Currency-Trading Reviews 6 Oct 2007

BillyT's Daily Forex Currency-Trading Reviews for 6 October 2007

EURO:

The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4155 level and was supported around the $1.4030 level. The common currency came off after the release of stronger-than-expected

U.S.

September non-farm payrolls that saw 110,000 new jobs created last month, consistent with expectations. There was a sizable upward revision to August's jobs tallies of 91,000 jobs and that temporarily pushed the greenback higher. The unemployment rate ticked up to 4.7% and average hourly earnings were up 0.4% in September. Average hourly earnings are now up 4.1% over the past year, the highest rate since February. Federal Reserve Vice Chairman Kohn today said the Federal Open Market Committee's interest rate cut last month was "a first approximation of what might be required to keep the economy on a sustainable growth path." Kohn added the 50bps reduction in the federal funds target rate "will not be able to avert all of the weakness in the economy but that may be in train for several months." He justified the 50bps cut saying "sluggish or inadequate easing risked a weaker real economy that might cause lenders to pull back even more." The German media reported the Federal Reserve "has resisted calls from other G7 nations for joint interventions such as selling euros." G7 officials will meet soon and dealers expect the communiqué will reference the disorderly nature of exchange rate markets and/ or call for exchange rates to move in accordance with economic fundamentals. Euro bids are cited around the US$ 1.4055 levels.

YEN:

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥117.30 level and was supported around the ¥116.35 level. Technically, today's intraday low was right around the 38.2% retracement of the move from ¥124.15 to ¥111.60. The pair reached its highest level since 15 August as traders continue to increase their risk appetite. Data released in

Japan

saw the August index of leading economic indicators fall to 30.0 from 72.7 in July while the coincident index improved to 83.3 from 70.0 in July. Other data released today saw September foreign reserves climb US$ 13.44 billion from August to US$ 945.60 billion. The Nikkei 225 stock index lost 0.16% to close at ¥17,065.04. Dollar bids are cited around the ¥114.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥165.10 level and was supported around the ¥164.20 level. The British pound and Swiss franc climbed higher vis-à-vis the yen as the crosses tested offers around the ¥238.30 and ¥99.20 levels, respectively.

BRITISH POUND:

The British pound gained ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 2.0440 level and was supported around the $2.0300 level. Technically, today's intraday low was right around the 23.6% retracement of the move from $1.9180 to $2.0655. Data released in the

U.K.

today saw median pay settlements down to 3.2% in the three months to September from 3.3% in the three months to August. Traders await the release of Tuesday's pre-Budget report by Chancellor Darling and the Comprehensive Spending Review. Many U.K.-watchers believe Prime Minister Brown will call a general election imminently. Cable bids are cited around the US$ 2.0270 level. The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.6910 level and was capped around the ₤0.6940 level.

SWISS FRANC:

The Swiss depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1855 level and was supported around the CHF 1.1740 level. Technically, today's intraday low was right around the 23.6% retracement of the move from CHF 1.2145 to CHF 1.1620l. Dollar offers are cited around the CHF 1.1885 level. The euro and British pound gained ground vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6660 and CHF 2.4070 levels, respectively.

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Currency-Trading Reviews 5 Oct 2007

BillyT's Daily Forex Currency-Trading Reviews for 5 October 2007

EURO:

The euro moved higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4155 level and was supported around the $1.4030 level. The common currency came off after the release of stronger-than-expected

U.S.

September non-farm payrolls that saw 110,000 new jobs created last month, consistent with expectations. There was a sizable upward revision to August's jobs tallies of 91,000 jobs and that temporarily pushed the greenback higher. The unemployment rate ticked up to 4.7% and average hourly earnings were up 0.4% in September. Average hourly earnings are now up 4.1% over the past year, the highest rate since February. Federal Reserve Vice Chairman Kohn today said the Federal Open Market Committee's interest rate cut last month was "a first approximation of what might be required to keep the economy on a sustainable growth path." Kohn added the 50bps reduction in the federal funds target rate "will not be able to avert all of the weakness in the economy but that may be in train for several months." He justified the 50bps cut saying "sluggish or inadequate easing risked a weaker real economy that might cause lenders to pull back even more." The German media reported the Federal Reserve "has resisted calls from other G7 nations for joint interventions such as selling euros." G7 officials will meet soon and dealers expect the communiqué will reference the disorderly nature of exchange rate markets and/ or call for exchange rates to move in accordance with economic fundamentals. Euro bids are cited around the US$ 1.4055 levels.

YEN:

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥117.30 level and was supported around the ¥116.35 level. Technically, today's intraday low was right around the 38.2% retracement of the move from ¥124.15 to ¥111.60. The pair reached its highest level since 15 August as traders continue to increase their risk appetite. Data released in

Japan

saw the August index of leading economic indicators fall to 30.0 from 72.7 in July while the coincident index improved to 83.3 from 70.0 in July. Other data released today saw September foreign reserves climb US$ 13.44 billion from August to US$ 945.60 billion. The Nikkei 225 stock index lost 0.16% to close at ¥17,065.04. Dollar bids are cited around the ¥114.75 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥165.10 level and was supported around the ¥164.20 level. The British pound and Swiss franc climbed higher vis-à-vis the yen as the crosses tested offers around the ¥238.30 and ¥99.20 levels, respectively.

BRITISH POUND:

The British pound gained ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 2.0440 level and was supported around the $2.0300 level. Technically, today's intraday low was right around the 23.6% retracement of the move from $1.9180 to $2.0655. Data released in the

U.K.

today saw median pay settlements down to 3.2% in the three months to September from 3.3% in the three months to August. Traders await the release of Tuesday's pre-Budget report by Chancellor Darling and the Comprehensive Spending Review. Many U.K.-watchers believe Prime Minister Brown will call a general election imminently. Cable bids are cited around the US$ 2.0270 level. The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.6910 level and was capped around the ₤0.6940 level.

SWISS FRANC:

The Swiss depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1855 level and was supported around the CHF 1.1740 level. Technically, today's intraday low was right around the 23.6% retracement of the move from CHF 1.2145 to CHF 1.1620l. Dollar offers are cited around the CHF 1.1885 level. The euro and British pound gained ground vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6660 and CHF 2.4070 levels, respectively.

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Currency-Trading Reviews 4 Oct 2007

BillyT's Daily Forex Currency-Trading Reviews for 4 October 2007

EURO:

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4150 level and was supported around the $1.4065 level. As expected, the European Central Bank kept interest rates unchanged with the refinancing rate steady at 4.00%. ECB President Trichet reiterated price risks remain to the upside and noted money and credit growth remains vigorous but conspicuously dropped "accommodative" to characterize the ECB's current monetary policy stance. Moreover, Trichet noted there is growing uncertainty over eurozone growth prospects but predicted inflation will remain above 2.0% through early 2008. Trichet also referred to his remarks earlier in the week wherein he said

YEN:

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥116.25 level and was capped around the ¥116.75 level. The pair retraced some of its recent gains and continues to orbit the ¥116.40 level, representing the 38.2% retracement of the move from ¥124.15 to ¥111.60. Bank of

BRITISH POUND:

The British pound gained ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 2.0425 level and was supported around the $2.0275 level. As expected, Bank of England's Monetary Policy Committee kept its headline repo rate unchanged at 5.75% and did not issue any policy statement. Minutes from today's MPC meeting will be released on 17 October and traders will closely scrutinize the minutes to determine if any policymakers voted to reduce interest rates. Data released in the

SWISS FRANC:

The Swiss appreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1815 level and was supported around the CHF 1.1735 level. Technically, today's intraday high was just below the 38.2% retracement of the move from CHF 1.2145 to CHF 1.1620. Dollar offers are cited around the CHF 1.1885 level. The euro and British pound came off vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6595 and CHF 2.3900 levels, respectively.

