GCI Forex Research

Daily Market Commentary

15 May 2008
Thursday

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GCI Foreign Exchange Research:                    www.gcitrading.com/fxnews/
FX Research Desk:                                             fxnews@gcitrading.com
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Fundamental Outlook at 1400 GMT (EST + 0400)

 

€

The euro gained marginal ground vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5545 level and was supported around the $1.5450 level.  Technically, today’s intraday low was right around the 23.6% retracement of the move from $1.6020 to $1.5280.  Many data were released in the U.S. today. First, net long-term TIC flows rose to US$ 80.4 billion in March from February’s total of US$ 72.5 billion while the monthly net TIC flows component saw an net outflow of US$ 48.2 billion compared with a net inflow of $48.9 billion in February.  The March U.S. trade balance registered US$ 58.21 billion.  Second, it was also reported that the New York State Empire manufacturing index fell to -3.23 in May.  Third, weekly initial jobless claims rose 6,000 to 371,000 while continuing jobless claims were up 28,000 to 3.06 million. Fourth, April industrial production fell 0.7% and April capacity utilization fell sharply to 79.7%.  Fifth, the Philadelphia Fed May business index improved to -15.7 from -24.9.  In eurozone news, traders were surprised by a strong print in German GDP growth data that saw an economic expansion of 1.5% q/q in Q1, double most forecasts.  EMU-15 GDP growth expanded 0.7% q/q in Q1 despite the strong euro but ECB President Trichet warned Q2 data could be “less flattering.”  Eurogroup chairman Juncker said the euro’s recent decline is “pointing in a good direction.”  Trichet and ECB member Mersch will speak later today.  It was also reported that German April final consumer price inflation was off 0.2% m/m and up 2.4% y/y while EMU-15 April provisional harmonized inflation was up 3.3% y/y.  ECB member Ordonez reported the central bank “has to continue what we’re doing.”  Euro bids are cited around the US$ 1.5230 level.

 

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥104.50 level and was capped around the ¥105.30 level.  Technically, today’s intraday low was right around the 23.6% retracement of the move from ¥100.00 to ¥105.70.  Data released in Japan overnight saw core private sector machinery orders decline a larger-than-expected 8.3% m/m to ¥956.8 billion and the government downgraded its assessment of machinery orders. This represented the second consecutive monthly decline.  Traders await the release of gross domestic product data for the January-through-March period overnight.  Most traders expect Bank of Japan’s Policy Board will keep the overnight call rate unchanged at 0.50% for several months.  The Nikkei 225 stock index gained 0.94% to close at ¥14,251.74.  Dollar bids are cited around the ¥101.35 levels.  The euro weakened vis-à-vis the yen as the single currency tested bids around the ¥162.05 level and was capped around the ¥162.95 level.  The British pound and Swiss franc weakened vis-à-vis the yen as the crosses tested bids around the ¥203.10 and ¥99.30 levels, respectively.  The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.9946 in the over-the-counter market, down from CNY 7.0030.  Data released in China overnight saw urban fixed-asset investment up 25.7% y/y between January and April.

₤

The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9405 level and was capped around the $1.9500 figure.  Prime Minister Brown indicated the U.K. government has no plans to change Bank of England’s remit on fighting inflation.  BoE aims to steer inflation to the 2.0% level and inflation remains significantly above this level on account of elevated energy and food prices.  Data released in the U.K. today saw home construction fall an annualized 24% in Q1. Cable bids are cited around the US$ 1.9360/ 1.9100 levels.  The euro and British pound gained ground vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6345 and CHF 2.0590 levels, respectively.

 

CHF

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0595 level and was supported around the CHF 1.0485 level.  Technically, today’s intraday low was right around the 38.2% retracement of the move from CHF 1.0625 to CHF 1.0390.  Data released in Switzerland today saw SECO April consumer sentiment decline to +2 from +14 in January.  U.S. dollar offers are cited around the CHF 1.0760 level.  The euro and British pound moved higher vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6345 and CHF 2.0590 levels, respectively.

