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EURO

The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5545 level and was supported around the $1.5445 level. Technically, today’s intraday low was right around the 23.6% retracement of the move from $1.6020 to $1.5280. The common currency moved to intraday highs in the North American session after a larger-than-expected draw in EIA crude oil inventories.

European Central Bank member Noyer reported “I remain confident about the fact that the rise in prices should slow progressively in the second half and at the beginning of next year, as long as we continue to avoid the development of second-round effects.” Noyer added, 

We have signaled that we are in a state of advanced alert and although we have decided (up to now) to maintain our rates at an unchanged level, we don’t exclude moving rates a little at our next meeting. I believe the market understands well the signal given about the possibility of a rate increase next month.

Many traders believe ECB President Trichet has adequately signaled the possibility the main refinancing rate will increase to 4.25% next month. ECB’s Stark reported the ECB is not contemplating a series of rate hikes. Data released in the eurozone today saw French May consumer price inflation rise 0.5% m/m and 3.3% y/y. EMU-15 CPI data will be released on Monday and could show inflation running around 3.6%.

In U.S. news, mortgage application volume was up 10.9% during the week ending 6 June. Traders continue to monitor comments from Federal Reserve officials, especially Chairman Bernanke who has recently been quite hawkish and dollar-supportive in his comments. Euro bids are cited around the $1.5230 level.

JPN/CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥106.90 level and was capped around the ¥107.75 level. The pair reached its highest level since 26 February before profit-taking ensued.

Many data were released overnight. First, the May domestic corporate goods price index was up +4.7% y/y, compared with +3.9% y/y in April and this represented its fastest pace in 27 years. Second, real gross domestic product for the January – March period was upwardly revised to +1.0% q/q from +0.8% q/q on account of higher corporate capital spending. On an annualized basis, the economy expanded +4.0% and this represents the economy’s fastest rate of growth since January – March 2007. Third, the April current account surplus was off 29.6% y/y to ¥1.381 trillion.

A senior Ministry of Finance officials said foreign exchange is unlikely to be put into the Group of Eight communiqué when officials convene this week. Bank of Japan’s Policy Board will convene this week and is not expected to change the overnight call rate from 0.50%. The Nikkei 225 stock index climbed 1.16% to close at ¥14,183.48. Dollar bids are cited around the ¥103.00/ 101.35 levels. The euro weakened vis-à-vis the yen as the single currency tested bids around the ¥165.65 level and was capped around the ¥166.95 level. The British pound and Swiss franc weakened vis-à-vis the yen as the crosses tested bids around the ¥209.50 and ¥102.85 levels, respectively.

The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.9814 in the over-the-counter market, down from CNY 6.9255 and the pair’s lowest close since the yuan revaluation of July 2005. Data released in China overnight saw the May trade surplus print at US$ 20.21 billion, up from US$ 16.68 billion in April. Also, May producer price inflation was up 8.2% y/y.

STERLING

The British pound appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.9655 level and was supported around the $1.9490 level. The pair retraced some of yesterday’s sizable intraday losses.

Data released in the U.K. today saw the May claimant count of jobseekers rise 9,000, above expectations while April’s claimant count was upwardly revised to 11,200. Also, headline average earnings including bonuses were up 3.8% in the three months to April, down from 4.0% in the previous three month period. Additionally, NIESR reported the U.K. economy “scarcely” grew in the three months to May and warned it may slow further. Also, it was reported the U.K. April trade in goods deficit widened to ₤4.3 billion from ₤3.8 billion. Cable bids are cited around the US$ 1.9360/ 1.9100 levels.

The euro gained marginal ground vis-à-vis the British pound as the single currency tested offers around the ₤0.7940 level and was supported around the ₤0.7900 figure.

SWISS

The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0325 level and was capped around the CHF 1.0445 level. The pair erased some of this week’s earlier gains. U.S. dollar bids are cited around the CHF 1.0250 level. The euro and British pound depreciated vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6060 and CHF 2.0285 levels, respectively.

AUD/NZD

The Australian dollar gained marginal ground vis-à-vis the U.S. dollar today as the greenback tested offers around the US$ 0.9485 level and was supported around the $0.9435 level. Data released in Australia today saw the June consumer sentiment index print at -5.6%, a fifteen-year low. Australian dollar bids are cited around the US$ 0.9280 level. The New Zealand dollar gained ground vis-à-vis the U.S. dollar today as the kiwi tested offers around the US$ 0.7580 level and was supported around the $0.7515 level. New Zealand dollar bids are cited around the $0.7380 level.

CAD

The Canadian dollar appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the C$ 1.0150 level and was capped around the C$ 1.0245 level. Data released in Canada today saw Q1 capacity utilization fall to 79.8% from 81.8% in Q4 2007. Also, April new house price growth moderated to +5.2% y/y. U.S. dollar offers are cited around the C$ 0.9960 level.

Source: Wednesday Currency Roundup