Forex Markets Upto 6th June

Fundamental Outlook at 1400 GMT (EDT + 0400)

€
The euro rocketed higher vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.5705 level and was supported around the $1.5570 level. The common currency added to yesterday’s gains following a generally negative U.S. May non-farm payrolls report that saw the economy shed 49,000 jobs last month, less than the 60,000 loss expected. The unemployment rate, however, rose to 5.5% from 5.0% in April, the largest monthly change since February 1986. March’s and April’s jobs tallies were downwardly revised by a cumulative 15,000 jobs for a cumulative job loss total of 116,000. Also, average hourly earnings were up 0.3% m/m and 3.5% y/y. These data do little to allay the concern that the U.S. economy is heading towards a recession. Remarks from Chicago Fed President Evans will be monitored later today. Federal Reserve Governor Kroszner today reiterated that U.S. financial institutions should work to obtain more funding and capitalization. In eurozone news, German April industrial output fell 0.8%, worse than expected. Germany’s Bundesbank lifted its German inflation forecasts for 2008 and 2009 to 3.0% and 2.2%, respectively – following a similar announcement from the European Central Bank yesterday. Buba also lifted its 2008 GDP growth forecast to 2.0% from the previous reading of 1.6%. Euro bids are cited around the $1.5230 level.
¥/ CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥105.45 level and was capped around the ¥106.35 level. Technically, today’s intraday low was right around the 76.4% retracement of the move from ¥108.60 to ¥95.70. The pair pared intraday gains after the release of the U.S. jobs data that saw a dramatic increase in the unemployment rate. Data released in Japan overnight saw its foreign reserves decline to US$ 996.97 billion at the end of May. Finance minister Nukaga stated the government is “closely monitoring foreign exchange and U.S. economic developments.” Most traders continue to believe Bank of Japan’s Policy Board will keep the overnight call rate unchanged for quite some time. The Nikkei 225 stock index climbed 1.03% to close at ¥14,489.44. Dollar bids are cited around the ¥103.00/ 101.35 levels. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥166.15 level and was supported around the ¥165.00 figure. The British pound came off vis-à-vis the yen as sterling tested bids around the ¥206.85 level and was capped around the ¥208.10 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥102.85 level. The Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.9230 in the over-the-counter market, down from CNY 6.9465. Goldman Sachs is forecasting China’s consumer price inflation declined by its largest amount in more than one year in May but that People’s Bank of China will maintain its tightening bias. Finance ministry official Zhu reported China will continue to recommend the U.S. pursues a stronger dollar.
₤

The British pound appreciated vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.9665 level and was supported around the $1.9535 level. Sterling added to yesterday’s gains following a disappointingly weak U.S. jobs report that was released today. There is an indication in the U.K. media that the perceived row between Bank of England Governor King and Chancellor of the Exchequer Darling about the nomination of the next BoE Deputy Governor may be quieting down. The media is reporting BoE Chief Economist and MPC member Bean – King’s putative favourite – will get the nod if the BoE allows some external oversight of financial stability. Cable bids are cited around the US$ 1.9360/ 1.9100 levels. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.8000 figure and was supported around the ₤0.7955 level.
CHF
The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.0225 level and was capped around the CHF 1.0405 level. Stops were reached below the CHF 1.0250 level, representing the 38.2% retracement of the move from CHF 0.9645 to CHF 1.0625. KOF reduced its Swiss GDP forecast for 2008 and 2009 to 2.0% and 1.6%, respectively. Also, KOF sees unemployment around 2.6% for both years. Swiss National Bank directorate member Jordan warned recent extraordinary central bank action to contend with global problems may have precipitated moral hazard and increased inflationary pressures. U.S. dollar offers are cited around the CHF 1.0760 level. The euro and British pound weakened vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6075 and CHF 2.0120 levels, respectively.



Technical Outlook at 1230 GMT (EDT + 0400)

(Bid Price) (Today’s Intraday Range)

EUR/ USD 1.5647 1.5698, 1.5572
USD/ JPY 105.76 106.33, 105.47
GBP/ USD 1.9611 1.9637, 1.9536
USD/ CHF 1.0298 1.0407, 1.0287
AUD/ USD 0.9606 0.9641, 0.9564
USD/CAD 1.0182 1.0214, 1.0160
NZD/USD 0.7669 0.7696, 0.7645
EUR/ JPY 165.74 166.14, 165.00
EUR/ GBP 0.7993 0.7998, 0.7954
EUR/ CHF 1.6143 1.6224, 1.6142
GBP/ JPY 207.28 208.10, 206.87
CHF/ JPY 102.66 102.70, 101.90




Support Resistance Support Resistance

EUR/ USD USD/ JPY


L1. 1.5225 1.5645 101.95 106.60
L2. 1.5035 1.5840 100.60 109.95
L3. 1.4805 1.6020 98.75 113.30

GBP/ USD USD/ CHF

L1. 1.9520 1.9760 1.0135 1.0565
L2. 1.9395 1.9880 0.9990 1.0730
L3. 1.9100 2.0000 0.9875 1.1040



AUD/ USD USD/ CAD

L1. 0.9380 0.9655 0.9870 1.0175
L2. 0.9215 0.9735 0.9715 1.0370
L3. 0.9005 1.0115 0.9465 1.0520



NZD/ USD EUR/ JPY

L1. 0.7700 0.8105 160.60 166.65
L2. 0.7595 0.8420 158.35 167.75
L3. 0.7275 0.8665 154.80 168.95

EUR/ GBP EUR/ CHF

L1. 0.7740 0.8120 1.5975 1.6250
L2. 0.7555 0.8310 1.5855 1.6470
L3. 0.7440 0.8570 1.5730 1.6760

GBP/ JPY CHF/ JPY

L1. 200.60 208.50 98.70 103.30
L2. 197.55 211.35 97.00 105.40
L3. 192.70 217.15 95.85 107.70



SCHEDULE

Friday, 6 June 2008
all times GMT
(last release in parentheses)

N/A Germany European Central Bank member Stark speaks
0645 France April trade balance (-€4.7 billion)
1000 Germany April industrial production (-0.5% m/m)
1000 Germany April industrial production (4.7% y/y)
1100 Canada May unemployment rate (6.1%)
1100 Canada May employment, net change (19,200)
1230 US May non-farm payrolls, net change (-20,000)
1230 US May unemployment rate (5.0%)
1230 US May average hourly earnings (0.1% m/m)
1230 US May average hourly earnings (3.4% y/y)
1245 US Federal Reserve Governor Kroszner speaks
1400 US April wholesale inventories (-0.1%)
1515 US Chicago Federal Reserve President Evans speaks
1900 US April consumer credit (US$ 15.3 billion)