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DAILY MARKET COMMENTARY
5 January 2004
Monday

North American Comment at 1500 GMT

_____________________________________________________________________
GCI Foreign Exchange Research: http://www.gcitrading.com/fxnews/
FX Research Desk: fxnews@gcitrading.com
_____________________________________________________________________



Fundamental Outlook at 1500 GMT (EDT + 0500)



The euro established another lifetime high vis-vis the U.S. dollar today as the single currency tested offers just below the 127.00 figure. Stops were triggered above the $1.2620/ 80 levels and strong options-related offers did not emerge until just below the $1.2700 options barrier. News of a new Osama bin Laden tape weighed on the dollar overnight and traders largely shrugged off U.S. economic data that saw a 1.2% increase in November construction spending. The big story involving the greenback today were comments made over the weekend by Fed officials. Fed Governor Bernanke weighted in on the dollar a rarity among Fed officials saying the odds of a dollar crisis are quite low and added interest rates will remain low for some time. These two comments are dollar-negative and traders used them to buy euros. Bernanke said the dollar is strong by some historical standards and added the Fed has the luxury to keep interest rates at the historically unusual 1% level. Greenspan spoke over the weekend and said the Fed was vindicated by policy developments for not bursting the asset price bubbles of the 1990s but conceded there is still a lot of uncertainty in monetary policymaking. Ifos Sinn today said a euro rate of $1.30 would be the pain threshold while the EC said it is in favour of a strong and stable euro. Data released in the eurozone today saw EMU-12 December flash HICP at +2.1%, down from 2.2% in November. Other data released today saw EMU-12 industrial orders rise 1.6% m/m in October while German November retail sales were off 1.8% m/m and 4.8% y/y. Euro offers are cited around the $1.2700 figure with bids seen around the $1.2640/ 20 levels and stops below the $1.2580 level.





The yen appreciated vis-vis the U.S. dollar today as the greenback tested bids around the 106.10 level during North American dealing, its lowest level since September 2000. The pair spiked through the 107.35 level during Australasian dealing on account of BoJ intervention. Banks deemed to be acting on behalf of the central bank are estimated to have purchased around US$ 3 5 billion today. It is clear the Japanese authorities are not trying to or are unable to reverse the yens rise but instead are conducting smoothing operations meant to slow the yens gains. MoFs Hayashi verbally intervened today saying the government has always said we will act appropriately and decisively against excessive (foreign exchange) movements. MoFs Mizoguchi added the government is ready to take steps to make sure the exchange rate does not overshoot. PM Koizumi pledged to continue with his ambitious reform agenda while FSA boss Takenaka said Japanese banks are aiming to halve their bad-loan ratio by March 2005. Data released in Japan today saw December PMI fall 0.4 index points to 56.0 but remained above the boom or bust 50.0 level for the seventh consecutive month. The December PMI output index fell 0.7 points to 58.8 while the December PMI new orders index fell 1.2 index points to 60.2. The Nikkei 225 stock index gained 1.39% on the first day of trading in 2004. Dollar offers are cited around the 107.50 level and options traders cite an option barrier around the 106.00 figure with other options triggers around the 105.80 level. The euro lost ground vis-vis the yen today despite testing offers around the 135.75 level. The pair fell to the 134.40 level during North American dealing after dropping nearly 1 in one hour during European dealing.





The British pound exploded higher vis-vis the U.S. dollar today as cable crossed above the psychologically-important US$ 1.8000 figure, the first time it has been at this level since September 1992. Sterling reached an intraday high around the $1.8080 level after stops were triggered above the $1.8025 level. The $1.8000 figure was seen as an option barrier but this level fell with little difficulty. The Ernst & Young ITEM Club is predicting the U.K. economy will grow by 2.8% in 2004 but it warned about the recent undershoot in tax revenues. Cable bids are cited around the $1.7955 level with stops below the $1.7940 level. The euro weakened vis-vis the British pound today as the single currency tested bids around the 0.7005 level after running out of steam around the 0.7065 level. Euro offers are cited around the 0.7080 level and stops are cited below the 0.6990 level.





CHF

The Swiss franc gained ground vis-vis the U.S. dollar today as the greenback fell to the CHF 1.2280 level, its lowest level since September 1996. A Swiss survey released today showed that growth in Switzerlands manufacturing industry decelerated in December. The SNB today reiterated its forecast that the economy will continue to recover in 2004, possible registering growth of 1.5% this year. The central bank also reiterated interest rates are on hold. SNB added overnight, tomorrow/ next, and one-week liquidity at 0.11% today, unchanged from recent repo operations. The euro gained ground vis-vis the Swiss franc today, testing offers around the CHF 1.5645 level.



