Daily Market Commentary - Fundamental Outlook

Daily Forex Fundamentals | Written by GCI Financial | Mar 10 09 15:13 GMT |

€ The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2820 level and was supported around the $1.2580 level. U.S. equity markets jumped higher early in the North American session and the U.S. dollar declined. European Central Bank member Hurley reported the central bank “will continue to monitor closely all developments” and added “the uncertainty concerning the outlook remains very high.” Hurley also noted “I should mention that the ECB is currently studying possible nonstandard monetary policy measures. Quantitative easing is a legitimate (monetary policy) measure.” Most traders believe the ECB will conduct quantitative easing measures in H1 2009 but acknowledge the difficulties in trying to select assets to purchase with varying credit profiles. European Central Bank member Bini Smaghi noted “If the (economic) situation worsens, the ECB is ready to reduce rates further, even to zero…That is above all the case if the economy was really threatened by sustained deflation. And in such a situation, the best approach would be to act sooner rather than later.” U.K. Chancellor of the Exchequer Darling was critical of the European Union today, saying the European Union and European Central Bank should do more to aid struggling Central and Eastern European developing countries that are struggling with the several regional crisis. Data released in the eurozone today saw the French January trade balance widen to -€4.55 billion while the German February consumer price index rose 0.6% m/m and +1.0% y/y. In U.S. news, Federal Reserve Chairman Bernanke called for regulatory reform, noting “We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components.” Data released in the U.S. today saw January wholesale inventories off 0.7% m/m, up from the revised December fall of 1.5%. Euro bids are cited around the US$ 1.2385 level. ¥/ CNY The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥97.90 level and was capped around the ¥99.15 level. The yen was mixed across the board as risk appetite returned to some equities markets. Central bankers have been driving home the message that many of the world’s largest financial institutions are too important to fail and spreads on credit default swaps came in overnight on that message and other developments. European Central Bank President Trichet yesterday said policymakers are striving to mitigate systemic risk and Federal Reserve Chairman Bernanke again reiterated banks maintain sufficient capital. Data released in Japan overnight saw the January leading index improve to 10.0 from 8.3 in December while the coincident index printed at 0.0. Most traders expect Bank of Japan will continue to ease monetary policy through asset purchases. The Nikkei 225 stock index lost 0.44% to close at ¥7,054.98. 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 ¥126.05 level and was supported around the ¥124.30 level. The British pound moved lower vis-à-vis the yen as sterling tested offers around the ¥137.05 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥85.85 level. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8410 in the over-the-counter market, up from CNY 6.8398. 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.