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Currency-Trading Reviews 3 Oct 2007

BillyT's Daily Forex Currency-Trading Reviews for 3 October 2007

EURO:

The euro weakened vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4140 level and was capped around the $1.4200 figure. Traders do not expect the European Central Bank to change monetary policy tomorrow but will pay close attention to remarks from ECB President Trichet. Two key items that Trichet may comment on include the euro's recent appreciation and its implications for actual intervention versus the heightened verbal intervention that European officials have been brandishing lately. Also, traders want to know if the ECB's policy bias has shifted from hawkish closer to neutral on account of the recent turmoil in the financial markets. Any sense of hawkishness in Trichet's remarks could easily see a strong bid in the market for the euro. In U.S. news, the September non-manufacturing ISM business index fell to 54.8 from 55.8 in August. The new orders index fell back while the prices index for service posted strong growth to 66.1. The greenback was pressured after ADP's National Employment Report noted 58,000 private-sector jobs were added last month, up from a revised 27,000 in August. A significant amount of job losses were cited in the housing, construction, and financial services industries on account of the subprime mortgage meltdown in Q3. Similarly, the Challenger layoff report "pointed to a disturbing ramp up in financial services year-over-year layoffs." Many economists are focusing on new jobs growth around 100,000 when the September non-farm payrolls report is released on Friday. In eurozone news, EMU-13 August retail sales were up +0.1% m/m and +1.0% y/y, weaker-than-expected, while the EMU-13 September services PMI survey fell back to 54.2 from 58.0 in August. Euro bids are cited around the US$ 1.4120/ 1.4055 levels.

YEN:

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥116.70 level and was supported around the ¥115.55 level. Stops were reached above the ¥116.55 level, representing the 50.0% retracement of the move from ¥109.00 to ¥124.15 as the greenback reached its strongest level since 27 August. Traders cited increasing risk appetite and a renewal of the short yen carry trade as two factors that led to intraday weakness in the yen. Traders await remarks from Bank of Japan Deputy Governor Iwata overnight. The Nikkei 225 stock index gained 0.90% to close at ¥17,199.89. Dollar bids are cited around the ¥114.80 level. The euro gained ground vis-à-vis the yen as the single currency tested offers around the ¥165.30 level and was supported around the ¥163.55 level. The British pound and Swiss franc gained ground vis-à-vis the yen as the crosses tested offers around the ¥237.80 and ¥235.85 levels, respectively. In Chinese news, traders are speculating the U.S. dollar could weaken soon and trade with a CNY 7.4 handle.

BRITISH POUND:

The British pound weakened vis-à-vis the U.S. dollar today as cable tested bids around the US$ 2.0340 level and was capped around the $ 2.0440 level. Sterling has moved lower for three consecutive days and traders are very curious to see how Bank of England Monetary Policy Committee's interest rate decision materializes tomorrow. The central bank took the rare step of not changing rates at their September meeting and releasing a statement regarding their decision. The MPC is faced with the task of balancing concerns about inflationary pressures against growing signs the housing market and overall economy are cooling. Most traders do not expect the MPC will reduce interest rates tomorrow but could move closer to a neutral bias. Data released in the U.K. today saw the September services PMI survey fall to 56.7, its lowest print since August 2006. Also, the BRC September shop price index was up 0.2% m/m and 0.4% y/y. The three-month sterling Libor interbank rate scaled back to 6.24% today from 6.26% yesterday while the overnight fixing rate remained steady at 5.81%. Cable bids are cited around the US$ 2.0270 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.6960 level and was supported around the ₤0.6930 level

SWISS FRANC:

The Swiss lost ground vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1780 level and was supported around the CHF 1.1710 level. U.S. dollar offers are cited around the CHF 1.1825 level. The euro and British pound gained ground vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6665 and CHF 2.4005 levels, respectively.

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Currency-Trading Reviews 2 Oct 2007

BillyT's Daily Forex Currency-Trading Reviews for 2 October 2007

EURO:

The euro weakened vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4140 level and was capped around the $1.4235 level. Stops were hit below the $1.4170 level, representing the 23.6% retracement of the move from $1.3825 to $1.4280. European financial and monetary officials continue to jawbone over the common currency's relative strength and this verbal intervention is leading to a weaker currency. Spanish deputy finance minister Vegara today said "not all the necessary adjustment should come through the euro/ dollar exchange rate…There are important agents like the yen and yuan that should also have some of the responsibility of the adjustment of the so-called world financial imbalances." This verbal intervention follows similar comments from officials like Trichet and Juncker yesterday. Recent volatility in the markets up the chances that the upcoming Group of Seven finance ministers' meeting will include a statement about disorderly exchange rates, particularly as more European officials are intervening. Data released in the eurozone today saw EMU-13 August unemployment print at 6.9%, unchanged from July's level, while EMU-13 August PPI was up 0.1% m/m and 1.7% y/y. In U.S. news, Redbook retail sales were up +0.3% m/m in the first four weeks of September. Traders await the release of September non-farm payrolls data on Friday with most economists expecting about 100,000 new jobs were created. Some dealers believe the Federal Open Market Committee will reduce the federal funds target rate by 25bps at the end of October while others believe the FOMC will lower the federal funds target rate by 25bps or 50bps in December. Euro bids are cited around the US$ 1.4120/ 1.4055 levels.

YEN:

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥115.90 level and was supported around the ¥115.25 level. Dollar bulls are eyeing the ¥116.35/55 levels as the pair's next upside target. The mixed Bank of Japan quarterly Tankan survey that was released yesterday did not help the yen's cause as there was little to change the view that the central bank is likely to leave the overnight call rate unchanged at +0.50% for the foreseeable future. Many traders believe the BoJ will not lift the target rate by +25bps to +0.75% before the end of the year. Japanese economic data as of late has been fairly strong but the changing political environment and international financial market turmoil are working against central bank officials who want to move rates higher now. Data released in Japan overnight saw the September monetary base up 0.7% y/y, the second consecutive monthly rise. The Nikkei 225 stock index climbed 1.19% to close at ¥17,046.78. Dollar bids are cited around the ¥114.55 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥163.65 level and was capped around the ¥164.85 level. The British pound and Swiss franc came off vis-à-vis the yen as the crosses tested bids around the ¥234.90 and ¥98.30 levels, respectively. In Chinese news, traders continue to speculate People's Bank of China will tighten monetary policy at least one more time by the end of the year.

BRITISH POUND:

The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 2.0365 level and was capped around the $2.0445 level. Technically, the paid continues to orbit the $2.0415 level, representing the 76.4% retracement of the move from $2.0655 to $1.9650 level. Bank of England conducted a section auction of £10 billion to inject liquidity into the three-month interbank money market but failed to attract bids. The three-month sterling Libor rate fell to 6.26% from 6.28% yesterday. Traders are talking about media reports that U.K. banks are instead bidding on liquidity from the European Central Bank. It is being reported that U.K. banks bid on a "substantial part" of the €190 billion lent in the ECB's variable rate tender last week. Data released in the U.K. today saw September construction PMI fall to 60.3 from 64.8 in August. Cable bids are cited around the US$ 2.0270 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the £0.6930 level and was capped around the £0.6970 level.

SWISS FRANC:

The Swiss lost ground vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1775 level and was supported around the CHF 1.1675 level. Stops were reached above the CHF 1.1745 level, representing the 23.6% retracement of the move from CHF 1.2145 to CHF 1.1620. Credit Suisse lifted its 2007 GDP forecast to 2.5% from 2.2% and kept its 2008 GDP forecast unchanged at 1.9%. Similarly, the Swiss government raises its 2007 GDP forecast to 2.6% from 2.3. The Swiss government also reported that September CPI was up 0.1% m/m and 0.7% y/y. U.S. dollar offers are cited around the CHF 1.1825 level. The euro and British pound gained ground vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6660 and CHF 2.4020 levels, respectively.