Technical Outlook at 1330 GMT (EDT + 0500)

(Bid Price) (Todays Intraday Range) (Previous High, Low, Close)

EUR/ USD 1.2660 1.2697, 1.2584 1.2631, 1.2523, 1.2584
USD/ JPY 106.24 107.38, 106.15 107.53, 106.81, 106.98
GBP/ USD 1.8039 1.8049, 1.7971 1.7951, 1.7786, 1.7936
USD/ CHF 1.2329 1.2395, 1.2282 1.2461, 1.2344, 1.2391
AUD/ USD 0.7661 0.7677, 0.7636 0.7595, 0.7501, 0.7580
USD/CAD 1.2794 1.2893, 1.2780 1.3030, 1.2864, 1.2882
NZD/ USD 0.6690 0.6708, 0.6668 0.6598, 0.6524, 0.6592
EUR/ JPY 134.45 135.75, 134.31 135.14, 134.19, 134.71
EUR/ GBP 0.7015 0.7063, 0.7013 0.7061, 0.7013, 0.7020
EUR/ CHF 1.5617 1.5635, 1.5577 1.5623, 1.5574, 1.5593
GBP/ JPY 191.61 192.72, 190.98 192.06, 190.27, 191.90
CHF/ JPY 86.11 87.06, 86.07 86.73, 85.92, 86.37





Support Resistance Support Resistance

EUR/ USD USD/ JPY

L1. 1.2400 1.2660 106.75 110.60
L2. 1.2325 1.2730 106.00 111.20
L3. 1.2225 1.2790 105.00 112.00



GBP/ USD USD/ CHF

L1. 1.7400 1.7775 1.2350 1.3200
L2. 1.7330 1.7825 1.2270 1.3300
L3. 1.7250 1.7900 1.2200 1.3400



AUD/ USD USD/ CAD

L1. 0.7000 0.7580 1.2900 1.3500
L2. 0.6960 0.7650 1.2830 1.3575
L3. 0.6910 0.7725 1.2770 1.3660



NZD/ USD EUR/ JPY

L1. 0.6350 0.6580 130.40 135.75
L2. 0.6300 0.6620 129.90 136.50
L3. 0.6250 0.6670 129.25 137.30



EUR/ GBP EUR/ CHF

L1. 0.6800 0.7170 1.5450 1.5750
L2. 0.6750 0.7250 1.5410 1.5800
L3. 0.6700 0.7310 1.5370 1.5860



GBP/ JPY CHF/ JPY

L1. 185.50 192.30 78.90 87.00
L2. 185.00 193.00 78.30 87.60
L3. 184.00 194.00 77.25 88.25

Becoming interested in dollar-pound and dow-ft100 ratios.

Today anyone short on the cash dow would have been down 75 points as I type which is currently 0.7%

Today anyone selling dollars for pounds would be up 0.9% approx (FOREX figures)

Therefore I muse if I had gone short on the dow today (in pounds) would my short losses be offset by any currency gains, and in this Alice in wonderland senerio would my loosing short actually win in cash pounds??

oh well my first two Forex trades end in loosers...... -30 and -35 juts as well they were only for a few quid per point.......

caps off a thoroughly crap day for me...... ;-0

Tw: Download the saxobank software and they have an analysis on the forex which is for evermorning and updated for the afternoon.You can also get it as email.They seem to be quite good and also give suggestions for going long and short -also when to stand aside. I have been looking at them for a while and traded them and can honestly say that they have paid off for me.

rgds
zarif

will take a look but these currencies are mean....they can be even worse then the dow! :-)

Thing about the low $ is that it makes it easier for the USA to export. That means more growth in the US which is the economic engine of the planet. Feeds back on itself doesn't it. And then the oil price works the same way. This all smacks of the G8 (or what ever they are now) agreeing on the week dollar until the world economy is back on track. Forex is on my list for this year and the safest route at the moment (for trend) is an increasing drop in the value of the dollar and the counter-balance of increasing gold price (in dollars ain't it).

