eToro Weekly Market Review sep 29, 2009


The Rally Stalls and Comes Down To Support

After two consecutive weeks of gains, the S&P 500 index stalled this week, closing by 2.25%. Most of last week’s trading sessions were characterized by uncertainty as neither bulls nor bears were sure of the upcoming direction. The first few days of trading were characterized by consolidation, which then led to a minor drop. The major event of the week was the US Federal reserve’s interest rate decision, as market participants waited for the announcement, as well as the Fed’s statement mentioning how they would deal with current security purchasing programs.  Market participants used Wednesday’s session as a pivot day, pushing the indices higher during morning hours, only to slam them down in the afternoon.  Although the news was neither bullish nor bearish, profit taking seized the day.  By taking a glance at the chart below one can see that despite the mixed signals going forward, most of last week’s selling pressure was due to profit taking. The bullish engulfing candle started the selling pressure which led the S&P500 back down to close just above support.

Crude oil was hammered during the week, dragging down the entire market and in particular the energy sector.    The XLE, an ETF of large energy companies was down almost 3% for the week.

Unlike previous trading weeks, economic data didn’t have as much as a positive affect this time round, showing investor’s that the pace of the economic recovery could be slowing.    The week started off with a disappointing Leading Economic Indicators figure, that increased by only 0.6% m/m, compared to a consensus of 0.9%.  Initial jobless claims and Existing Home Sales showed a mixed picture on Thursday.  Jobless claims released by the Bureau Labor of Statistics showed a decrease of 530k compared to a consensus of 560k. Existing Home sales came in less than expected at 5.1M, compared to the 5.35M homes expected.  Furthermore, housing data released on Friday showed that New Home sales were revised down to 4.29K, instead of the 4.4K previously estimated.  The one bright spot during Friday’s session was the Michigan Sentiment index which surprised to the upside, with a release of 73.5 compared to 70.5.

Dollar gains on a downbeat equity market

On the Forex market the Dollar was clearly the leader of the week, increasing dramatically against counterparts. The Pound was pounded last week, after BOE’s King mentioned that a weak sterling would help the UK economy’s adjustment process.  This statement drove the GBP/USD below $1.60 taking out multiple levels of technical support.    The pound will likely face increasing pressure as the UK government has expressed a preference for a weaker domestic currency, stating that the low level of its currency could help its exports.

The Australian dollar was fare better than most currencies against the US dollar, but also came under pressure, affected by the overall momentum in the markets.  Furthermore, news headlines also had an impact on last week’s trading week as the Australian press suggested that contrary to what Chinese officials have been saying, the bilateral relationship between the two is still strained. One must note that China is a major consumer of Australia’s raw commodities, something that also has a tremendous affect on the Australian Dollar. Similar to the rest of the currencies, the Australian Dollar lost its steam last week having an affect on all the AUD crosses. The AUD/JPY broke minor trend line support last week dropping to close the week at 77.699. One must note that even though the AUD/JPY could fall to lower levels a strong support level located at 76.5 lies ahead. A break of support could lead this pair down sharply to new support located near 72.00.

NFP Ahead

Next week the markets will start off on a quiet note but volatility will pick up as the week progresses. Tuesday will be headlined by GDP in the UK and consumer confidence in the Euro zone.  Wednesday will reveal construction spending in Japan, employment in Germany and ADP employment in the US.  Friday’s session will be the major event of the week as the US employment figures are scheduled to be released. Even though the numbers should show an improvement, the NFP index is expected to show job losses for another month, as the U.S economy tries to recover from its recession. Similar to last month’s figure, analysts are expected mixed signals as the NFP result is expected to show its smallest drop, while the unemployment rate is expected to jump to a whopping 9.8%. With the major assets now correcting, some of which located at critical support levels, it will be interesting to see this time round the impact of this result.