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Currency-Trading Reviews 1 Oct 2007

BillyT's Daily Forex Currency-Trading Reviews for 1 October 2007



EURO:

The euro weakened vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4210 level and was capped around the $1.4280 level. The common currency reached another new lifetime high before paring some recent gains. The verbal intervention from eurozone officials grew louder over the weekend and today. European Central Bank President Trichet said the ECB notes with “extreme attention” that U.S. officials have reiterated the U.S.’s long-standing strong-dollar policy. Similarly, European Union Commissioner for Economic and Monetary Affairs Alumnia said he “looks forward to the next G7 statement,” implying officials may mention exchange rates in their communiqué. Also, the European Commission reported it is “concerned” about the euro’s strength while eurogroup chairman Juncker reported “The strong euro, as long as it stays on its path, tends to worry us a lot.” Data released in the eurozone saw final September final manufacturing PMI print at 53.2, unchanged from the previous estimate and its lowest showing since November 2005. Also, German September manufacturing PMI printed at 54.9. In U.S. news, the September ISM manufacturing activity index weakened to 52.0 from 52.9 in August and 53.8 in July. The prices paid index fell to 59.0 in September from 63.0 in August and the new orders, production, and inventories indices all decelerated. Traders are eyeing this Friday’s September non-farm payrolls report with many economists expecting about 100,000 jobs were added to the economy last month. Traders will also pay close attention to revisions for July’s and August’s non-farm payrolls tallies. Federal Reserve Chairman Greenspan spooked the markets by saying “Disinflationary pressures are gradually dissipating and inflationary pressures are beginning to mount.” Many traders believe the Federal Open Market Committee will reduce the federal funds target rate by 25bps at the end of the month while other traders see a 25bps or 50bps move lower in December. Euro bids are cited around the US$ 1.4120 level.

YEN:

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥116.05 level and was supported around the ¥114.70 level. Technically, today’s intraday low was right around the 61.8% retracement of the move from ¥109.00 to ¥124.15. The quarterly Bank of Japan Tnkan survey that was released overnight saw confidence among large manufacturers remain flat for the second consecutive quarter in Q3 with the headline reading at +23. Companies are forecasting renewed weakness in Q4 and results for smaller manufacturers and non-manufacturers were not as strong as expected. Additionally, the combined capital expenditures plans in the “all-industries” category is expected to improve to 4.9% in the year to March 2008, above the 3.1% that was anticipated in the June Tankan survey. Most traders believe the Tankan data will not have a major impact on Bank of Japan’s monetary policymaking with most traders seeing less than a 50% chance the central bank will lift the overnight call rate by 25bps to +0.50% by the end of the year. Other data released in Japan overnight saw August average overall income rise +0.1% y/y in August, the first rise in nine months. The Nikkei 225 stock index climbed 0.36% to close at ¥16,845.96. Dollar bids are cited around the ¥114.55 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥165.05 level and was supported around the ¥163.70 level. The British pound and Swiss franc gained ground vis-à-vis the yen as the crosses tested offers around the ¥236.95 and ¥99.30 levels, respectively. In Chinese news, China formally launched its state-owned foreign reserves investment company that will be responsible for managing about US$ 200 billion in foreign reserves. China recently announced its foreign reserves totaled US$ 1.4 trillion at the end of August.

BRITISH POUND:

The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 2.0375 level and was capped around the $2.0495 level. Sterling pared some of its recent gains following last week’s strong move higher. Many data were released in the U.K. today. First, August final M4 money supply was up an annualized 13.5%. Second, August consumer lending fell to ₤9.5 billion from ₤10.0 billion in July. Third, Hometrack reported U.K. September house prices were unchanged m/m for the second consecutive month and were up +5.0% y/y. Fourth, the U.K. September CIPS manufacturing PMI survey fell back to 55.1 from 55.7 in August. Fifth, Bank of England reported Q2 housing equity withdrawal fell back to ₤10.0 billion from a revised ₤13.1 billion in Q1. BoE also noted that the number of mortgage approvals fell to 109,000 in August from 115,000 in July and net mortgage lending fell to ₤8.5 billion from ₤8.9 billion during the same time frame. Liquidity conditions continue to improve in the U.K. money market sector as the three-month sterling Libor rate fell to 6.28% from 6.30% on Friday and the overnight fixing rate fell to 5.80% from 6.00% on Friday. Cable bids are cited around the US$ 2.0270 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.6945 level and was capped around the ₤0.6980 level.

SWISS FRANC:

The Swiss lost appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1720 level and was supported around the CHF 1.1620 level. Data released in Switzerland today saw September PMI fall to 57.6 from 65.1 in August. U.S. dollar offers are cited around the CHF 1.1760 level. The euro and British pound moved higher vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6665 and CHF 2.3970 level, respectively.


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Currency-Trading Reviews 24 Sept 2007

BillyT's Daily Forex Currency-Trading Reviews for 24 September 2007

EURO:

The euro extended recent gains vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4130 level and was supported around the $1.4085 level. The pair established a new lifetime high before consolidating some intraday gains. The move higher in the common currency was partially fueled by expectations the Federal Open Market Committee will reduce interest rates at least another 25bps before the end of the year. Traders await remarks from Federal Reserve Chairman Bernanke later in the North American session to see if he offers any additional clues about the Fed’s current thinking that were not detailed in the FOMC’s policy statement last week or in his subsequent Congressional testimony. Hong Kong Monetary Authority Chief Executive Joseph Yam warned that the U.S. dollar’s weakness may force Asian central banks to reassess their foreign exchange reserves management policies. Dallas Fed President Fisher indicated the Fed would have risked “unacceptably slow economic growth” if it didn’t cut rates last week and pledged the Fed is prepared to make a “further correction” towards growth or inflation. Data to be released in the U.S. this week include consumer confidence tomorrow and existing home sales. In eurozone news, the Belgian National Bank’s September business confidence index receded to 1.5 from 3.3 in August. Data to be released in the eurozone this week include the German Ifo business confidence index. Other data released today saw EMU-13 industrial orders fall 4.0% m/m in July and climb 10.9% y/y. Traders await comments on Wednesday from European Central Bank President Trichet to see if he offers any indication the ECB is prepared to lower interest rates before the end of the year. The other major question on traders’ minds is how the ECB will react to the relative strength of the euro. ECB member Noyer reported “Any abrupt changes in the dollar's value could seriously hamper economic growth. I regard it as extremely positive in this context that the US authorities are always sticking to and continue to stick to their strong dollar policy.” Euro bids are cited around the US$ 1.3990 level.

YEN:

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥114.75 level and was capped around the ¥115.40 level. Technically, today’s intraday low was right around the 61.8% retracement of the move from ¥109.00 to ¥124.15. Traders are talking about the shakeup in the leadership of the Liberal Democratic Party as Yasuo Fukuda will be named the country’s new Prime Minister tomorrow and is expected to place moderates in key party posts. The big questions on traders’ minds is whether Fukuda will promote economic and financial reforms, whether his Ministry of Finance officials will do anything to hasten the unwinding of the short yen carry trade, and how his government will get along with Bank of Japan officials. The Nikkei 225 stock index lost 0.62% to close at ¥16,312.61. Dollar bids are cited around the ¥114.55 level. The euro came off vis-à-vis the yen as the single currency tested bids around the ¥161.80 level and was capped around the ¥162.65 level. The British pound and Swiss franc came off vis-à-vis the yen as the crosses tested bids around the ¥232.15 and ¥97.80 levels, respectively. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5106 in the over-the-counter market, down from CNY 7.5036. Merrill Lynch now estimates inflation will peak between 6.5% and 7.0% in the September to October period.

BRITISH POUND:

The British appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 2.0315 level and was supported around the $2.0195 level. Technically, today’s intraday high was just above the 23.6% retracement of the move from $1.9180 to $2.0655. Bank of England’s quarterly bulletin reported “A broad deterioration of conditions across credit markets was associated with increased volatility and impaired liquidity in global financial markets more generally in the review period.” Notably, the three-month sterling Libor market interest rate fell to 6.36% from 6.37% on Friday while the overnight rate rose to 5.80% from 5.75%. Data released in the U.K. today saw August public sector net borrowing print at ₤9.1 billion, the highest level since 1993 and a reflection of the credit market turmoil. Cable bids are cited around the US$ 2.0150 level. The euro slumped vis-à-vis the British pound as the single currency tested bids around the ₤0.6950 level and was capped around the ₤0.6975 level.

