GCI Forex Research

Daily Market Commentary

3 July 2009
Friday

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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 (EDT + 0400)

  

€

The euro moved marginally lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3925 level and was capped around the $1.4025 level.  Liquidity was light ahead of the long Independence Day holiday weekend.  The European Central Bank voted yesterday to keep monetary policy unchanged and ECB President Trichet’s remarks indicate interest rates may be on hold for some time in the eurozone.  Commercial banks’ overnight deposits at the ECB rose to a new 5 ½-month high overnight as banks hoarded most of last week’s injection of liquidity by the ECB that amounted to nearly €500 billion.  Some €403.3 billion was on deposit overnight at the ECB, suggesting banks are awash in liquidity but are reluctant to lend.  Data released in the eurozone today saw May retail sales fall 0.4% and 3.3% y/y, worse-than-expected, while the June EMU-16 purchasing managers’ composite survey improved to 44.6 from 44.0 in May – albeit still a contraction below the “boom-or-bust” 50.0 level.  ECB member Noyer said policymakers should remain focused on keeping prices stable.  In U.S. news, the markets will reopen on Monday after the holiday weekend.  Yesterday’s U.S. economic data saw June non-farm payrolls collapse by a worse-than-expected 467,000 with the unemployment rate now at 9.5%.  Many economists believe the unemployment rate could reach the psychologically-important 10.0% level during the current economic contraction.  Euro bids are cited around the US$ 1.3435 level.

 

¥/ CNY

The yen depreciated marginally vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥96.10 level and was supported around the ¥95.70 level.  Liquidity was reduced with most U.S. desks closed for the Independence Day weekend celebration.  The Ministry of Finance named Tomoyuki Furusawa as the new head of its currency division but most MoF-watchers do not believe this will lead to a major change in currency policy.  The yen has recently traded in an inverse manner to the performance of global equities markets.  Declining risk appetite has oftentimes resulted in an appreciation in the yen.  Bank of Japan will convene its quarterly meeting of branch managers on Monday and many Japanese data will be released during the week.  Traders await further indications that Japan’s economy may be improving including better industrial production and factory output data, along with a turnaround in the weak labour market.  The Nikkei 225 stock index lost 0.61% to close at ¥9,816.07.  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 ¥134.80 level and was supported around the ¥133.55 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥156.40 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.90 level. In Chinese news, the U.S. dollar moved higher vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8315 in the over-the-counter market, up from CNY 6.8304. 

 

₤

The British pound moved lower vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.6300 figure and was capped around the $1.6430 level.  Bank of England’s Monetary Policy Committee convenes next week and is not expected to change monetary policy at this time.  Data released in the U.K. today saw the June CIPS PMI services survey decline to 51.6 from 51.7 in May.  Some economists believe the U.K. economy will emerge from recession this quarter but it is unlikely that policymakers will unwind their massive monetary and fiscal stimuli anytime soon.  It was also reported today that U.K. residents added ₤8.1 billion to their housing equity in Q1, up from ₤7.8 billion in Q4.  Cable bids are cited around the US$ 1.6180 level.  The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8585 level and was supported around the ₤0.8515 level.

 

CHF

The Swiss franc came off vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.0900 figure and was supported around the CHF 1.0830 level.  Data released in Switzerland today saw the June consumer price index rise 0.2% m/m and decline 1.0% y/y.  Many traders suspect the Swiss National Bank has been intervening in the market by selling francs to weaken the domestic currency.  SNB Directorate member Jordan yesterday indicated “we continue to consider interventions to prevent an excessive rise in the Swiss franc.” SNB Vice President Hildebrand said the Swiss economic recovery may lag the global recovery because Switzerland was impacted later than many countries.  Hildebrand suggested the global economy is no longer in a “free-fall.”  U.S. dollar offers are cited around the CHF 1.1165 level.  The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.5250 level while the British pound came off vis-à-vis the Swiss franc and tested bids around the CHF 1.7725 level.