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US Dollar slides in Forex Trading as risk flows with stocks jumping


The US Dollar has been on the defensive today in forex trading against the other major currencies as investor’s increased risk appetite has helped propel the currency lower and the stock markets higher. The dollar has been losing ground to the euro, British pound, Australian dollar, New Zealand dollar, Swiss franc and the 250150CalcDollarPaperCanadian dollar while edging up versus the Japanese yen at 2:34 pm EDT in the afternoon of the US trading session according currency data by Oanda.

The US stock markets, meanwhile, have had a positive session so far today with the Dow Jones gaining by over 130 points, the Nasdaq increasing over 40 points and the S&P 500 advancing by over 15 points at the time of writing.  Oil has traded almost unchanged around $66.16 while gold has also been mostly unchanged around the $990.900 per ounce level.

There has been limited economic news released with a short economic calendar scheduled for today.  US economic news releases today showed that the Chicago Fed National Activity Index fell in August.  Economic activity declined to a -0.90 score in August from a -0.56 reading in July according to the Federal Reserve Bank of Chicago.  The index three-month average improved from -1.61 in July to -1.09 in August.

Also released out of the US today was a report on Dallas manufacturing activity and the report showed that manufacturing was better than August but still contracting.  The Federal Reserve Bank of Dallas general activity index registered a -6.4 score in September from a -9.1 score in August. The report also showed that Texas-area production and employment improved in September from August.

Out of Europe earlier today, Germany’s consumer price index decreased by 0.4 percent in September after a gain of 0.2 percent in August.  Year-over-year German consumer prices have fallen by 0.3 percent in September.  An Italian consumer confidence index rose to its highest point since December 2006 according to data by the Research institute ISAE. The confidence index increased to a 113.6 score following a 111.8 score in August, surpassing economic forecasts.

USD/JPY Chart – The US Dollar gaining slightly today against the Japanese Yen after touching an eight month low point around the 88.22 exchange rate in overnight trading. The dollar last fell this low against the Yen in February 2009.


Gold Consolidates Beneath $1000/oz

By Fast Brokers – Gold is balancing above 9/10 lows and June 2009 highs, yet remains below the psychological $1000/oz level.  Gold appears to be taking its cue more from the performance of the EUR/USD and U.S. equities, which are trading the bottom of their near-term uptrend zones.  However, rapid deteriorations of both the GBP/USD and USD/JPY are certainly causes for concern.  Since the large pullbacks in the Dollar crosses are predominantly based on psychological factors, gold’s correlation is favoring the more fundamentally-based performances of the EUR/USD and U.S. equities.  Hence, gold has managed to stay within range of the $1000/oz level despite recent volatility in the FX market.  As a result, gold’s near-term performance will likely depend upon the results of key U.S. economic data this week.  If global economic data continues to underperform gold may be forced to sacrifice 9/10 lows.  That being said, we’re a bit skeptical about upcoming data releases.  Therefore, we believe gold has a downward inclination over the near-term.

Investors should keep eye key technical supports of both the EUR/USD and the S&P futures.  A technically significant decline in either of these investment vehicles would likely be accompanied by a large selloff in gold.  Intraday and 9/10 lows should serve as reliable technical cushions for gold along with our 3 uptrend lines.  As for the topside, gold faces formidable resistances in our multiple downtrend lines and the highly psychological $1000/oz level.  We maintain our neutral outlook on gold trend-wise due to the mixed picture across the marketplace.

Present Price: $992.15/oz

Resistances:  $993.14/oz, $995.13/oz, $997.20/oz, $998.94/oz, $1000.39/oz, $1003.44/oz

Supports: $993.14/oz, $990.96/oz, $988.78/oz, $987.03/oz, $985.25/oz, $982.93/oz, $980.61/oz

Psychological: $1000/oz

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

EUR/USD Climbs Back Above 9/21 Lows

By Fast Brokers – The EUR/USD is trading back above 9/21 lows, recovering from earlier losses while avoiding a retest of 1.45.  Meanwhile, the EUR/GBP is trading off of intraday highs after touching .93.  Therefore, the EUR/USD is rebounding with a broad-based dip in the Dollar rather than thriving off of the Euro’s relative strength.  We may continue to see the EUR/USD behave more closely to its correlations throughout the week rather than relying on economic data and the ECB’s comparatively hawkish stance.  Since the EU will be releasing only scattered, light-weight data throughout the week, investors will price the EUR/USD more on last week’s stream of negatively mixed data.  The wave of PMI data was disappointing and Germany’s Ifo Business Climate number was nothing to cheer about.  We are noticing a pullback in overall global economic data, and it appears stimulus measures may begin to wear off.  Therefore, we are entering a key phase of the recovery.  It is uncertain whether the global economy can continue on its present growth track sans stimulus.

