By GCI Fx Research
The euro depreciated modestly vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.4015 level and was capped around the $1.4195 level. Data released in the U.S. today saw June durable goods orders decline 2.5%, a sharp swing downward from the +1.8% prior release and the expected -0.6% print. The ex-transportation component, in contrast, notched growth of 1.1%, up from the revised 0.8% print in May and above the 0.0% forecast. Additionally, MBA mortgage applications were off 6.3% last week, down from the +2.8% print the prior week. Traders await the Federal Reserve’s July Beige Book later in the North American session for any clues about how the Fed will unwind its massive monetary stimuli. In eurozone news, the European Central Bank’s quarterly lending survey reported banks continued to tighten credit conditions in the second quarter, albeit at a lesser rate than in previous quarters. German provisional July consumer price inflation data were released that indicated many German states saw negative inflation growth in July. This will likely prod the ECB into continuing its generous liquidity provision for the next couple of quarters. Specifically, it was reported CPI was likely to have fallen year-over-year for the first time in more than twenty years. Euro bids are cited around the US$ 1.3900 figure.
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥95.10 level and was supported around the ¥94.00 figure. Data released in Japan today saw June retail sales off 3% y/y. There is significant talk that Japanese investors will be repatriating proceeds from Eurobond redemptions and this is weighing heavily on some of the crosses. Data released in Japan today saw June retail sales decline 3% y/y. Most traders believe Bank of Japan will begin to gradually unwind its considerable monetary stimuli by the end of the year when some of its emergency lending and liquidity provision programs begin to mature. The Nikkei 225 stock index climbed 0.26% to close at ¥10,113.24. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥132.75 level and was capped around the ¥134.40 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥156.30 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.10 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8285 in the over-the-counter market, down from CNY 6.8315.
Daily Market Commentary provided by GCI Financial Ltd.
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