 

 

Technical Outlook at 1230 GMT (EDT + 0400)

 

          (Bid Price)        (Today’s Intraday Range)                    

              

EUR/ USD      1.4004                1.4027, 1.3927
USD/ JPY         95.96                  96.11,   95.70
GBP/ USD      1.6329                1.6429, 1.6301
USD/ CHF      1.0868                1.0899, 1.0828
AUD/ USD      0.7986                0.8005, 0.7900
USD/CAD       1.1583                1.1637, 1.1560
NZD/USD        0.6308                0.6348, 0.6261
EUR/ JPY        134.46                134.80, 133.57
EUR/ GBP      0.8573                0.8583, 0.8513
GBP/ JPY       156.82                157.85, 156.38
CHF/ JPY         88.33                  88.72,   87.90

 

 

 

                      

Support                      Resistance                  Support               Resistance

  

EUR/ USD                                                          USD/ JPY

 

 

L1.       1.3915                         1.4295                            94.25                          98.85

L2.       1.3720                         1.4630                            91.90                        101.65

L3.       1.3400                         1.5105                            90.05                        105.05

 

   GBP/ USD                                                        USD/ CHF

 

L1.       1.6000                         1.6740                         1.0510                         1.0980

L2.       1.5690                         1.6830                         1.0275                         1.1270

L3.       1.5440                         1.7470                         0.9750                         1.1555

 

 AUD/ USD                                                       USD/ CAD

 

L1.       0.7715                         0.8250                         1.0725                         1.1175

L2.       0.7440                         0.8555                         1.0580                         1.1315

L3.       0.7165                         0.9050                         1.0305                         1.1430

 

 

 NZD/ USD                                                       EUR/ JPY

 

L1.       0.6305                         0.6665                         131.30                         141.50

L2.       0.6020                         0.6945                         127.65                         146.80

L3.       0.5655                         0.7760                         121.70                         150.60

 

  EUR/ GBP                                                       EUR/ CHF

 

L1.       0.8320                         0.8770                         1.4905                         1.5380

L2.       0.7870                         0.9080                         1.4670                         1.5580

L3.       0.7590                         0.9355                         1.4420                         1.5880

 

  GBP/ JPY                                                        CHF/ JPY

 

L1.       152.60                         167.30                           87.55                          93.55

L2.       148.55                         172.10                           85.70                          97.90

L3.       142.05                         178.75                           82.90                        105.05

 

SCHEDULE

    

Sunday, 5 July 2009
all times GMT
(last release in parentheses)

 

N/A

 

Monday, 6 July 2009
all times GMT
(last release in parentheses)

 

0030    Australia          June TD Securities inflation (-0.3% m/m)

0030    Australia          June TD Securities inflation (1.5% y/y)

0030    Japan               Bank of Japan quarterly branch managers’ meeting

0130    Australia          June ANZ job advertisements (-0.2% m/m)

0500    Japan               May leading index (76.2)

0500    Japan               May coincident index (86.0)

0830    Eurozone         July Sentix investor confidence (-27)

1400    US                   June ISM non-manufacturing composite (44.0)

2200    NZ                   Q2 NZIER business opinion survey (-65)

2330    Australia          June performance of construction index (46.9)

 

Tuesday, 7 July 2009
all times GMT
(last release in parentheses)

 

0430    Australia          Reserve Bank of Australia interest rate decision

0645    France             May trade balance (-€3.8 billion)

0830    UK                  May industrial production (0.3% m/m)

0830    UK                  May industrial production (-12.3% y/y)

0830    UK                  May manufacturing production (0.2% m/m)

0830    UK                  May manufacturing production (-12.7% y/y)

1000    Germany         May factory orders (0.0% m/m)

1000    Germany         May factory orders (-37.1% y/y)

1230    Canada           May building permits (-5.4% m/m)

1400    Canada           June Ivey PMI (48.4)

2301    UK                  June Nationwide consumer confidence (53)

2301    UK                  June NIESR gross domestic product, estimate (-0.9%)

2350    Japan               June M3 money supply (1.8%)

2350    Japan               May machine orders (-5.4% m/m)

2350    Japan               May machine orders (-32.8% y/y)

2350    Japan               May trade balance (¥184.3 billion)

2350    Japan               May current account (¥630.5 billion)

2350    Japan               June bank lending (3.9% y/y)

 