SWISS FRANC:

The Swiss franc came off marginally vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1755 level and was supported around the CHF 1.1685 level. The August UBS consumption indicator will be released tomorrow. U.S. dollar offers are cited around the CHF 1.1880 level. The euro and British pound gained ground vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6550 and CHF 2.3760 levels, respectively.

BillyT Daily Forex

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Currency-Trading Reviews 21 Sept 2007

BillyT's Daily Forex Currency-Trading Reviews for 21 September 2007

EURO:

The euro extended recent gains vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4120 level and was supported around the $1.4040 level. The common currency’s intraday high represented a fresh lifetime high for the pair. There was a dearth of economic data released in the U.S. today. Data released in the U.S. yesterday saw the Philadelphia Federal Reserve’s September manufacturing survey improve to 10.9. Fed Chairman Bernanke told Congress the current credit market crisis has created “significant market stress” and reiterated regulators would take steps to limit the effects from the mortgage crisis. Fed Vice Chairman Kohn today said the Fed formulates policy for the macroeconomy but added asset prices play a role in policymaking. Kohn said “"I doubt policy would have been eased this week if housing prices had continued their upward march” and surprisingly advocated inflation targeting. In eurozone news, the flash estimate for EMU-13 September manufacturing PMI fell to 53.2, its lowest level since November 2005, while the services PMI index weakened to 54.0, its lowest level since August 2005. Many traders believe these data will help tilt the European Central Bank’s policy bias from tightening to neutral or even expansionary. Also, it was reported that the eurozone’s current account surplus narrowed in July to €1.7 billion from €3.7 billion in June. ECB member Bini Smaghi verbally intervened against the euro’s rise today saying the ECB’s monetary policy must not take into account any particular exchange rate for the euro but added the ECB can decide to intervene to weaken the currency. ECB member Constancio reported “what happens in the U.S. economy will affect us,” a hint the ECB’s policy bias is likely to change. Constancio added “have no forex target, but the level of the euro is important due to its effects on inflation.” Euro bids are cited around the US$ 1.3970 level.

YEN:

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥115.85 level and was supported around the ¥114.55 level. Technically, today’s intraday low was right around the 23.6% retracement of the move from ¥124.15 to ¥111.60. The yen has been quite volatile lately, torn between dollar bulls who believe Bank of Japan will not raise interest rates by the end of the year and yen bulls who are unwinding their short yen carry trades. Ministry of Finance official Shinohara spoke overnight and said “Foreign exchange volatility has fallen a little compared with some time ago, but it is still at high levels.” Data released in Japan overnight saw the July all-industries index off 0.4% m/m and up 1.2% y/y. Also, capital flows reported Japanese accounts sold a net ¥449.6 billion in foreign bonds last week while foreign investors were net sellers of Japanese equities for the second consecutive week last week. The Nikkei 225 stock index lost 0.62% to close at ¥16,312.61. Dollar bids are cited around the ¥114.55 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥162.80 level and was supported around the ¥161.10 level. The British pound and Swiss franc gained ground vis-à-vis the yen as the crosses tested offers around the ¥233.50 and ¥98.50 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5036 in the over-the-counter market, down from CNY 7.5144 and the pair’s weakest close since the yuan revaluation of July 2005. People’s Bank of China Governor Zhou reported China “does not have a timetable” for making the yuan fully convertible on China’s capital account.

BRITISH POUND:

The British appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 2.0195 level and was supported around the $2.0075 level. Technically, today’s intraday low was right around the 38.2% retracement of the move from $1.9180 to $2.0655. Liquidity conditions continued to normalize in the U.K. money markets today as the three-month sterling Libor rate fell to 6.37% from 6.39%. Traders will pay close attention to the banking system to see if a buyer emerges for troubled Northern Rock PLC. A buyout of that financial institution could lead to more sterling strength as it would imply less panicked withdrawals from the banking system. Data released in the U.K. today saw IRS pay deals remain steady at 3.5% in the three months to the end of August. Cable bids are cited around the US$ 2.0035 level. The euro came off vis-à-vis the British pound as the single currency tested bids around the ₤0.6965 level and was capped around the ₤0.7020 level.

SWISS FRANC:

The Swiss franc came off marginally vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1770 level and was supported around the CHF 1.1675 level. Today’s intraday low represents the pair’s weakest showing since March 2005. Traders are debating whether or not Swiss National Bank will tighten monetary policy in December or if official Swiss interest rates have peaked. U.S. dollar offers are cited around the CHF 1.1880 level. The euro and British pound moved higher vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6535 and CHF 2.3725 levels, respectively.

AUSTRALIAN / NEW ZEALAND DOLLAR:

The Australian dollar moved higher vis-à-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8700 figure and was supported around the $0.8605 level. Technically, today’s intraday high represents the pair’s strongest showing since 27 July. Australian dollar bids are cited around the US$ 0.8585 level. The New Zealand dollar climbed higher vis-à-vis the U.S. dollar as the kiwi tested offers around the US$ 0.7465 level and was supported around the $0.7365 level. New Zealand dollar bids are cited around the US$ 0.7275 level.

CANADIAN DOLLAR:

The Canadian dollar appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the C$ 0.9935 level and was capped around the C$ 1.0055 level. The loonie extended recent multi-decade gains, establishing a new fresh high dating back to November 1976. Data released in Canada today saw July retail sales fell 0.8% m/m with the ex-autos component off 0.3%. U.S. dollar offers are cited around the C$ 1.0090 level.


BillyT Daily Forex

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Currency-Trading Reviews 20 Sept 2007

BillyT's Daily Forex Currency-Trading Reviews for 20 September 2007

EURO:

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4070 level and was supported around the $1.3955. The common currency rocketed to a new lifetime high above the psychologically-important $1.4000 figure on speculation that Saudi Arabia is ending its ending the peg between the rial and the U.S. dollar. Notably, the Saudi Arabian Monetary Agency did not reduce interest rates this week when the Federal Reserve took the federal funds target rate lower by 50bps. Traders believe this may set off a firestorm in the Middle East and could see other oil-rich countries decouple their currencies from the U.S. dollar and ignite more selling pressure. Data released in the U.S. today saw weekly initial jobless claims fall 9,000 to 311,000 while continuing jobless claims were off 53,000 to 2.544 million. Traders are paying close attention to testimony from Federal Reserve Chairman Bernanke and U.S. Treasury Secretary Paulson about the U.S. mortgage industry today. The September Philadelphia Fed survey will be released later in the North American session. In eurozone news, the Belgian National Bank’s September consumer confidence indicator was unchanged at -2. Euro bids are cited around the US$ 1.3950 level.

YEN:

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥114.90 level and was capped around the ¥116.10 level. The U.S. dollar crumbled across the board and the New York Board of Trade’s U.S. Dollar Index plunged to its lowest level since September 2002 and is now trading with a 78 handle. Data released in Japan overnight the saw large companies’ business sentiment diffusion index rebound to +6.2 in Q3 from -0.9 in Q2. This is the government’s index and not the Bank of Japan’s tankan survey but it nonetheless represents an improvement in sentiment. The yen posted gains on many of its crosses too and this partially reflects the fact that the Federal Reserve’s rate cut is likely to see other central banks move from a tightening bias to a neutral or easing bias, thus leading to more unwinding of the short yen carry trade. The Nikkei 225 stock index climbed 0.20% to close at ¥16,413.79. Dollar bids are cited around the ¥113.70 level. The euro came off vis-à-vis the yen as the single currency tested bids around the ¥161.35 level and was capped around the ¥162.40 level. The British pound and Swiss franc moved lower vis-à-vis the yen as the crosses tested bids around the ¥230.70 and ¥97.90 levels, respectively. The Chinese yuan lost marginal ground vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5144 in the over-the-counter market, up from CNY 7.5135. Data released in China saw the Q3 bank industry prosperity index hit a record high at 70.6% while the Q3 entrepreneur confidence index receded to 77% from 83.4% in Q2. People’s Bank of China reported that household satisfaction with consumer prices is at a record low.

