by GCI Financial Team GCI
EURO The
euro lost ground vis-à-vis the U.S. dollar today as the single currency
tested bids around the US$ 1.4065 level and was capped around the
$1.4150 level. Better-than-expected earnings at major U.S. financial
institutions including Citigroup and Bank of America led to a bid U.S.
equity markets but the common currency was still kept on the
defensive. Two possible terrorist attacks in Jakarta overnight
contributed to the dollar’s bid on safe haven demand. Data released in
the U.S. today saw June housing starts climb 3.6% m/m to an annualized
rate of 582,000 units, the highest level since November 2008 and above
the revised May print of 562,000. Also, June building permits improved
to 563,000 from 518,000 in May. Data to be released in the U.S. on
Monday include June leading indicators and the June Chicago Fed’s
national activity index. All attention will be focused on Federal
Reserve Chairman Bernanke’s semi-annual testimony to Congress next
week. Some Fed-watchers believe Bernanke may signal an end to the Fed’s
massive credit easing policies. Bernanke is likely to note that gross
domestic product growth is not as weak as originally reported but that
the U.S. labour sector is weaker than originally thought. U.S.
economic official Summers today reported risks to banks have been
reduced over the past six months and said he is not alarmed on
inflation yet. Former Federal Reserve Governor Meyer does not see a
return to “full” employment until 2015. An improvement in the U.S.
housing and construction industries would signal a major inflection
point in the economy. In eurozone news, the EMU-16 May trade surplus
narrowed to €1.9 billion from ₤2.7 billion in April. Euro bids are
cited around the US$ 1.3435 level. JPY / CNY The
yen depreciated vis-à-vis the U.S. dollar today as the greenback tested
offers around the ¥94.35 level and was supported around the ¥93.50
level. The yen initially appreciated overnight following two bomb
blasts in Jakarta and renewed concerns that troubled U.S. commercial
lending giant CIT Group may be forced to file for bankruptcy. Japanese
financial markets will be closed on Monday and will reopen on Tuesday
thus yen liquidity will be reduced. Bank of Japan reported Governor
Shirakawa will visit China between 21-24 July. The yen initially
gained following possible terrorist blasts overnight in Jakarta at two
U.S.-owned hotels. The Nikkei 225 stock index climbed 0.55% to close
at ¥9,395.32. 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 ¥133.45 level and was supported around the ¥131.70
level. The British pound moved lower vis-à-vis the yen as sterling
tested bids around the ¥152.40 level while the Swiss franc moved lower
vis-à-vis the yen and tested bids around the ¥86.60 level. In Chinese
news, the U.S. dollar strengthened vis-à-vis the Chinese yuan as the
greenback closed at CNY 6.8304 in the over-the-counter market, up from
CNY 6.8303. U.S. Commerce Secretary Locke reported the U.S. wants
China to liberalize its yuan convertibility and move to a free-floating
exchange rate mechanism as quickly as possible. STERLING The
British pound depreciated vis-à-vis the U.S. dollar today as cable
tested bids around the US$ 1.6265 level and was capped around the US$
1.6445 level. Bank of England Deputy Governor Bean said the central
bank’s quantitative easing policy is best assessed on a quarterly basis
rather than on a monthly basis. Bean also reiterated the U.K. economy
may grow by the end of 2009. Cable bids are cited around the US$
1.6185 level. The euro moved higher vis-à-vis the British pound as the
single currency tested offers around the ₤0.8655 level and was
supported around the ₤0.8590 level.
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