Wednesday, 8 July 2009
all times GMT
(last release in parentheses)

 

N/A     Japan               June economy watchers’ survey, current (36.7)

N/A     Japan               June economy watchers’ survey, outlook (43.3)

0100    Australia          July Westpac consumer confidence (12.7%)

0130    Australia          May home loans (0.9%0

0130    Australia          May investment lending (8.9%)

0130    Australia          May value of loans (1.9%)

0400    Japan               June bankruptcies (-6.7% y/y)

0545    CH                  June unemployment rate (3.4%)

0630    France             June Bank of France business sentiment (81)

0900    Eurozone         Q1 gross domestic product (-2.5% q/q)

0900    Eurozone         Q1 gross domestic product (-4.8% y/y)

0930    UK                  June BRC shop price index

1000    Germany         May industrial production (-1.9% m/m)

1000    Germany         May industrial production (-21.6% y/y)

1100    US                   MBA mortgage applications (-18.9%)

1900    US                   May consumer credit (-US$ 15.7 billion)

2245    NZ                   June card spending (0.9% m/m)

2350    Japan               Foreign purchases of Japanese equities and bonds

2350    Japan               Japanese purchases of foreign equities and bonds

 

Thursday, 9 July 2009
all times GMT
(last release in parentheses)

 

0100    Australia          July consumer inflation expectations (2.8%)

0130    Australia          June employment change (-1,700)

0130    Australia          June unemployment rate

0600    Germany         June consumer price index, harmonized

0600    Germany         May trade balance (€9.4 billion)

0600    Germany         May current account (€5.8 billion)

0800    Eurozone         July European Central Bank monthly report

0830    UK                  May visible trade balance

1100    UK                  Bank of England Monetary Policy Committee interest rate decision

1215    Canada          June housing starts (128.4%)

1230    US                   Weekly initial jobless claims

1230    US                   Continuing jobless claims

1300    US                   Federal Reserve Governor Duke speaks

1400    US                   May wholesale inventories (-1.4%)

1500    US                   June ICSC chain store sales

2350    Japan               June domestic corporate goods price index (-0.4% m/m)

2350    Japan               June domestic corporate goods price index (-5.4% y/y)

 

Friday, 10 July 2009
all times GMT
(last release in parentheses)

 

0645    France             May industrial production (-1.4% m/m)

0645    France             May industrial production (-18.8% y/y)

0645    France             May manufacturing production (-0.5% m/m)

0645    France             May manufacturing production (-19.7% y/y)

0645    France             May current account (-€3.1 billion)

0800    Italy                 May industrial production (1.1% m/m)

0800    Italy                 May industrial production (-24.2% y/y)

0830    UK                  June producer price index, input (0.4% m/m)

0830    UK                  June producer price index, input (-9.4% y/y)

0830    UK                  June producer price index, output (0.4% m/m)

0830    UK                  June producer price index, output (-0.3% y/y)

0830    UK                  June producer price index, core output (0.2% m/m)

0830    UK                  June producer price index, core output (1.2% y/y)

1100    Canada          June employment, net change (-41,800)

1100    Canada          June unemployment rate (8.4%)

1230    US                   May trade balance (-US$ 29.2 billion)

1230    US                   June import price index (1.3% m/m)

1230    US                   June import price index (-17.6% y/y)

1230    Canada           May international merchandise trade (-C$ 200 million)

1230    Canada           May new housing price index (-0.6% m/m)

1400    US                   July University of Michigan consumer sentiment

 

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