Nice thread Hil - didn't know you had the HTML in your skill box as well as "those legs" ;-)

BOJ SUSPECTED TO HAVE INTERVENED IN FOREX TRADING - JIJI

Paul,

You can use Sharescope to examine a currency and overlay a share or index. Personally, I can't see the merits of pairs trading an index -v- a currency, but wdik?

Treble,

Sorry to hear about your losses. The bulk of the price action has been away from the EUR/GBP recently which looks to be consolidating. There are still some nice trends to latch onto with the other currencies though. Personally, I wouldn't trade against the trend but, again, wdik?

BT,

Legs and html .... what more could you want in a girl?

To follow on from US exports being helped by the weak dollar, the reverse is true of the Yen. The low Japanese interest rates are stimulating domestic growth on one side of the coin, but unless the Japanese exporters are hedging on the FX markets, weaker exports will stifle profits which could in turn adversely affect the NIK. There has been a theory recently that the Bush administration has been leaning on the BoJ to hold off from buying the Dollar until the New Year to enable US exporters to report earnings growth, thereby boosting the Dow ahead of Presidential elections.

for her to phone ?

Options Expire in the next hour on Euro$ according to Bloom. Battle going on to get it over 1.28... could be volitile, as vol picking up...

Trying again......

Hi - Does anyone use CMC for /$ spot?

If so I need some help.

I am confused by the order screen.

If I want to say buy $ - do I enter sell say 1,000?

Sorry if this is too low brow! It's got me baffled.

I have used CMC for /$ spot. If you think the $ is going to increase in value then you sell /$ for however much pounds per pip. 100 pips per Cent. One thing to bear in mind is volatility which can move this currency pair 100pips plus every day in both directions!. So if you use stops you need to give them a wide berth! Be careful and good luck!!

richesboy - thanks - I tried - but my account is not authorised (a CFD a/c) I'll have to ring them.

I guess the CFD a/c must be set up somewhat differently to SB a/c which I have!

Sue. The order screens always have the buy/sell relating to the first currency quoted. But it can be confusing - for instance IG Index have Euro/Sterling to bet - ie 0.7000, but their chart shows /Euro - ie 1.42. It's to do with the fact that the and Irish Punt are traditionally quoted first worldwide, no matter what thay are being quoted against (I think that's the right way round). No doubt someone will correct me if I'm wrong.

SINGAPORE (AFX-ASIA) - The US dollar was rangebound against the yen and
weaker against the euro, which stayed above the 1.27 level after hitting fresh
highs, dealers said.
BNP Paribas Peregrine Securities currency analyst Thio Chin Loo said the
weakness trend for the dollar remains intact but the greenback is finding some
temporary support near the 106 yen level.

Singapore 3.00 pm Tokyo 12.20 pm
Dollar
yen 106.23 down from 106.32
sfr 1.2334 up from 1.2330
Euro
usd 1.2724 up from 1.2706
stg 0.6984 down from 0.6988
yen 135.11 up from 135.09
sfr 1.5691 up from 1.5667
Sterling
usd 1.8211 up from 1.8182
yen 193.36 up from 193.31
sfr 2.2456 up from 2.2418
Australian dollar
usd 0.7685 up from 0.7671
stg 0.4217 down from 0.4219
yen 81.590 up from 81.558

DAILY MARKET COMMENTARY
6 January 2004
Tuesday

North American Comment at 1500 GMT

_____________________________________________________________________
GCI Foreign Exchange Research: http://www.gcitrading.com/fxnews/
FX Research Desk: fxnews@gcitrading.com
_____________________________________________________________________



Fundamental Outlook at 1500 GMT (EDT + 0500)



The euro added insult to the dollars injuries today as traders drove the single currency to the US$ 1.2815 level before the pair consolidated some gains around the $1.2770 level. Stops were reached above the $1.2750 level and traders bought euros on dips. There is increasing speculation the ECB is ready to conduct euro-selling intervention as the single currency inches closer to psychologically-important 130.00 figure. Belgian finance minister Reynders today said the euros current level is relatively reasonable while the French budget ministry said brutal FX moves are bad for everyone. There continues to be increasing verbal intervention across the eurozone about the euros strong moves. Data released in the eurozone today saw an improvement in Germanys December services PMI index while France and Italy both saw a m/m decline in their service PMI indices. All three countries, however, had readings above the boom-or-bust 50.0 level, an indication of sectoral expansion. Overall, EMU-12 services PMI fell to 56.6 in December from 57.5 in November. Also, final Q3 French GDP was confirmed at +0.4% q/q. One reason for the euros gains today was a report that U.S. factory orders fell 1.4% in November. Traders are eagerly awaiting holiday spending data from the U.S. to see if the U.S. consumers continued to be the lynchpins of the U.S. economy. Atlanta Fed President Guynn spoke yesterday and said it will be appropriate to shift monetary policy back to a longer-term setting at some point but added interest rates are appropriate for now. Euro bids are cited around the $1.2700 figure with additional demand around the $1.2650 level.