 

 

Technical Outlook at 1230 GMT (EDT + 0400)

 

           (Bid Price)       (Today’s Intraday Range)                    

                                                                
EUR/ USD      1.5499                1.5547, 1.5452
USD/ JPY       104.78                105.28, 104.55
GBP/ USD      1.9432                1.9500, 1.9403
USD/ CHF      1.0528                1.0564, 1.0483
AUD/ USD     0.9366                0.9388, 0.9289
USD/CAD      0.9999                1.0061, 0.9995
NZD/USD      0.7570                0.7615, 0.7536
EUR/ JPY       162.43                162.94, 162.16
EUR/ GBP      0.7974                0.7987, 0.7942
EUR/ CHF      1.6319                1.6347, 1.6288
GBP/ JPY       203.72                204.82, 203.48
CHF/ JPY         99.53                  99.88,   99.41



 

Support                      Resistance                  Support                   Resistance

 

EUR/ USD                                                          USD/ JPY

  

L1.       1.5545                         1.6020                           94.20                         105.55
L2.       1.5320                         1.6125                           88.75                         106.95
L3.       1.5260                         1.6650                           85.25                         108.60

 

   GBP/ USD                                                        USD/ CHF

 

L1.       1.9605                         2.0395                         1.0105                         1.0375

L2.       1.9395                         2.0525                         0.9990                         1.0565

L3.       1.9100                         2.0885                         0.9875                         1.1040

 

 AUD/ USD                                                       USD/ CAD

 

L1.       0.9145                         0.9550                         0.9960                         1.0370

L2.       0.9005                         0.9735                         0.9715                         1.0520

L3.       0.8750                         1.0115                         0.9465                         1.0745

 

 NZD/ USD                                                       EUR/ JPY

 

L1.       0.7800                         0.8105                         161.85                         166.65

L2.       0.7595                         0.8420                         158.35                         167.75

L3.       0.7275                         0.8665                         154.80                         168.95

 

  EUR/ GBP                                                       EUR/ CHF

 

L1.       0.7825                         0.8120                         1.6450                         1.6760

L2.       0.7625                         0.8310                         1.6255                         1.6955

L3.       0.7440                         0.8570                         1.6100                         1.7180

 

  GBP/ JPY                                                        CHF/ JPY

 

L1.       197.20                         209.90                           97.00                        103.30

L2.       186.75                         215.50                           95.85                        105.40

L3.       172.35                         226.75                           92.15                        107.70

 

SCHEDULE

 

Thursday, 15 May 2008
all times GMT
(last release in parentheses)

 

N/A     South Africa   Reserve Bank of Australia Deputy Governor Debelle speaks

0000    NZ                   April PMI (48.3)

0030    Australia          May consumer inflation expectations (11.2%)

0130    Australia          February average weekly wages (0.6% q/q)

0130    Australia          February average weekly wages (4.7% y/y)

0400    Japan               April Tokyo-area condominium sales (-17.8% y/y)

0545    CH                  April SECO consumer climate (14.0)

0600    Germany         Q1 GDP (0.3% q/q)

0600    Germany         Q1 GDP (1.8% y/y)

0600    Germany         April CPI (-0.2% m/m)

0600    Germany         April CPI (2.4% y/y)

0600    Germany         April CPI, harmonized (0.5% m/m)

0600    Germany         April CPI, harmonized (2.6% y/y)

0645    France             Q1 GDP (0.4% q/q)

0645    France             Q1 GDP (2.1% y/y)

0930    Australia          Reserve Bank of Australia Governor Stevens speaks

1230    US                   Weekly initial jobless claims (365,000)

1230    US                   Continuing jobless claims (3.020 million)

1230    US                   May Empire State manufacturing index (0.6)

1230    Canada          March manufacturing shipments (1.6% m/m)

1300    US                   March net long-term TIC flows (US$ 72.5 billion)

1300    US                   March total net TIC flows (US$ 64.1 billion)

1315    US                   April industrial production (0.3%)

1315    US                   April capacity utilization (80.5%)

1400    US                   May Philadelphia Fed manufacturing survey (-24.9)

1700    US                   May NAHB housing market index (20.0)

2245    NZ                   Q1 PPI, input (1.3% q/q)

2245    NZ                   Q1 PPI, output (1.5% q/q)

2350    Japan               Q1 GDP (0.9% q/q)

2350    Japan               Q1 GDP, annualized (3.5%)

2350    Japan               Q1 GDP deflator (-1.3% y/y)

 

Friday, 16 May 2008
all times GMT
(last release in parentheses)

 

0400    Japan               April consumer confidence (37.0)

0400    Japan               March industrial production (-3.1% m/m)

0400    Japan               March industrial production (-0.4% y/y)

0430    Japan               March capacity utilization (1.8% m/m)

0600    Japan               April machine tool orders

0645    France             Q1 wages (0.3% q/q)

0715    CH                   March retail sales (3.3% y/y)

1230    US                   April housing starts (947,000)

1230    US                   April building permits (927,000)

1400    US                   May University of Michigan consumer sentiment (62.6)

 

 

 

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 U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.