Due to the lack of EU economic data this week, the EUR/USD will rely upon the performance of U.S., British, and Japanese economic data.  Therefore, the EUR/USD should ultimately follow the path of U.S. equities and gold.  We are beginning to disfavor U.S. equities while the GBP/USD and USD/JPY continue to make clear commitments to longer-term downtrends.  The relative strength in the EUR/USD could gradually deteriorate if the currency pair’s positive correlations don’t cooperate.  Hence, we maintain our neutral outlook trend-wise on the EUR/USD until we get a clearer indication of where markets are headed or a change in monetary policy behavior from the ECB.  Tomorrow will be a busy day data-wise in other parts of the world.  The U.S. will release some important consumer and housing data while Britain will print a wave of its own.  Should tomorrow’s econ data disappoint, we could see a test of 1.45 rather quickly.

Technically speaking, our 1st tier uptrend line plays an important role over the immediate-term.  Since the 1st tier runs through 9/09 lows, a failure of this trend line suggests a reversal to the psychological 1.45 area.  As for the topside, we notice multiple downtrend lines bearing on price along with Friday’s highs.  Meanwhile, we are in the midst of multiple trend line inflection points, indicating a spike in volatility over the next 24-48 hours.  Hence, a test of 1.45 could be in the works and the EUR/USD appears to be favoring the downside.

Present Price: 1.4640

Resistances: 1.4656, 1.4677, 1.4703, 1.4724, 1.4745

Supports: 1.4634, 1.4611, 1.4580, 1.4563, 1.4541, 1.4519

Psychological: 1.45

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

GBP/USD Continues its Rapid Descent

By Fast Brokers – The Cable has deteriorated faster than we anticipated, blowing right past the psychological 1.60 level with little hesitation.  The GBP/USD has proceeded to decline below June 8th lows, a significant negative technical development in our eyes.  The Cable appears to be committing to a more protracted downtrend pattern.  Though the Cable could opt to try and consolidate around the psychological 1.60 area to salvage an uptrend, there is a lot of space between our 3rd uptrend and our 1st-2nd uptrend lines (off-grid).  Therefore, losses have the potential to accelerate further over the near-term.  In fact, we predict a medium-term decline towards 1.50 could be in the works.  As for the topside, the Cable faces multiple downtrend lines along with Friday highs and the highly psychological 1.60 level.  Economic data from Britain and the U.S. over the next week should determine the GBP/USD pieces together a near-term consolidation or continues its rapid descent towards our 2nd tier uptrend line.

Britain will make a return to the data circle tomorrow by releasing its Current Account, Final GDP, CBI Realized Sales, etc.  Brtain was relatively quiet on the data front last week despite the Cable’s decline, meaning volatility could remain at a heightened state over the next 24-48 hours.  The latest employment and consumption data from Britain indicated a cool down in the economic recovery.  Further deterioration in consumption, lending, and trade would likely drag the GBP/USD lower.  Since BoE Governor King has stuck to his dovish monetary policy stance, we believe Britain’s Current Account data could indicate a noticeable decline in UK exports.  The U.S. will release consumption data of its own tomorrow along with industrial production from Japan.  If we see a continuation of the theme of a global economic cool down U.S. equities will likely get whacked, a negative indicator for the GBP/USD.  Since our outlook concerning the health of the global economic is darkening, we have even fewer reasons to be positive on the Cable other than the concept of oversold conditions.  Therefore, we maintain our negative outlook on the Cable trend-wise even if bottom-feeders help the currency pair consolidate over the immediate-term.

