European session but North American dealers bought the pair back. European Central Bank officials spoke today about the eventual conclusion of the central bank’s quantitative easing policy that has seen official borrowing costs driven to all-time lows. ECB member Stark noted “In fact, we are prepared to take appropriate actions once the macroeconomic environment improves. We will ensure that the measures taken can be quickly unwound and the liquidity provided absorbed. This includes, for instance, unwinding the increase in the average maturity of our refinancing operations.” Similarly, ECB’s Weber added “We will counter potential risks to price stability early on and, at the same time, make a contribution to avoiding future financial crises.” German finance minister Steinbrueck railed against French calls to weaken the European Union’s Stability and Growth Pact. Data released in Germany today saw April manufacturing orders remain unchanged following March’s improvement. It was also reported that the EMU-16 Sentix investor confidence index improved to -27 in June. European Union finance ministers are convening this week to discuss the plan to broaden the European Central Bank’s banking supervisory powers. The European Systemic Risk Council would be discharged with issuing warnings and recommendations but the Bank of England is against the idea because the U.K. is not a member of the eurozone. 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 ¥98.20 level and was capped around the ¥98.85 level. Today’s range was relatively limited as traders found themselves trying to reconcile a stalled Japanese economy with a clouded international economic picture. Many data were released in Japan overnight. First, May corporate bankruptcies totaled 1,057, up +6.3% y/y but down from 1,169 in April. Second, the April current account was off 48.8% m/m and down 54.5% y/y as the trade balance tumbled, printing at ¥630.5 billion. A U.S. dollar exchange rate below ¥100 has had a profound impact on Japan’s once-massive trade balance. Third, May bank lending expanded 2.7%, down from April’s 3.0% growth pace. The Nikkei 225 stock index 1.00% to close at ¥9.865.63. 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 ¥135.95 level and was capped around the ¥138.00 figure. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥158.25 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥89.65 level. In Chinese news, the U.S. dollar strengthened vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8363 in the over-the-counter market, up from CNY 6.8315.
STERLING
The British pound gained ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6100 figure and was supported around the $1.5800 figure. Sterling has been quite volatile lately on account of the political drama that continues to unfold in London. Prime Minister Brown continues to resist calls to step down following an expenses scandal that rocked his Cabinet. Additionally, Brown’s Labour Party came in third in European Parliament polls. Data released in the U.K. today saw May business confidence improve for a third consecutive month, printing at +28 from +14 in April. Cable bids are cited around the US$ 1.5790 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8645 level and was capped around the ₤0.8795 level.
SWISS
The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0985 level and was supported around the CHF 1.0835 level. Data released in Switzerland today saw the May unemployment rate move higher to 3.5%. U.S. dollar offers are cited around the CHF 1.1165 level. The euro and British pound moved higher vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.5215 and CHF 1.7535 levels, respectively.
