EURO The euro moved higher vis-?-vis the U.S. dollar today as the single currency tested offers around the US$1.3165 level and was supported around the $1.3085 level. The market gapped about 65 pips higher at the Australasian open yesterday following Friday’s move that pushed the common currency to its highest level since April 2005. French finance minister Breton said he will “of course” discuss the euro’s strength, adding “the recent depreciation (of the dollar) requires our great collective vigilance.” Many U.S. and European economic data will be released this week including U.S. October personal consumption expenditures data on Thursday. Federal Reserve Chairman Bernanke will speak about the economy tomorrow and traders will be particularly interested in what he has to say about the U.S. housing market. Additionally, it will be interesting to see if he discusses the U.S. dollar’s recent depreciation. Euro bids are cited around the US$ 1.3045 level.
JPN/ CNY The yen weakened vis-?-vis the U.S. dollar today as the greenback tested offers around the ?116.40 level and was supported around the ?115.40 level. Technically, today’s intraday high was just below the 38.2% retracement of the move from ?118.25 to ?115.40. Data released in Japan overnight saw the October corporate services price index rise 0.1% y/y, the third consecutive monthly increase and the latest evidence that deflation is ebbing. Bank of Japan Governor Fukui spoke overnight and reiterated interest rates will rise gradually, adding capital spending is “robust but not overheating” and noting the BoJ will closely watch “asset prices and the forex change market.” A Nikkei reports companies plan to increase their capital investments by 15.1% in the current fiscal year to March. The Nikkei 225 stock index climbed 0.96% to close at ?15,885.38. Dollar bids are cited around the ?115.20 level. The euro moved higher vis-?-vis the yen as the single currency tested offers around the ?152.45 level and was supported around the ?151.80 level. The British pound and Swiss franc appreciated vis-?-vis the yen as the crosses tested offers around the ?225.00 and ?96.25 levels, respectively. The Chinese yuan appreciated sharply vis-?-vis the U.S. dollar as the greenback closed at CNY 7.8428 in the exchange-traded market. Vice Governor Wu Xiaoling spoke today and indicated the central bank is concerned about asset price bubbles, noting “excess liquidity is very dangerous.” State Administration of Foreign Exchange member Guan Tao noted the scope of China to adjust its foreign reserves portfolio composition is “very limited because its every move is watched by the market.”
STERLING The British pound appreciated sharply vis-?-vis the U.S. dollar today as cable tested offers around the US$ 1.9455 level and was supported around the $ 1.9305 level. Cable gapped higher at the Australian open by about 135 pips, a continuation of last week’s significant move that propelled the pair to its highest level since December 2004. BBA data released today saw October mortgage approvals rise to 74,997, their highest level since June. Also, Hometrack reported house prices accelerated in November. Bank of England Monetary Policy Committee member Besley spoke today and said high levels of personal debt are not yet a major concern of policymakers. Cable bids are cited around the US$ 1.9310/ 1.9220 levels. The euro came off vis-?-vis the British pound as the single currency tested bids around the ₤0.6760 level and was capped around the ₤0.6785 level.
CHF The Swiss franc appreciated marginally vis-?-vis the U.S. dollar today as the greenback tested bids around the CHF 1.2025 level and was capped around the CHF 1.2110 level. The pair today reached its lowest level since June of this year and the market gapped downwardly about 60 pips at the Australasian open. Most traders expect Swiss National Bank to tighten monetary policy by about 25bps in December. Dollar offers are cited around the CHF 1.2125/ 90 levels. The euro and British pound appreciated vis-?-vis the Swiss franc as the crosses tested offers around the CHF 1.5855 and CHF 2.3415 levels, respectively.
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