GCI Forex Research
Daily Market Commentary
23 January
2007
Tuesday
_____________________________________________________________________
GCI
Foreign Exchange Research:
www.gcitrading.com/fxnews/
FX Research Desk: fxnews@gcitrading.com
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Fundamental Outlook at 1500 GMT (EST + 0500)
€
The euro rocketed higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3045 level and was supported around the $1.2925 level. Technically, today’s intraday high was right around the 76.4% retracement of the move from $1.3665 to $1.1640. The common currency was propelled higher after the release of stronger-than-expected EMU-12 industrial production data that rose 1.4% m/m and 6.2% y/y in November. Also, French household spending expanded 1.3% m/m in December, its third consecutive monthly rise. European Central Bank policymaker Bini Smaghi reported the central bank will need to keep raising interest rates if growth expectations are confirmed, noting “growth will remain robust, also in 2007, the recovery is consolidating.” Many traders believe the ECB will tighten monetary policy in March and on that score, Bini Smaghi characterized monetary policy as “still accommodating.” In U.S. news, San Francisco Fed President Yellen spoke last night and indicated fears of a housing-induced recession have been “largely allayed” on account of solid consumer spending. Yellen also suggested that the Fed’s current policy is “well-positioned” to see inflation move lower and while she cited labour market tightness as “transitory,” she saw it “as a serious risk.” Yellen’s comments are the last scheduled public comments before the Federal Open Market Committee convenes at the end of the month. Traders are also talking about the G7 meeting in early February and speculating policymakers will reiterate their warning against “disorderly exchange rate movements.” Euro bids are cited around the US$ 1.2925 level.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥121.10 level and was capped around the ¥121.75 level. The pair has gained about six yen since the beginning of December and today’s sizable dollar sell-off across the board let to some profit-taking. Traders are still selling the yen short to finance carry trades following Bank of Japan’s decision to keep borrowing rates unchanged last week. Data to be released this Friday include December consumer prices and a deceleration in Japanese inflation figures could prompt more yen selling as it would cast doubts on the prospect of BoJ hiking rates next month. The Nikkei 225 stock index lost 0.09% to close at ¥17,408.57. Dollar bids are cited around the ¥120.85/ 30 levels. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥158.20 level and was supported around the ¥157.35 level. The British pound and Swiss franc moved higher vis-à-vis the yen as the crosses tested offers around the ¥241.40 and ¥97.90 levels, respectively. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 7.7781, up from CNY 7.7743. The Chinese government predicted 2006 retail sales may have expanded as much as 13% to 14%.
₤
The British pound appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.9915 level and was supported around the US$ 1.9750 level. Sterling reached levels not seen since September 1992 when the U.K. was forced to abandon the European Exchange Rate Mechanism. Many dealers believe it is only a matter of time before the pair tests the psychologically-important US$ 2.00 figure. Many options-defense orders are said to be in place ahead of the $2.00 figure thus any additional appreciation will likely be choppy. Traders continue to speculate that Bank of England will move rates higher again next month after this month’s shocking +25bps rate hike. Data released in the U.K. today saw the CBI’s quarter industrial trends survey report that 25% of firms saw average domestic prices move higher in the past three months while 9% reported they have fallen, leading to the strongest positive balance since July 1995. These data evidence additional inflationary pressures in the U.K. economy. Additionally, the total new orders balance and the output balance rose in January from their October levels. Cable bids are cited around the US$ 1.9760 level. The euro gained marginal ground vis-à-vis the British pound as the single currency tested offers around the ₤0.6560 level and was supported around the ₤0.6535 level.
CHF
The Swiss franc notched sharp gains vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2385 level and was capped around the CHF 1.2515 level. Technically, today’s intraday low was right around the 38.2% retracement of the move from CHF 1.2110 to CHF 1.2545. Stops were reached below the CHF 1.2430 level, representing 61.8% retracement of the move from CHF 1.2770 to CHF 1.1875. Dollar offers are cited around the CHF 1.2445 level. The euro and British pound weakened vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6135 and CHF 2.4620 levels, respectively.