BRITISH POUND:

The British appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 2.0135 level and was supported around the $1.9970 level. Sterling recouped some recent losses after testimony from Bank of England Governor King quelled speculation that he would be ousted in response to the central bank’s delayed response to the global liquidity crisis and its impact on the U.K. banking sector. King made it clear the BoE does not intend to provide a complete bail-out to the U.K. money market. King also reported that existing legislation such as the Market Abuses Directive reduces his “preferred” measure of finding a “covert lender of last resort” for troubled financial institutions such as Northern Rock PLC. Liquidity conditions improved marginally in the U.K. money market today with the three-month sterling Libor rate falling to 6.39% from 6.55 and the overnight and one-week rates down 7bps and 15bps, respectively. BoE yesterday announced it will offer ₤10 billion to the interbank market via next week’s three-week repurchase agreement. Bank of England Monetary Policy Committee member Barker today reported the U.K. housing market “remains relatively robust.” Data released in the U.K. today saw August retail sales rise 0.6% m/m while the CBI’s revealed a positive output balance level of +17%, up from +13% in July. Also, August provisional annual M4 money supply growth rose to 13.5% from 13.0% in July while August gross mortgage lending fell to ₤32.2 billion from ₤34.1 billion in July. Cable bids are cited around the US$ 1.9920 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7005 level and was supported around the ₤0.6975 level.

SWISS FRANC:

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1695 level and was capped around the CHF 1.1845 level. The pair reached its lowest level since March 2005. Data released in Switzerland today saw August producer and import prices expand more than expected, up 0.3% m/m and 2.7% y/y. The August trade surplus widened to CHF 637.1 million and the indicator for economic expectations indicator fell 21.6 points to -26.7 in September. U.S. dollar offers are cited around the CHF 1.1880 level. The euro and British pound weakened vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6445 and CHF 2.3505 levels, respectively.

AUSTRALIAN / NEW ZEALAND DOLLAR:

The Australian dollar moved higher vis-à-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8660 level and was supported around the $0.8550 level. The pair reached its highest level since 27 July. Data released in Australia today saw August new home sales fall 8.6% m/m, the lowest level since January. Australian dollar bids are cited around the US$ 0.8430 level. The New Zealand dollar gained ground vis-à-vis the U.S. dollar as the kiwi tested offers around the US$ 0.7450 level and was supported around the $0.7325 level. Data released in New Zealand today saw the annual current account deficit expand slightly in Q2. New Zealand dollar bids are cited around the US$ 0.7275 level.

CANADIAN DOLLAR:

The Canadian dollar appreciated sharply vis-à-vis the U.S. dollar today as the greenback tested bids around the C$ 0.9995 level and was capped around the C$ 1.0155 level. The last time the pair reached parity prior to today was November 1976. Data released in Canada saw July wholesale sales rose 2.0% m/m while wholesale inventories were up 0.6%. U.S. dollar offers are cited around the C$ 1.0155 level.


BillyT Daily Forex
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BillyT's Daily Forex Currency-Trading Reviews for 19 September 2007

BillyT's Daily Forex Currency-Trading Reviews for 19 September 2007

EURO:

The euro came off vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3935 level and was capped around the $1.3985 level. Today’s range was limited following yesterday’s significant move higher that saw the common currency establish a new lifetime high and come within fifteen pips of testing the psychologically-important US$ 1.4000 figure. The impetus for the pair’s gains yesterday was a larger-than-expected interest rate reduction by the Federal Open Market Committee that saw the federal funds target rate lowered by 50bps to 4.75%. Most traders expected the FOMC to reduce rates by 25bps and many Fed-watchers are already anticipating policymakers will lower rates another 25bps this year. The FOMC reported “Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today’s action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time. Readings on core inflation have improved modestly this year. However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully. Developments in financial markets since the Committee’s last regular meeting have increased the uncertainty surrounding the economic outlook. The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.” Equity markets reacted very positively to the Fed’s decision that also included a 50bps reduction in the discount rate. The Fed is clearly concerned about the impact of the subprime mortgage market crisis on the U.S. housing sector. Data released in the U.S. today saw August headline consumer price inflation off 0.1%, the first negative reading since October 2006. Core CPI prices were up 0.2% last month and core inflation is now up 2.1% over the past twelve months. These data are consistent with the Fed’s assessment that inflation is moderating. Other data released today saw August housing starts off 2.6% to 1.331 million units while permits for future construction were at their lowest levels in more than one decade. U.S. federal housing regulators provided the housing market with a little bit of a boost today in granting Fannie Mae and Freddie Mac with the capacity to invest US$ 20 billion in subprime mortgages. In eurozone news, the German government warned a weaker dollar could negatively impact German exports. Data released in Germany saw the August producer price index up 0.1% m/m and 1.0% y/y. Euro bids are cited around the US$ 1.3620 level.

YEN:

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥116.30 level and was supported around the ¥115.65 level. Technically, today’s intraday high was right around the 38.2% retracement of the move from ¥122.15 to ¥111.60. As expected, Bank of Japan’s Policy Board voted 8-to-1 to keep the overnight call rate unchanged at +0.50%. The central bank also kept its economic assessment of the economy unchanged and most traders believe the BoJ may be forced to keep the overnight call rate unchanged through the end of 2007. BoJ Governor Fukui said instability in global financial markets and downside risks surrounding the U.S. economy countered “the steady expansion of the Japanese economy.” Data released in Japan overnight saw August department store sales rise 1.4% y/y while the July leading index was upwardly revised to 72.7. The Nikkei 225 stock index gained 3.67% to close at ¥16,381.54. Dollar bids are cited around the ¥113.70 level. The euro came off vis-à-vis the yen as the single currency tested bids around the ¥161.35 level and was capped around the ¥162.45 level. The British pound and Swiss franc weakened vis-à-vis the yen as the crosses tested bids around the ¥231.10 and ¥97.80 levels, respectively. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5135 in the over-the-counter market, down from CNY 7.5228 – the pair’s weakest closing price since the revaluation in July 2005. The government now estimates 2007 retail sales will print around CNY 8.8 trillion, up 15%

BRITISH POUND:

The British extended recent losses vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9950 level and was capped around the $2.0170 level. Technically, today’s intraday high was just above the 50% retracement of the move from $2.0655 to $1.9650. Minutes from Bank of England Monetary Policy Committee’s September interest rate meeting were released today and evidenced a 9-to-0 vote to keep rates unchanged on account of turmoil in the credit market. The MPC also concluded the upside balance of risk to inflation it identified last month “had probably receded.” Bank of England today announced it will avail the support it has provided over the past week to Northern Rock PLC to other financial institutions. The central bank is trying bring the sterling money markets under control where the premium for short-term liquidity remains 100bps above the central bank’s repo rate target of 5.75%. Most traders now believe the BoE will be forced to reduce interest rates over the coming months. Cable bids are cited around the US$ 1.9805 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.6995 level and was supported around the ₤0.6930 level.


SWISS FRANC:

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1875 level and was supported around the CHF 1.1790 level. The pair reached its lowest level since April 2005 before being bid higher today. Data released in Switzerland today saw July retail sales rise 3.3% y/y, above expectations. Dollar offers are cited around the CHF 1.1960 level. The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.6560 level while the British pound came off vis-à-vis the Swiss franc and tested bids around the CHF 2.3590 level.