Present Price: 1.5825

Resistances: 1.5847, 1.5871, 1.5921, 1.5950, 1.5978

Supports: 1.5813, 1.5780, 1.5751, 1.5726, 1.5672

Psychological: 1.60

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

USD/JPY Recovers After Heading Towards January Lows

By Fast Brokers – The USD/JPY’s long-term downtrend kicked in much quicker than we anticipated.  The psychological 90 level didn’t put up much of a fight, certainly a negative technical sign.  Investors continued to snatch up the Yen after the BoJ confirmed that it may be less inclined to intervene in FX markets than the previous administration.  The psychological plays by the BoJ and DPJ are having a profound impact on currency markets, driving down the USD/JPY towards previous 2009 and 2008 lows.  Hence, the USD/JPY is flirting with historical levels once again.  A compromise of December 2008 lows would knock the currency pair into levels not witnessed in over a decade.

The saving grace for the USD/JPY over the immediate-term would be stronger than expected industrial production and TMI data later this week.  Strong Japanese economic data could help buoy the USD/JPY for the time being and allow the currency pair to regain its footing.  However, we notice a cool down in global economic data.  The dip in global econ data combined with an extraordinarily strong Yen has likely hindered Japan’s economic recovery since the economy is highly reliant on exports and manufacturing.  Disappointing Durable Goods orders from the U.S. last Friday is certainly a cause for concern.  More weak consumption data out of the U.S. tomorrow could place additional downward pressure on the USD/JPY.  Investors will also be keeping a close eye on China’s Manufacturing PMI release on Wednesday.  China has been the engine of the global economic recovery.  A slowdown in Japan’s #1 trading partner would likely accelerate the USD/JPY’s present downturn.

Technically speaking, we have little reason to be positive on the USD/JPY trend-wise.  The currency pair continues to travel south from all of our note-worthy uptrend lines.  The only technicals working in the USD/JPY’s favor right now are intraday and January 2009 lows.  However, we did previously note that the 88.50-90 level should prove to be a reliable supportive trading range.  Therefore, we wouldn’t be surprised to see the USD/JPY hang in this area over the next 24-48 hours.  On the other hand, traders should remain on their toes since the FX markets are very dynamic right now.  We’ve seen an equally negative deterioration in the GBP/USD, which is positively correlated with the USD/JPY.  The question becomes whether U.S. equities and gold can keep their head above water.  As for the topside, the USD/JPY faces numerous downtrend lines along with the highly psychological 90 level.  Therefore, the USD/JPY has quite a few large obstacles to overcome to the topside.

Present Price: 89.39

Resistances:  89.42, 89.80, 90.03, 90.32, 90.73, 90.96

Supports:  89.15, 88.89, 88.60, 88.25, 87.80

Psychological: 90, 2009 and 2008 lows

Market Commentary provided by Fast Brokers.

Disclaimer: FastBrokers’ market commentary is provided for information purposes only and under no circumstances should be regardedneither as an investment advice nor as a solicitation or an offer to sell/buy any financial product. FastBrokers assumes no responsibility or liability from gains or losses incurred by the information herein contained.

Risk Disclosure: There is a substantial risk of loss in trading futures and foreign exchange. Please carefully review all risk disclosure documents before opening an account as these financial instruments are not appropriate for all investors.

Straight Lines Lead Straight to Profits in Crude Oil

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Japan’s Currency Hits a 7 Month High

Source: ForexYard

The Yen rose to a 7 month high versus the Dollar as Japan’s new government reiterated its opposition to pursuing deliberate currency devaluation strategy. The Sterling dropped to a 3 month low versus the Dollar last week after Bank of England Governor Mervyn King was quoted as saying the Pound’s weakness is aiding in stabilizing the U.K.’s economy. Today’s trading day will likely experience the markets reaction to the G20 leaders’ decisions, mainly their pledge to continue supporting the stimulus efforts.