A$
The Australian dollar appreciated vis-à-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.7935 level and was supported around the $0.7870 level. Technically, today’s intraday low was right around the 50% retracement of the move from $0.7980 to $0.7760 level. Australian dollar bids are cited around the US$ 0.7850 level.
C$
The Canadian dollar appreciated marginally vis-à-vis the U.S. dollar today as the greenback tested bids around the C$ 1.1800 figure and was capped around the C$ 1.1850 level. Technically, today’s intraday low was right around the 23.6% retracement of the move from C$ 1.1625 to C$ 1.1850 level. Data released in Canada today saw the December consumer price index rise 0.2% m/m and 1.6% y/y, up from November’s 1.4% annual inflation rate. Also, the core CPI rate expanded 2.0% y/y, down from November’s +2.2% rate. Other data released today saw November retail sales gain 0.2% with the ex-autos component up 0.1%. U.S. dollar bids are cited around the C$ 1.1750 level.
Gold/ Silver
Gold made major strides vis-à-vis the U.S. dollar today as the yellow metal tested offers around the US$ 644.20 level and was supported around the $633.10 level. The U.S. dollar’s significant sell-off spurred demand for the pair. Silver moved higher vis-à-vis the U.S. dollar last night as the pair tested offers around the US$ 13.25 level and was supported around the US$ 12.93 level.
Crude Oil
Crude oil climbed higher vis-à-vis the U.S.
dollar today as light, sweet NYMEX crude oil
futures for March delivery tested offers around the US$ 53.69 level and
was supported around the $ 52.41 level. OPEC President al-Hamli
indicated US$ 55.00 is a “reasonable price” and the pair now down about
32% from its July highs.
Technical Outlook at 1330 GMT (EST + 0500)
(Bid Price) (Today’s Intraday Range)
EUR/ USD 1.3027 1.2044, 1.2927
USD/ JPY 121.25 121.74, 121.09
GBP/ USD 1.9893 1.9914, 1.9752
USD/ CHF 1.2408 1.2514, 1.2392
AUD/ USD 0.7931 0.7937, 0.7871
USD/CAD 1.1807 1.1851, 1.1798
NZD/USD 0.7026 0.7035, 0.6981
EUR/ JPY 157.95 158.21, 157.33
EUR/ GBP 0.6546 0.6560, 0.6535
EUR/ CHF 1.6163 1.6188, 1.6155
GBP/ JPY 241.22 241.40, 240.24
CHF/ JPY 97.69 97.87, 97.22
Support Resistance Support Resistance
EUR/ USD USD/ JPY
L1.
1.2820 1.3350
114.45 121.40
L2. 1.2690
1.3480 113.50 123.10
L3.
1.2560 1.3580
112.80 125.75
GBP/ USD USD/ CHF
L1. 1.9315 1.9750 1.1880 1.2530
L2. 1.9210 1.9870 1.1740 1.2650
L3. 1.9080 2.0035 1.1480 1.2770
AUD/ USD USD/ CAD
L1. 0.7755 0.7985 1.1355 1.1735
L2. 0.7700 0.8060 1.1295 1.1850
L3. 0.7610 0.8140 1.1200 1.1980
NZD/ USD EUR/ JPY
L1. 0.6735 0.7095 154.20 157.00
L2. 0.6640 0.7195 152.15 158.20
L3. 0.6560 0.7375 151.90 160.00
EUR/ GBP EUR/ CHF
L1. 0.6485 0.6710 1.6030 1.6200
L2. 0.6400 0.6840 1.5945 1.6275
L3. 0.6310 0.6980 1.5825 1.6335
GBP/ JPY CHF/ JPY
L1. 232.55 240.90 94.90 98.05
L2. 231.10 242.25 93.20 99.20
L3. 229.80 244.80 91.90 100.85
SCHEDULE
Tuesday,
23 January 2007
all times GMT
(last release in parentheses)
0500 Japan Bank of Japan Policy Board meeting minutes
0745 France December manufactured goods spending (0.9% m/m)
0745 France December manufactured goods spending (4.3% y/y)
1000 Eurozone November industrial new orders (-0.6% m/m)
1000 Eurozone November industrial new orders (12.5% y/y)
1100 UK January CBI industrial trends, total orders (-5)
1100 UK January CBI industrial trends, export orders (-5)
1200 Canada December consumer price index (0.2% m/m)
1200 Canada December consumer price index (1.4% y/y)
1200 Canada December Bank of Canada CPI, core (0.3% m/m)