BillyT Daily Forex
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BillyT's Daily Forex Currency-Trading Reviews for 18 September 2007

BillyT's Daily Forex Currency-Trading Reviews for 18 September 2007

EURO:

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3890 level and was supported around the $1.3825 level. Traders awaited the Federal Open Market Committee’s interest rate decision later in the North American session with most expecting a 25bps monetary expansion. A sizable minority, however, continue to call for a 50bps reduction in the federal funds target rate to provide the financial markets with some additional liquidity in the wake of the ongoing credit market shakeout. A 25bps cut would take the federal funds target rate lower to 5.00% and many traders also believe the Fed will again lower the discount rate to make it less expensive for financial institutions to borrow funds. As always, the Fed’s policy statement will be scrutinized closely to try and decipher policymakers’ policy bias and policy actions in the future. The big question on traders’ minds is whether or not the FOMC will need to lower interest rates again after today or if this will represent a one-time reduction in the federal funds target rate. Data released in the U.S. today saw the August producer price index fall 1.4% m/m, the sharpest decline since October 2006, while core prices were up 0.2%. Over the past year, core prices have been up 2.2%, consistent with expectations. Other data released in the U.S. saw foreign demand for long-term U.S. securities decline sharply in July to US$ 19.2 billion from a revised US$ 97.3 billion in June and well below expectations. These data evidence waning foreign demand for long-term U.S. assets during early in Q3. The decline was partially offset by demand for short-term assets as total net foreign capital inflows printed at US$ 103.8 billion, up from US$ 34.4 billion in June. Other U.S. data saw the number of U.S. house foreclosure filings double in August from one year ago and up 36% m/m, the latest indication of the impact the subprime mortgage crisis is having on homeowners. In eurozone news, European Central Bank member Weber expressed “some concern” with the development of oil and food prices in Germany. Data released in Germany today saw the September ZEW economic expectations index fall sharply to -18.1 from -6.9 in August, more-than-expected. Euro bids are cited around the US$ 1.3620 level.

YEN:

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥115.85 level and was supported around the ¥114.80 level. Technically, today’s intraday low was right around the 61.8% retracement of the move from ¥109.00 to ¥124.15. The pair reached its highest level since 5 September on growing expectations that Bank of Japan will not raise the overnight call rate this year from its current +0.50% level. Nikkei reported the U.S. subprime mortgage shakeout and political instability in Japan may limit the central bank’s ability to push rates higher over the next few months. BoJ’s Policy Board will announce its latest interest rate decision tomorrow. Traders await the outcome of this Sunday’s LDP presidential election to determine who the next Prime Minister of Japan will be with most Japan-watchers anticipating Fukuda will assume the top slot. Data released in Japan saw the July tertiary index fall 0.5% m/m, the third decline in seven months. The Nikkei 225 stock index lost 2.02% to close at ¥15,801.80. Dollar bids are cited around the ¥113.70 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥160.85 level and was supported around the ¥158.80 level. The British pound and Swiss franc moved higher vis-à-vis the yen as the crosses tested offers around the ¥231.55 and ¥97.55 levels, respectively. The Chinese yuan weakened marginally vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5228 in the over-the-counter market, up from CNY 7.5227. Credit Suisse predicted China is likely to tighten monetary policy further this year. The European Union criticized China’s foreign exchange reforms noting they have had “no impact” on the yuan’s exchange rate vis-à-vis the euro.

BRITISH POUND:

The British gained ground vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.9995 level and was supported around the $1.9880 level. Technically, today’s intraday low was right around the 23.6% retracement of the move from $2.0655 to $1.9650. Data released in the U.K. today saw the August headline consumer price index fall to 1.8%, the lowest rate since February 2005. Notably, this means CPI is below the level Bank of England expected it would be when it released its quarterly inflation report one month ago. Sterling was bid on news the U.K. government has provided a blanket guarantee on all bank deposits following the continuation of panicked withdrawals from U.K. home lender Northern Rock. Bank of England provided financial institutions with ₤4.4 billion in reserves to contend with short-term liquidity issues via a two-day repo. Many dealers now believe the central bank will be forced to lower interest rates in the near future. CBI reduced its 2008 GDP forecast for the U.K. to 2.2% from 2.4%. Cable bids are cited around the US$ 1.9805 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.6940 level and was capped around the ₤0.6975 level.

SWISS FRANC:

The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1890 level and was supported around the CHF 1.1855 level. Technically, today’s intraday high was right around the 23.6% retracement of the move from CHF 1.1800 to CHF 1.1920. Data released in Switzerland today saw Q2 industrial production up 6.7% q/q and 9.8% y/y. Swiss National Bank President Roth spoke yesterday and intimated interest rates may have peaked. Dollar offers are cited around the CHF 1.1960 level. The euro and British pound appreciated vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6490 and CHF 2.3745 levels, respectively.

AUSTRALIAN / NEW ZEALAND DOLLAR:

The Australian dollar gained ground vis-à-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8375 level and was supported around the $0.8275 level. Technically, today’s intraday low was right around the 50% retracement of the move from $0.8870 to $0.7675. Data released in Australia today saw August merchandise imports rise to A$ 16.924 billion from A$ 15.247 billion in July. Reserve Bank of Australia Governor Stevens called on Australian banks to disclose their exposures to the U.S. subprime mortgage crisis more fully. Australian dollar bids are cited around the US$ 0.8160 level. The New Zealand dollar moved higher vis-à-vis the U.S. dollar as the kiwi tested offers around the US$ 0.7095 level and was supported around the $0.7005 level. New Zealand dollar bids are cited around the $0.6985 level.

CANADIAN DOLLAR:

The Canadian dollar extended recent gains vis-à-vis the U.S. dollar today as the greenback tested bids around the C$ 1.2000 figure and was capped around the C$ 1.0285 level. The pair reached its lowest level in a couple of decades and many traders are now talking about parity between the two currencies. August CPI data will be released in Canada tomorrow. U.S. dollar offers are cited around the C$ 1.0430 level.


BillyT Daily Forex
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BillyT's Forex Daily Currency-Trading Reviews for 17 September 2007

BillyT's Forex Daily Currency-Trading Reviews for 17 September 2007

EURO:

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3850 level and was capped around the $1.3885 level. Today’s range was quite thin as traders were loath to establish new ranges ahead of tomorrow’s Federal Open Market Committee interest rate decision. Most traders expect the Fed will reduce the federal funds target rate by +25bps or +50bps on account of the recent turmoil in the financial markets that was precipitated by the subprime mortgage credit shakeout. U.S. Treasury Secretary Paulson reiterated the ongoing repricing of risk in the credit market “will be with us for a while” but that the U.S. is doing so “against a backdrop of a strong global economy.” Data released in the U.K. today saw the September Empire State manufacturing index fall to 14.7, far below its reading of 25.1 in August. In eurozone news, European Central Bank officials continued to defend their policymaking activities from ongoing criticism from French President Sarkozy. ECB member Liebscher reiterated inflationary risks are on the upside. The German government reported Germany’s jobless total could fall to 3.5 million this month or next month. It was also reported that the EMU-13 July trade surplus printed at €4.6 billion from a revised €7.6 billion in June. Euro bids are cited around the US$ 1.3620 level.

YEN:

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥114.65 level and was capped around the ¥115.35 level. Technically, today’s intraday low was just above the 23.6% retracement of the move from ¥124.15 to ¥111.60. Japanese financial markets were closed for a market holiday overnight and will reopen tomorrow. All eyes are on the Japanese political landscape where a majority of lawmakers from the ruling Liberal Democratic Party are said to support the moderate Yasuo Fukuda in next Sunday’s party presidential election over challenger Taro Aso. The big question on traders’ minds is how a win by either candidate would impact Japan’s national finances and how the yen may react. Most traders believe Bank of Japan will push forth a +25bps hike in the overnight call rate before the end of the current fiscal year in March 2008, also around the time that BoJ Governor Fukui leaves office. Dollar bids are cited around the ¥113.70 level. The euro came off vis-à-vis the yen as the single currency tested bids around the ¥159.00 figure and was capped around the ¥160.15 level. The British pound and Swiss franc weakened vis-à-vis the yen as the crosses tested bids around the ¥229.05 and ¥96.60 levels, respectively. The Chinese yuan came off vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5227 in the over-the-counter market, up from CNY 7.5175.