Economic News

USD – USD Falls below 90.00 Yen

The Dollar weakened on Friday after a set of mixed U.S economic reports as well as reports that the G20 leaders will continue to provide support for the global economy. The Dollar index fell to 76.774 Friday, down from 76.901 late Thursday. The Dollar remained down more than 1% versus the Japanese Yen after statements by Japan’s Finance Minister Hirohisa Fujii that he opposes intervening in the currency markets to curb the rise in the Yen.

Orders of durable goods unexpectedly fell 2.4% in August. Sales of new homes rose 0.7% to a 429,000 pace in August, much slower than the expected 442,000. On the other hand, the Reuters-University of Michigan consumer sentiment index was revised to 73.5 in September, compared to a previous estimate of 70.2 and 65.7 in August, beating analysts expectations.

No news events are expected today form the U.S; therefore, it is likely that Dollar sentiment will be determined by investors’ reactions to the G20 concluding statements.

EUR – Sterling Trades at a 3 Month Low vs. USD

The Sterling dropped to a 3 month low below $1.60 last week after Bank of England (BOE) Governor Mervyn King was quoted stating the Pound’s weakness is aiding in the recovery of the U.K economy. The EUR traded at $1.4665, up 0.2% from Thursday.

The Sterling slid 2.1% versus the Dollar last week following very dovish announcements by BOE Governor Mervyn King, calling the Pound’s recent drop “very helpful.” The Pound fell Friday to $1.5918, the lowest level since June 8, and depreciated to 91.19 per ERU, the weakest level since April 1.

While a rather slow news day is expected today, ECB president Trichet’s speech at 2:30 GMT is likely to provide volatility to the EUR as interest rate targets and exit strategies are likely to be discussed.

JPY – Yen at a 7 Month high versus the Dollar

The Yen registered sharp gains Friday, breaching the significant Y90.00 barrier against the Dollar and reaching the highest levels versus the greenback in over 7 months. Japan’s currency benefited from supportive comments from Japan’s finance minister Hirohisa Fujii who said that he opposes intentional devaluation of the Yen.

The JPY advanced 1.8% this week to 89.64 per Dollar from 91.29 on Sept. 18, briefly touching 89.51 Friday, the strongest level since Feb. 5. The currency also gained 2% to 131.70 per ERU, from 134.33.

Crude Oil – Crude Prices up Slightly on Mixed Data

At the end of a very volatile trading day Friday, Crude Oil futures rose slightly, for the first session in 3, following the release of mixed economic data from the U.S as well as on increased odds of broad based sanctions against Iran, the world’s 4th largest Oil producer. Crude for November delivery rose 13 cents, or 0.2%, to end at $66.20 a barrel on the New York Mercantile Exchange, after dropping as low as $65.05, the lowest level since July 30. Overall futures tumbled more than 8% this week, the biggest weekly loss in more than two months.

The unexpected jump in the Reuters/UoM Consumer Sentiment Index to 73.5 in September helped push up Oil prices; however, concerns over weak demand dampened Friday’s gains. Furthermore, several worse than expected economic data from the U.S stemmed further Oil’s Gains.

With last Wednesday’s report by the Energy Information Administration (EIA) stating that inventories of Crude Oil, gasoline and other petroleum products all rose last week and a lack of any significant economic news today, Oil prices will likely continue to stay subdued throughout today’s trading day.

Technical News


The typical range trading on the 4-hour chart continues. The daily chart RSI is floating in neutral territory. However, the hourly chart’s RSI is already floating in the oversold territory, suggesting an upward correction may be imminent. Going long might be a wise choice.


The price of this pair appears to be floating in the over-sold territory on the daily chart’s RSI indicating an upward correction may be imminent. The upward direction on the 4-hour chart’s Momentum oscillator also supports this notion. When the upwards breach occurs, going long with tight stops appears to be preferable strategy.


The hourly chart is showing mixed signals with its RSI fluctuating at the neutral territory. However, there is a fresh bullish cross forming on the daily chart’s Slow Stochastic indicating a bullish correction might take place in the nearest future. Going long might be a wise choice.


