Daily Market Commentary

Fundamental Outlook at 1500 GMT (EDT + 0500)

€

The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3550 level and was capped around the $1.3710 level.  The common currency was unable to gain much traction despite a solid ten-year bond issuance from Greece that was well-received by international investors and traded higher in the market.  Greek officials suggested it will issue two more tranches of debt over the coming months and refinance the remainder of its debts maturing this year.  Greece is still expected to receive financial assistance from Germany and possibly from other eurozone members as it continues to contain its massive debt crisis.  As expected, the European Central Bank kept its main refinancing rate target unchanged at 1.0% today.  ECB President Trichet cautiously reported “The economic recovery in the euro area is on track” and added he expects economic growth to expand “at a moderate pace” this year.  Trichet also noted Greece’s progress has been “positive.”  Data released in the eurozone today saw Q4 gross domestic product unrevised at +0.1% q/q and 2.1% y/y, down from +0.4% q/q in Q3.  In U.S. news, data released today saw Q4 non-farm productivity climb 6.9%, up from the prior reading of 6.2%, while Q4 unit labour costs were off 5.9%, lower than the -4.4% reading.  Also, weekly initial jobless claims came in at 469,000, down from an upwardly revised 498,000 the previous week, and continuing jobless claims printed at 4.500 million.  Additionally, January factory orders printed at 1.7%, up from a revised 1.5%, while January pending home sales were much weaker-than-expected, off 7.6% m/m and up 8.8% y/y, both below expectations and December’s readings.  Traders will be closely watching tomorrow’s February non-farm payrolls report with many forecasts calling for jobs losses of 65,000.  Euro bids are cited around the US$ 1.3335 level.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥89.25 level and was supported around the ¥88.15 level.  Dealers cited semi-official buying of the pair below the ¥88.75 level, an indication the government may be trying to keep the yen from appreciating further.  The Japanese government reportedly increased its allowance for foreign exchange intervention in the draft budget for its next fiscal year that starts at the end of this month.  Some dealers suggest the new government may have as much as ¥145 trillion with which to intervene.  Bank of Japan Policy Board member Noda reported “Maintaining fiscal discipline, in other words showing a road map and implementing it decisively in a timely manner, is critical” to keep interest rates low.  This is the latest indication that the verbal sparring between the central bank and government continues.  Noda also added deflation will continue through fiscal year 2011 and said overseas economies are Japan’s largest risk factor.  The Nikkei 225 stock index climbed 1.05% to close at ¥10,145.72.  U.S. dollar offers are cited around the ¥94.75 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥120.25 level and was capped around the ¥121.80 level.  The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥134.80 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥82.20 level. In Chinese news, the U.S. dollar appreciated vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8264 in the over-the-counter market, up from CNY 6.8250.  Options traders have become considerably bullish on the prospect on additional yuan appreciation.”  PBoC is expected to raise banks’ reserve requirements further this year.  The government also reported new bank lending exceeded CNY 70 billion in February.
 

Technical Outlook at 1330 GMT (EDT + 0500)


                (Bid Price)        (Today’s Intraday Range)    
              
EUR/ USD      1.3564               1.3712, 1.3550
USD/ JPY       89.15                 89.25,   88.13
GBP/ USD      1.5024               1.5135, 1.5004
USD/ CHF      1.0781               1.0794, 1.0668
AUD/USD       0.8992               0.9062, 0.8977
USD/CAD       1.0319               1.0338, 1.0269
NZD/USD       0.6855                0.6943, 0.6850
EUR/ JPY       120.94                121.81, 120.27
EUR/ GBP      0.9027                0.9081, 0.9016
GBP/ JPY       133.94                134.80, 132.55
CHF/ JPY       82.67                  83.24    82.21

Support                      Resistance                         Support                     Resistance

  

L1.       1.3480                         1.3965                            86.95                          93.20

L2.       1.3245                         1.4200                            84.85                          95.50
L3.       1.3085                         1.4495                            82.30                          98.85

 

   GBP/ USD                                                        USD/ CHF

 

L1.       1.5345                         1.5880                         1.0540                         1.0830

L2.       1.5160                         1.6215                         1.0350                         1.1045

L3.       1.4950                         1.6530                         1.0040                         1.1315

 

 AUD/ USD                                                       USD/ CAD

 

L1.       0.8555                         0.8860                         1.0560                         1.0960

L2.       0.8225                         0.9005                         1.0400                         1.1140

L3.       0.8105                         0.9325                         1.0150                         1.1360

 

 

 NZD/ USD                                                       EUR/ JPY

 

L1.       0.6535                         0.6985                         118.50                         124.85

L2.       0.6265                         0.7295                         115.65                         128.90

L3.       0.6160                         0.7430                         112.05                         132.85

 

 

  EUR/ GBP                                                       EUR/ CHF

 

L1.       0.8500                         0.9175                         1.4575                         1.4875

L2.       0.8320                         0.9290                         1.4305                         1.5010

L3.       0.8190                         0.9430                         1.4110                         1.5450

 

  GBP/ JPY                                                        CHF/ JPY

 

L1.       135.85                         141.75                           81.40                          85.25

L2.       131.10                         146.35                           78.95                          87.65

L3.       129.35                         152.90                           75.05                          91.60