BRITISH POUND:

The British pound sold off significantly vis-à-vis the U.S. dollar today as cable tested bids around the US$ 1.9915 level and was capped around the $2.0090 level. Technically, today’s intraday low was right around the 50% retracement of the move from $1.9180 to $2.0655. Traders are driving sterling lower on account of ongoing problems at U.K. bank Northern Rock where customers withdrew sizable amounts of deposits over the weekend. Northern Rock is the U.K.’s fifth-largest home lender and received emergency funding from the Bank of England last week. Short sterling futures are now pricing in a reduction in Bank of England’s repo rate over the coming months, a stark contrast to just a few weeks ago when traders believed the MPC would lift the repo rate by +25bps to 6.00% by the end of the year. Traders await this month’s MPC meeting minutes followed by testimony from Bank of England Governor King on Thursday. The problems being faced in the U.K. money market are exemplified by the spike in short-term funding costs. The overnight sterling deposit rate jumped to 6.47% from 5.87% and the one-week rate climbed to 6.21% from 5.98%. These increases reflect the premiums being paid by financial institutions looking to secure funds in the money market. Cable bids are cited around the US$ 1.9920 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.6955 level and was supported around the ₤0.6905 level.

SWISS FRANC:

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1845 level and was capped around the CHF 1.1900 figure. Technically, today’s intraday high was right around the 23.6% retracement of the move from CHF 1.2215 to CHF 1.1800. Q2 industrial production data will be released in tomorrow. Dollar offers are cited around the CHF 1.1960 level. The euro and British pound lost ground vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6440 and CHF 2.3645 levels, respectively.


BillyT Daily Forex
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BillyT's Forex Daily Currency-Trading Reviews for 14 September 2007

BillyT's Forex Daily Currency-Trading Reviews for 14 September 2007

EURO:

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3845 level and was capped around the $1.3895 level. U.S. Treasury Secretary Paulson reported the U.S. economy may pay “some penalty” on account of the recent financial market turmoil. Many data were released in the U.S. today. First, the U.S. current account deficit narrowed in –US$ 190.8 billion between April and June from a revised –US$ 197.1 billion in Q1 and is now around 5.5% of GDP. Second, July business inventories were up 0.5% with sales up 1.1%. Third, August retail sales were up 0.3% with the ex-autos and ex- gasoline component off 0.1%. Fourth, August industrial output was up 0.2% with capacity utilization at 82.2%. Fifth, U.S. August import prices were off 0.3% m/m, weaker-than-expected. These data are important because they afford the Federal Reserve a little extra justification to lower interest rates on Tuesday. Most dealers believe the Federal Open Market Committee will reduce the federal funds target rate by 25bps or 50bps at that time. Other data released today saw the mid-September University of Michigan consumer sentiment index improve to 83.8 from 83.4 at the end of August. In eurozone news, European Central Bank President Trichet reiterated EMU-13 price risks remain on the upside. European central bankers and finance ministers are meeting in Porto, Portugal this weekend to discuss the impact of the recent financial market turbulence on the eurozone economy. Data released in the eurozone today saw August harmonized consumer price inflation print at 1.7%, down from the flash estimate of 1.8% - the twelfth straight month the rate has been below the ECB’s 2.0% ceiling target. Euro bids are cited around the US$ 1.3620 level.

YEN:

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥115.40 level and was supported around the ¥114.35 level. Technically, today’s intraday low was right around the 50% retracement of the move from ¥111.60 to ¥117.10. The Japanese government kept its assessment of the economy unchanged for September but downgraded its assessment for the first time in 30 months on account of weak capital spending. The government also noted “attention should be paid to effects of developments in the U.S. economy and changes in oil prices on the Japanese economy and overseas economies." On the political front, former foreign minister Aso appears to be the front runner to succeed outgoing Prime Minister Abe. Most traders believe Bank of Japan will keep the overnight call rate unchanged at +0.50% for the next few months and possibly lift the call rate by +25bps to +0.75% by the end of the current fiscal year in March 2008. The Nikkei 225 stock index climbed 1.94% to close at ¥16,127.42. Dollar bids are cited around the ¥113.70 level. The euro came off vis-à-vis the yen as the single currency tested bids around the ¥158.75 level and was capped around the ¥160.25 level. The British pound and Swiss franc weakened vis-à-vis the yen as the crosses tested offers around the ¥230.15 and ¥96.50 levels, respectively. The Chinese yuan came off vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5175 in the over-the-counter market, up from CNY 7.5105. People’s Bank of China announced it is tightening monetary policy again, effective tomorrow, by lifting deposit and lending rates by 27 bps. Data released in China today saw 2006 direct overseas investment up 73% y/y at a record US$ 21 billion. Also, urban fixed-asset investment was up 26.7% between January and August.

BRITISH POUND:

The British pound sold off significantly vis-à-vis the U.S. dollar today as cable tested bids around the US$ 2.0055 level and was capped around the $2.0250 level. Traders continued to reduce long sterling exposure on declining expectations that the Bank of England Monetary Policy Committee will tighten monetary policy further this year. A report that U.K. mortgage lender Northern Rock PLC sought emergency funding from Bank of England pushed cable lower. The move lower was exacerbated by a leaked report from Rightmove that asking prices for houses on the market fell 2.6% m/m. Cable bids are cited around the US$ 1.9920 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.6905 level and was supported around the ₤0.6855 level.

SWISS FRANC:

The Swiss franc lost ground vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1920 level and was supported around the CHF 1.1835 level. Dollar offers are cited around the CHF 1.1960 level. The euro gained ground vis-à-vis the Swiss franc as the single currency tested offers around the 1.6515 level while the British pound came off vis-à-vis the Swiss franc and tested bids around the CHF 2.3845 level.

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BillyT's Forex Daily Currency-Trading Reviews for 13 September 2007

BillyT's Forex Daily Currency-Trading Reviews for 13 September 2007

EURO:

The euro strengthened vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3925 level and was supported around the $1.3860 level. The common currency established a new lifetime high and then yielded gains during the North American session. The Federal Reserve injected US$ 21 billion in liquidity today one day after it added US$ 13.5 billion to the banking system. Most traders believe the Federal Open Market Committee will reduce the federal funds target rate between 25bps and 50bps next Tuesday on account of the slowness in the U.S. housing sector and turmoil in the credit markets. Fed Chairman Bernanke will testify before the House on 20 September about the U.S. subprime mortgage meltdown. Data released in the U.S. today saw weekly initial jobless claims rise 4,000 to 319,000 while continuing jobless claims fell 6,000 to 2.585 million. Traders are paying close attention to any evidence that the U.S. labour market continues to worsen following August’s 4,000 jobs contraction as reported in last week’s non-farm payrolls tally. In eurozone news, the European Central Bank reported it will act in a “firm and timely” manner to counter price risks in its monthly bulletin. The ECB is expected to lift its main refinancing rate target by +25bps before the end of the year. Germany’s IfW research institute lowered its German 2007 GDP forecast to 2.7% from 3.2%. EMU-13 Q2 provisional employment was up 0.5% q/q and 1.7% y/y. Euro bids are cited around the US$ 1.3620 level

YEN:

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥115.45 level and was supported around the ¥114.10 level. Traders dumped yen following yesterday’s resignation of Prime Minister Abe and his subsequent hospitalization on concerns that his successor may not carry forward Japan’s economic reform agenda. During his short stint in office, Abe has tightened fiscal policy and a reversal away from that could see more Japanese government bonds issued. Dealers also moved out of yen after a report emerged that Japan’s government will downgrade its assessment of its economy this month on account of weaker consumer spending and capital investments. Many traders believe Bank of Japan’s Policy Board next +25bps rate hike to +0.75% is being pushed back further with a possibility one will not emerge by the end of 2007, but perhaps by the end of Japan’s fiscal year at the end of March 2008. Around this time, BoJ Governor Fukui will leave office and the markets perceive him as wanting to lift rates before he leaves office. The Nikkei 225 stock index climbed 0.15% to close at ¥15,821.19. Dollar bids are cited around the ¥112.55 level. The euro appreciated vis-à-vis the yen as the single currency tested offers around the ¥160.35 level and was supported around the ¥158.55 level. The British pound and Swiss franc moved higher vis-à-vis the yen as the crosses tested offers around the ¥234.05 and ¥97.25 levels, respectively. The Chinese yuan appreciated sharply vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5105 in the over-the-counter market, down from CNY 7.5216, a new post-revaluation low. Data released in China today saw actual foreign direct investment up 11.9% y/y in August while industrial value-added output was up 18.4% y/y between January and August.