The pair has been range-trading for a while now, with no specific direction. The Daily chart’s Slow Stochastic providing us with mixed signals. All oscillators on the 4 hour chart do not provide a clear direction as well. Waiting for a clearer sign on the hourlies might be a good strategy today.

The Wild Card – EUR/GBP

This pair’s sustained upward movement has finally pushed its price into the over-bought territory on the daily chart’s RSI. Not only that, but there actually appears to be a bearish cross on the Slow Stochastic pointing to an imminent downward correction. Forex traders have the opportunity to wait for the downward breach on the hourlies and go short in order to ride out the impending wave.

Forex Market Analysis provided by Forex Yard.

© 2006 by FxYard Ltd

Disclaimer: Trading Foreign Exchange carries a high level of risk and may not be suitable for all investors. There is a possibility that you could sustain a loss of all of your investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with Foreign Exchange trading.

US Dollar mixed in Forex Trading. Durable Goods fall. New Home Sales, Consumer Confidence rise.


The U.S. dollar was mostly lower in forex trading today against the other major currencies and the U.S. stock markets fell for the third straight day. The dollar gained today versus the British pound and Canadian dollar while falling against the euro, Japanese yen, Swiss franc, Australian dollar and New Zealand dollar at 4:41 pm EDT according to currency data by Oanda.

Overall for the week, the dollar was also mixed against the majors.  The American currency gained slightly against the euro despite falling to new yearly lows on Wednesday around 1.4844 before the USD pushed back late Wednesday and Thursday.  The dollar also gained ground this week versus the British pound and Canadian dollar while falling to the franc, aussie, kiwi and yen.

The U.S. stock markets fell again today with the Dow Jones falling by 42.25 points, the Nasdaq decreasing 16.69 points and the S&P 500 down by 6.40 points.  Oil edged up by $0.18 to $66.07 while gold lost $7.30 to stay under the $1000 per ounce level at $990.20.

U.S. economic releases today showed that two out the three releases were positive.

First up, consumer confidence beat forecasts and rose in September to its highest level since January 2008.  The University of Michigan/Reuters survey registered a 73.5 score in the final September report after this month’s preliminary report had scored 70.2, the level where forecasters were expecting the data to come in.  The index of consumer expectations also increased to a score of 73.5 while the index of current conditions increased to 73.4 after scoring 66.6 in August.

Durable goods fall after last month’s gain.

Durable goods orders fell in August after gaining by the largest amount in two years in July according to a report released by the U.S. Commerce Department today. Durable goods orders declined by 2.4 percent in August to a total of $164.4 billion after surging by a revised 4.8 percent in July.  Today’s data was worse than the market forecasts that had been expecting that durable goods orders would increase by approximately 0.1 percent for the month.

New orders for durable goods excluding transportation showed no change in August following a revised increase of 0.9 percent in July. Market forecasts were predicting an increase of 0.8 percent in durable goods minus transportation.

Shipments of durable goods were down in August by 1.4 percent while unfilled orders fell 0.4 percent and inventories decreased by 1.3 percent. August nondefense orders for new goods declined by 7.1 percent while defense orders for capital goods rose by 1.1 percent.

U.S. New Home Sales increase in August.

New Home Sales in the United States increased for the fifth straight month according to data released by the Department of Commerce today. Purchases of new single family homes rose to an annual rate of 426,000 in August and made a 0.7 percent advancement following July’s 6.5 percent revised gain. August’s annual rate of new homes sold, despite the increase, is still 3.4 percent lower than the August 2008 level. August’s results failed to match market forecasts which were expecting a 1.6 percent increase in sales for an annual rate of 440,000 new homes sold.

Contributing to the decrease in August was a 16.3 percent decrease in new homes sold in the Northeast while the Midwest saw a 5.8 percent decline. The West sales rose by 12.1 percent while the South saw no change in August from July.

