Daily Market Commentary - Fundamental Outlook

Daily Forex Fundamentals | Written by GCI Financial | Nov 04 08 14:37 GMT |

€ The euro moved sharply higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2850 level and was supported around the $1.2525 level. The common currency moved to intraweek highs two days before the European Central Bank is expected to reduce interest rates by 50bps for the second time in two months. Data released in the eurozone today EMU-15 producer prices decline for the second consecutive month, off 0.2% m/m and up 7.9% y/y. These data will provide the ECB with more breadth to trim borrowing costs this week. Group of 20 finance chiefs convene in Brazil later this week to prepare for a summit of global leaders on 15 November that is being hosted by the U.S. EMU-15 finance ministers met last night and will meet again today. Officials yesterday pledged to adhere to European Union budgetary rules even though economic growth will likely decline next year. Eurogroup chairman Juncker reported “We don't want to indulge in an orgy of spending and indebtedness -- in essence, mortgaging future generations.” EMU-15 officials sees 2009 GDP growth around 0.1%, down from the 1.2% expansion expected this year. In U.S. news, September factory orders data will be released later today. Traders are closely watching the outcome of the U.S. presidential election today. Euro bids are cited around the US$ 1.2135 level. ¥/ CNY The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥99.70 level and was supported around the ¥98.35 level. Many traders now expect Japan's economy will enter a technical recession in the third quarter. Bank of Japan cut rates last week and reduced its GDP growth forecasts for the fiscal year to March 2009, now predicting virtually no growth at all. BoJ Governor Shirakawa will speak on 26 November and Deputy Governor Nishimura speaks on 10 December. Data released in Japan overnight saw September overtime pay fall 3.3% y/y. Minutes from the October BoJ Policy Board meeting will be released on Thursday. The Nikkei 225 stock index climbed 6.27% to close at ¥9,114.60. 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 ¥128.00 figure and was supported around the ¥123.40 level. The British pound and Swiss franc appreciated vis-à-vis the yen as the crosses tested offers around the ¥159.05 and ¥85.60 levels, respectively. ₤ The British pound moved higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5960 level and was supported around the $1.5600 figure. Data released in Switzerland today saw U.K. construction PMI fall to 35.1 in October from 38.8 in September, representing the eighth consecutive month the index has been below 50. Cable bids are cited around the US$ 1.5275 level. The euro gained ground vis-à-vis the British pound as the single currency tested offers around the ₤0.8080 level and was supported around the ₤0.7970 level. 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.