BRITISH POUND:

The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 2.0235 level and was capped around the $2.0300 level. Traders continue to pare back their expectations that Bank of England’s Monetary Policy Committee will lift the repo rate by another +25bps to 6.00% by the end of the year. BoE’s inflation expectations survey was released today and remained steady at 2.7% despite the sizable decline in July’s inflation rate. The view that the MPC is on hold with interest rates was reaffirmed after RICS reported the first decline in house prices for the first time in nearly two years. BoE reported it will offer banks more flexibility regarding the amount of reserves they maintain with the central bank. The three-month sterling Libor rate fell to 6.88% today but is still 113bps above the BoE’s 5.75% repo target rate – the latest evidence of funding difficulties in the money market. Cable bids are cited around the US$ 2.0160 level. The euro slumped vis-à-vis the British pound as the single currency tested bids around the ₤0.6840 level and was capped around the ₤0.6875 level.

SWISS FRANC:

The Swiss franc lost ground vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1890 level and was supported around the CHF 1.1800 figure. The pair earlier reached its lowest level since April 2005 before moving higher. As expected, Swiss National Bank tightened monetary policy today, its eighth consecutive interest rate rise in less than two years. SNB lifted its three-month Libor target band by 0.25% to 2.25% - 3.25% and the central bank will target the middle of that band, or 2.75%. Most SNB-watchers believe the SNB focused on upward pressures in GDP and inflation. In making the policy shift, the SNB also asserted its independence, especially after the ECB’s and BoE’s recent decisions to keep rates unchanged. Another major reason why the SNB lifted rates is on account of the relatively stong euro/ Swiss franc exchange rate. SNB reported “The volatility of the exchange rate can increase rapidly... participants in the Swiss franc credit market and entrepreneurs should always be aware of the exchange rate risks.” The SNB now sees 2007 inflation around 0.7%. Data released in Switzerland today saw August corporate bankruptcies up 19.1% y/y. Dollar offers are cited around the CHF 1.2120 level. The euro and British pound appreciated vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6495 and CHF 2.4095 levels, respectively

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BillyT's Forex Daily Currency-Trading Reviews for 12 September 2007

BillyT's Forex Daily Currency-Trading Reviews for 12 September 2007

EURO:

The euro strengthened vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3895 level and was supported around the $1.3825 level. The common currency established a fresh lifetime high as traders reacted to remarks from U.S. Treasury Secretary Paulson who indicated the current financial market problems may last longer than the Asian and Russian financial crises of the 1990s. Further pressure on the U.S. is likely to materialize on account of growing pressure on the Federal Reserve to reduce interest rates next Tuesday. The federal funds futures market is pricing in between 25bps and 50bps of easing by the Federal Open Market Committee next week on account of subprime mortgage and housing sector problems. In eurozone news, European Central Bank President Trichet yesterday testified that monetary policy remains on the “accommodative side” and most dealers believe the ECB will lift the repo rate by +25bps by the end of the year. Data released in the eurozone today saw July industrial production up 0.6% m/m and 3.7% y/y. Also, EMU-13 labour costs were up 2.5% y/y in Q2. Euro bids are cited around the US$ 1.3620 level.

YEN:

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥114.35 level and was supported around the ¥113.75 level. Prime Minister Abe resigned today and the Liberal Democratic Party is set to name his successor on 19 September with Taro Aso looking like the most likely replacement. Abe’s resignation may be mildly yen-negative as will likely make it more difficult for Bank of Japan Governor Fukui to lift the overnight call rate to by +25bps to +0.75%. Many data were released in Japan overnight. First, the August wholesale goods price index rose 1.9% y/y, exceeding forecasts and the 42nd consecutive monthly rise. Second, August consumer confidence fell to its lowest level in 32 months, printing at 44.0 from July’s 44.4 tally. Third, August revised machine tool orders were up 12.6% y/y. Fourth, the July current account surplus gained 4.5% y/y, below forecasts. The Nikkei 225 stock index lost 0.50% to close at ¥15,797.60. Dollar bids are cited around the ¥112.55 level. The euro appreciated vis-à-vis the yen as the single currency tested offers around the ¥158.75 level and was supported around the ¥157.75 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥231.00 figure while the Swiss franc appreciated vis-à-vis the yen and tested offers around the ¥96.50 level. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5216 in the over-the-counter market, down from CNY 7.5232. Data released in China saw the M2 money supply up 18.09% at the end of August and these data will likely result in additional pressure on People’s Bank of China to tighten monetary policy again this year. Also, August retail sales were up 17.1% y/y, August wholesale prices were up 6.5% y/y, and August property prices in 70 cities were up 8.2% y/y

BRITISH POUND:

The British pound came off vis-à-vis the U.S. dollar today as cable tested bids around the US$ 2.0285 level and was capped around the $2.0365 level. Sterling reached its highest level since 9 August. Bank of England Governor King again defended the central bank’s reaction to the global credit market instability. King reported “The current turmoil, which has at its heart the earlier under-pricing of risk, has disturbed the unusual serenity of recent years, but, managed properly, it should not threaten our long-term economic stability” and conceded the problems have “clouded” the U.K.’s economic outlook. King’s remarks were partly responsive to the ongoing spike in three-month sterling Libor rates that have market borrowing costs at 6.90%, a full 115bps above BoE’s headline 5.75% target rate. Most traders are significantly paring back their expectations for another rate hike from the BoE this year. Data released in the U.K. today saw the August claimant count rate at 2.6%, the lowest level since April 2005 with the ILO unemployment rare steady at 5.4%. Also, average earnings growth including bonuses was up 3.5% in the three months to July. Cable bids are cited around the US$ 2.0160 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.6840 level and was supported around the ₤0.6805 level.

SWISS FRANC:

The Swiss franc gained ground vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1815 level and was capped around the CHF 1.1895 level. The pair has not been this week since April 2005 and the CHF 1.1740 level remains a key target for dollar bears. Swiss National Bank’s interest rate decision will be released tomorrow and many expect the central bank will lift its three-month Swiss franc Libor target by 25bps. Other traders, however, believe the SNB will keep rates on hold, much as other major global central banks have done recently. One reason why the SNB could lift rates is to prevent the Swiss franc from being sold-off further vis-à-vis the euro. Data released in Switzerland today saw the country’s 2006 current account surplus escalate to CHF 74 billion from CHF 63 billion in 2005. Dollar offers are cited around the CHF 1.2120 level. The euro moved higher vis-à-vis the Swiss franc as the crosses tested offers around the CHF 1.6465 level while the British pound came off vis-à-vis the Swiss franc and tested bids around the CHF 2.3995 level.

AUSTRALIAN / NEW ZEALAND DOLLAR:

The Australian dollar moved higher vis-à-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8430 level and was supported around the $0.8325 level. Data released in Australia overnight saw the September Westpac consumer index up 4.2%. Australian dollar bids are cited around the US$ 0.8130 level. The New Zealand dollar moved higher vis-à-vis the U.S. dollar as the kiwi tested offers around the US$ 0.7155 level and was supported around the US$ 0.7045 level. New Zealand dollar bids are cited around the US$ 0.6760 level.

CANADIAN DOLLAR:

The Canadian dollar made strong gains vis-à-vis the U.S. dollar today as the greenback tested bids around the C$ 1.0355 level and was capped around the C$ 1.0445 level. Bank of Canada Governor Dodge characterized the central bank’s current 4.50% base rate as “appropriate.” He added “The actions that we took to provide liquidity to support the smooth operation of financial markets did not in any way signal a change in our monetary policy.” U.S. dollar offers are cited around the C$ 1.0655 level.


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