Fundamental Outlook at 1400 GMT (EDT + 0400)

By GCI Fx Research

The euro strengthened vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4725 level and was supported around the $1.4615 level.  Group of Twenty officials are said to be preparing a statement that says they will continue to support the global economy and the U.S. dollar suffered as a result. There is also a report that G20 members will be required to have their economic policies reviewed by their peers. Data released in the U.S. today saw August headline durable goods orders off 2.4%, far below expectations and the revised 4.8% print in July, while the ex-transportaton component was flat at +0.0%, down from the revised +0.9% print in July. Also, September University of Michigan consumer sentiment came in stronger-than-expected at 73.5, up from the prior reading of 70.2.  Additionally, August new home sales were up 0.7% m/m, a lighter-than-expected annualized 429,000 rate.  In eurozone news, German GfK consumer confidence improved to 4.3 in October from 3.7 in September.  Also, the EMU-16 M3 money supply expanded 2.5% y/y in August, less-than-expected.   The Federal Reserve, European Central Bank, Bank of England, Bank of Japan, and Swiss National Bank yesterday  announced they will extend their liquidity-providing facilities and operations through January 2010.  The euro’s upside may be pressured by continued strong selling pressure against sterling.  Bank of England Governor has been quoted as saying sterling’s recent weakness has been “helpful” in addressing economic imbalances.  Euro bids are cited around the US$ 1.3900 figure.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥89.50 level and was capped around the ¥91.35 level.  The yen rampaged across the board as the Group of Twenty meeting remained underway in Pittsburgh.  Japanese finance minister Fujii met with U.S. Treasury Secretary Geithner last night and reported he is opposed to intentionally devaluing the yen or other currencies.  This admission gave the yen a clear path to appreciate.  Former MoF mouthpiece “Mr Yen” Sakakibara reported the government may not intervene even if the pair falls as low as ¥90.  Fujii and the government may only decide to intervene if exchange rate imbalances become “abnormal.” Data released in Japan overnight saw the August corporate service price index printed at 92.2, off 0.4% m/m and 3.5% y/y.   Bank of Japan announced it will extend liquidity provision measures through January 2010 to cushion money markets in concert with other central banks.  Yen borrowing costs declined to a three-year low with three-month Libor at 0.34625, the lowest level since June 2006.  Similarly, U.S. dollar three-month Libor printed at a record low of 0.28250.  U.S. dollar rates have been below Japanese dollar rates since 24 August and that has resulted in the U.S. dollar being used as a carry trade funding currency.  The Nikkei 225 stock index lost 2.64% to close at ¥10,265.98.  U.S. dollar offers are cited around the ¥94.75 level.  The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥131.55 level and was capped around the ¥133.85 level.  The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥142.75 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥87.15 level. In Chinese news, the U.S. dollar lost ground vis-à-vis the Chinese yuan as the greenback closed at CNY 6.8235 in the over-the-counter market, up from CNY 6.8218.  People’s Bank of China Deputy Governor Hu this week reported G20 nations should consider establishing an international wealth fund to invest a portion of members’ current account surpluses.  There is continued speculation among dealers that Chinese monetary authorities may allow the yuan to appreciate further vis-à-vis the U.S. dollar.  PBoC official Xie Duo reported it is “closely watching” the direction and trend of the U.S. dollar.

Daily Market Commentary provided by GCI Financial Ltd.

GCI Financial Ltd (”GCI”) is a regulated securities and commodities trading firm, specializing in online Foreign Exchange (”Forex”) brokerage. GCI executes billions of dollars per month in foreign exchange transactions alone. In addition to Forex, GCI is a primary market maker in Contracts for Difference (”CFDs”) on shares, indices and futures, and offers one of the fastest growing online CFD trading services. GCI has over 10,000 clients worldwide, including individual traders, institutions, and money managers. GCI provides an advanced, secure, and comprehensive online trading system. Client funds are insured and held in a separate customer account. In addition, GCI Financial Ltd maintains Net Capital in excess of minimum regulatory requirements.

DISCLAIMER: GCI’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be U.S.ed as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.