The yen gained some additional ground vis-vis the U.S. dollar today as the greenback tested bids around the 106.05 level and was unable to move above the 106.45 level. Dealers again reported demand from BoJ agent banks and this was cited as the reason why the pair spike from the 106.10 level to the 106.40 level during early Australasian dealing. It is estimated that up to US$ 3 billion was spent by the Japanese to temporarily prop up the dollar today. There was renewed jawboning from Japanese officials overnight with finance minister Tanigaki pledging to counter rapid, speculative forex moves. His comments were seconded by verbal intervention from MoFs Mizoguchi. Dealers cited talk that a large Asian participant bought US$ 1 billion in 100.00 three-month dollar puts with a one-month knockout at 105.00. It was announced that PM Koizumi will meet with Japanese and foreign nationals on 14 January to discuss economic issues. Japan Business Federation head Okuda said an exchange rate of 105.00 would be critical for Japanese exporters. The Nikkei 225 stock index lost ground today, falling for the first time in four trading sessions. Dealers cite stops around the 105.80 level with option barriers cited around the 105.50 and 107.00 levels. The euro made major moves vis-vis the yen today as the single currency tested offers around the 136.05 level. Euro bids are cited around the 135.00 and 134.50 levels.





Technical Outlook at 1330 GMT (EDT + 0500)

(Bid Price) (Todays Intraday Range) (Previous High, Low, Close)

EUR/ USD 1.2765 1.2813, 1.2667 1.2697, 1.2584, 1.2675
USD/ JPY 106.14 106.44, 106.05 107.38, 106.00, 106.20
GBP/ USD 1.8243 1.8288, 1.8048 1.8105, 1.7971, 1.8068
USD/ CHF 1.2282 1.2345, 1.2241 1.2395, 1.2282, 1.2319
AUD/ USD 0.7704 0.7729, 0.7657 0.7693, 0.7636, 0.7679
USD/CAD 1.2837 1.2869, 1.2764 1.2893, 1.2773, 1.2818
NZD/ USD 0.6729 0.6748, 0.6681 0.6733, 0.6587, 0.6706
EUR/ JPY 135.55 136.05, 134.49 135.75, 134.30, 134.61
EUR/ GBP 0.6997 0.7024, 0.6987 0.7063, 0.7002, 0.7017
EUR/ CHF 1.5675 1.5706, 1.5613 1.5644, 1.5609, 1.5633
GBP/ JPY 193.71 194.10, 191.62 192.72, 190.98, 191.85
CHF/ JPY 86.46 86.73, 86.06 87.06, 85.87, 86.18





Support Resistance Support Resistance

EUR/ USD USD/ JPY

L1. 1.2400 1.2660 106.75 110.60
L2. 1.2325 1.2730 106.00 111.20
L3. 1.2225 1.2790 105.00 112.00



GBP/ USD USD/ CHF

L1. 1.7400 1.7775 1.2350 1.3200
L2. 1.7330 1.7825 1.2270 1.3300
L3. 1.7250 1.7900 1.2200 1.3400



AUD/ USD USD/ CAD

L1. 0.7000 0.7580 1.2900 1.3500
L2. 0.6960 0.7650 1.2830 1.3575
L3. 0.6910 0.7725 1.2770 1.3660



NZD/ USD EUR/ JPY

L1. 0.6350 0.6580 130.40 135.75
L2. 0.6300 0.6620 129.90 136.50
L3. 0.6250 0.6670 129.25 137.30



EUR/ GBP EUR/ CHF

L1. 0.6800 0.7170 1.5450 1.5750
L2. 0.6750 0.7250 1.5410 1.5800
L3. 0.6700 0.7310 1.5370 1.5860



GBP/ JPY CHF/ JPY

L1. 185.50 192.30 78.90 87.00
L2. 185.00 193.00 78.30 87.60
L3. 184.00 194.00 77.25 88.25

Looks like the Dollar bears closing this am.