EURO
The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4185 level and was capped around the $1.4290 level. The common currency reached its highest level since 3 June before ceding intraday gains. Positive economic data in the U.S. contributed to the pair’s fade. First, it was reported that June existing home sales expanded 3.6% m/m to an annualized 4.89 million rate, more-than-expected and up from the revised 4.72 million pace in May. Second, it was reported that weekly initial jobless claims rose 30,000 to 554,000 from a revised 524,000 while continuing jobless claims were off 88,000 to 6.225 million, far below expectations. The decline in continuing claims could reflect a moderation in U.S. labour market weakness. Federal Reserve Chairman Bernanke testified before Congress this week and was guardedly optimistic regarding an improvement in the U.S. labour market picture. Many economists, however, believe the current economic recovery may involve a jobless recovery. Dallas Fed President Fisher today cautiously said “we probably have the beginnings of a faint recovery,” echoing Bernanke’s comments about “tentative signs of stabilization.” In eurozone news, the European Central Bank reported it has purchased a total of €2.6 billion in covered bonds to date as part of its quantitative easing policy. Data released in the eurozone today saw the May current account balance print at -€1.2 billion, down from -€6.1 billion in April. Also, French July business sentiment improved to 78 from 76 in June. Euro bids are cited around the US$ 1.3435 level.
JPY / CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥95.30 level and was supported around the ¥93.50 level. Risk appetite returned to the market and the yen was given across the board. Bank of Japan Governor Shirakawa met with his Chinese and South Korean counterparts today to discuss their respective economies and regional economic issues. Data released in Japan overnight saw the June trade surplus print at ¥508 billion, less-than-expected but the fifth consecutive month of surplus and a 388% y/y increase. BoJ Deputy Governor Yamaguchi yesterday said price declines will continue “for some time” but said they should moderate before the end of the year. Yamaguchi also said there is no need for additional monetary stimulus at this time. The Nikkei 225 climbed 0.72% to close at ¥9,792.94. U.S. dollar offers are cited around the ¥104.15 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥135.60 level and was supported around the ¥133.60 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥157.60 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥89.10 level. In Chinese news, the U.S. dollar gained ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8300 in the over-the-counter market, up from CNY 6.8397.
STERLING
The British pound gained marginal ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.6585 level and was supported around the $1.6430 level. Sterling was bid higher yesterday following the release of the minutes from the Bank of England Monetary Policy Committee’s July meeting. MPC policymakers voted not to expand the MPC’s ₤125 billion asset purchase plan at this time, and traders reacted positively on the notion the central bank may not have to expand its quantitative easing policies. Sterling moved higher today after it was reported that June retail sales grew a larger-than-expected 1.2%. Also, BBA reported mortgage activity improved in June with a pick-up in mortgage approvals and an increase in June net mortgage lending to an increase of ₤2.6 billion from a gain of ₤2.4 billion in May. Cable bids are cited around the US$ 1.6185 level. The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.8575 level and was capped around the ₤0.8650 level.