1200 Canada December Bank of Canada CPI, core (2.2% y/y)
1330 Canada November retail sales (-0.7% m/m)
1330 Canada November retail sales, ex-autos (-0.7% m/m)
1330 Canada December leading indicators (0.5% m/m)
1355 US Redbook retail sales (1.5%)
1500 US January Richmond Fed manufacturing index (-6)
1900 UK Bank of England Governor King speaks
2300 Australia November leading index (0.3%)
2350 Japan November all-industry activity index (1.7% m/m)
Wednesday, 24 January 2007
all times GMT
(last release in parentheses)
0030 Australia Q4 consumer prices (0.9% q/q)
0030 Australia Q4 consumer prices (3.9% y/y)
0200 NZ December credit card spending (7.8% y/y)
0830 Italy January consumer confidence (113.9)
0930 UK Bank of England MPC meeting minutes, 10-11 January
0930 UK Q4 GDP (0.7% q/q)
0930 UK Q4 GDP (2.9% y/y)
0930 UK November index of services (0.9%)
1200 US MBA mortgage applications (-0.6%)
1530 US EIA crude oil stocks (6.8 million barrels)
2000 NZ Reserve Bank of New Zealand interest rate decision
2350 Japan December merchandise trade balance (¥911.2 billion)
Thursday,
25 January 2007
all times GMT
(last release in parentheses)
0430 Japan Bank of Japan Policy Board member Suda speaks
0500 Eurozone European Central Bank member Stark speaks
0710 Germany February GfK consumer confidence survey (8.7)
0745 France January business confidence indicator (106)
0745 France January production outlook indicator (-1)
0900 Germany January Ifo, business climate (108.7)
0900 Germany January Ifo, current assessment (115.3)
0900 Germany January Ifo, expectations (102.5)
0900 Eurozone November current account (-€400 million)
1000 Italy November retail sales (-0.1% m/m)
1000 Italy November retail sales (0.4% y/y)
1330 US Weekly initial jobless claims (290,000)
1330 US Continuing jobless claims (2.530 million)
1500 US December existing home sales (6.28 million)
1500 US December existing home sales (0.6% m/m)
1800 Canada Bank of Canada Governor Dodge speaks
1945 Germany European Central Bank member Gonzalez-Paramo speaks
2330 Japan January Tokyo-area consumer price index (0.0% m/m)
2330 Japan January Tokyo-area consumer price index (0.3% y/y)
2330 Japan January Tokyo-area CPI, ex-fresh food (-0.1% m/m)
2330 Japan January Tokyo-area CPI, ex-fresh food (0.2% y/y)
2330 Japan December consumer price index (-0.1% m/m)
2330 Japan December consumer price index (0.3% y/y)
2330 Japan December consumer price index, ex-fresh food (0.0% m/m)
2330 Japan December consumer price index, ex-fresh food (0.2% y/y)
2350 Japan December corporate services prices (0.1% m/m)
2350 Japan December corporate services prices (-0.1% y/y)
Friday,
26 January 2007
all times GMT
(last release in parentheses)
0500 Japan December housing starts (4.0% y/y)
0500 Japan December construction orders (2.5% y/y)
0500 Japan December construction orders (9.2% y/y)
0700 Germany December import price index (-0.4% m/m)
0700 Germany December import price index (2.8% y/y)
0700 Germany February GfK consumer confidence (8.7)
0900 CH December UBS consumption indicator (1.886)
0900 Eurozone December M3 money supply (9.3% y/y)
0930 UK November BBA mortgage lending
0930 UK December mortgage approvals (3.7% m/m)
0930 UK December BBA mortgage approvals (77,800)
1330 US December durable goods orders (1.6%)
1330 US December durable goods, ex-transportation (-1.1%)
1330 US December durable goods shipments (0.2%)
1500 US December new home sales (1.047 million)
1500 US December new home sales (3.4% m/m)
DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.
