Daily Market Commentary - Fundamental Outlook

Daily Forex Fundamentals | Written by GCI Financial | Oct 29 08 15:08 GMT |

€ The euro moved sharply higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2975 level and was supported around the $1.2650 level. Traders positioned themselves ahead of this afternoon's interest rate decision from the Federal Open Market Committee. Most Fed-watchers expect FOMC policymakers will deliver up to 50bps of monetary easing in the federal funds target rate and possibly the discount rate. Data released in the U.S. today saw September durable goods orders up 0.8% with the ex-transportation component up 6.3% and non-defense capital goods excluding aircraft were off 1.4%, an improvement from August's 2.2% decline. In eurozone news, the German government will likely announce a new fiscal stimulus package next Wednesday in a bid to support economic growth and jobs in the eurozone's largest economy. Data released in Germany today saw preliminary October consumer price inflation off 0.2% m/m and up 2.4% y/y. European Central Bank member Gonzalez-Paramo reported “confidence will not return until we stop to think about the measures which have been taken and we can see financial institutions resuming their normal activity.” Most traders expect the ECB will cut rates by up to 50bps next week. Euro bids are cited around the US$ 1.2135 level. ¥/ CNY The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥96.05 level and was capped around the ¥99.70 level. There is growing speculation Bank of Japan's Policy Board will announce the first cut in interest rates in some seven years at the end of the week. This would signify solidarity between Japanese central bankers and their Group of Seven counterparts in handling the ongoing credit market dislocations. The Ministry of Finance reduced its assessment of the economy for the third consecutive quarter overnight and BoJ Deputy Governor Nishimura warned “there is a risk that global market and economic conditions could worsen further and affect Japan's economy.” Data released in Japan overnight saw September industrial output climb 1.2% m/m. The government announced the yen's recent gains resulted in the notional loss of ¥23.9 trillion to Japan's foreign currency reserves. The Nikkei 225 stock index climbed 7.74% to close at ¥8,211.90. 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 ¥127.30 level and was supported around the ¥121.40 level. The British pound and Swiss franc moved higher vis-à-vis the yen as the crosses tested offers around the ¥159.50 and ¥86.40 levels, respectively. The Chinese yuan weakened vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8470 in the over-the-counter market, up from CNY 6.8390. People's Bank of China cut interest rates today, taking the cost of one-year bank loans lower by 27bps to 6.66% with a corresponding decrease in the benchmark one-year deposit rate to 3.60%. GCI Financial http://www.gcitrading.com DISCLAIMER : GCI's Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.