€ - The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.4070...

... level and was supported around the $1.3955.

The common currency rocketed to a new lifetime high above the psychologically-important $1.4000 figure on speculation that Saudi Arabia is ending its ending the peg between the rial and the U.S. dollar. Notably, the Saudi Arabian Monetary Agency did not reduce interest rates this week when the Federal Reserve took the federal funds target rate lower by 50bps. Traders believe this may set off a firestorm in the Middle East and could see other oil-rich countries decouple their currencies from the U.S. dollar and ignite more selling pressure. Data released in the U.S. today saw weekly initial jobless claims fall 9,000 to 311,000 while continuing jobless claims were off 53,000 to 2.544 million. Traders are paying close attention to testimony from Federal Reserve Chairman Bernanke and U.S. Treasury Secretary Paulson about the U.S. mortgage industry today. The September Philadelphia Fed survey will be released later in the North American session. In eurozone news, the Belgian National Bank’s September consumer confidence indicator was unchanged at -2. Euro bids are cited around the US$ 1.3950 level.

¥/ CNY


The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥114.90 level and was capped around the ¥116.10 level. The U.S. dollar crumbled across the board and the New York Board of Trade’s U.S. Dollar Index plunged to its lowest level since September 2002 and is now trading with a 78 handle. Data released in Japan overnight the saw large companies’ business sentiment diffusion index rebound to +6.2 in Q3 from -0.9 in Q2. This is the government’s index and not the Bank of Japan’s tankan survey but it nonetheless represents an improvement in sentiment. The yen posted gains on many of its crosses too and this partially reflects the fact that the Federal Reserve’s rate cut is likely to see other central banks move from a tightening bias to a neutral or easing bias, thus leading to more unwinding of the short yen carry trade. The Nikkei 225 stock index climbed 0.20% to close at ¥16,413.79. Dollar bids are cited around the ¥113.70 level. The euro came off vis-à-vis the yen as the single currency tested bids around the ¥161.35 level and was capped around the ¥162.40 level. The British pound and Swiss franc moved lower vis-à-vis the yen as the crosses tested bids around the ¥230.70 and ¥97.90 levels, respectively. The Chinese yuan lost marginal ground vis-à-vis the U.S. dollar as the greenback closed at CNY 7.5144 in the over-the-counter market, up from CNY 7.5135. Data released in China saw the Q3 bank industry prosperity index hit a record high at 70.6% while the Q3 entrepreneur confidence index receded to 77% from 83.4% in Q2. People’s Bank of China reported that household satisfaction with consumer prices is at a record low.



₤



The British appreciated sharply vis-à-vis the U.S. dollar today as cable tested offers around the US$ 2.0135 level and was supported around the $1.9970 level. Sterling recouped some recent losses after testimony from Bank of England Governor King quelled speculation that he would be ousted in response to the central bank’s delayed response to the global liquidity crisis and its impact on the U.K. banking sector. King made it clear the BoE does not intend to provide a complete bail-out to the U.K. money market. King also reported that existing legislation such as the Market Abuses Directive reduces his “preferred” measure of finding a “covert lender of last resort” for troubled financial institutions such as Northern Rock PLC. Liquidity conditions improved marginally in the U.K. money market today with the three-month sterling Libor rate falling to 6.39% from 6.55 and the overnight and one-week rates down 7bps and 15bps, respectively. BoE yesterday announced it will offer ₤10 billion to the interbank market via next week’s three-week repurchase agreement. Bank of England Monetary Policy Committee member Barker today reported the U.K. housing market “remains relatively robust.” Data released in the U.K. today saw August retail sales rise 0.6% m/m while the CBI’s revealed a positive output balance level of +17%, up from +13% in July. Also, August provisional annual M4 money supply growth rose to 13.5% from 13.0% in July while August gross mortgage lending fell to ₤32.2 billion from ₤34.1 billion in July. Cable bids are cited around the US$ 1.9920 level. The euro moved higher vis-à-vis the British pound as the single currency tested offers around the ₤0.7005 level and was supported around the ₤0.6975 level.



CHF



The Swiss franc appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the CHF 1.1695 level and was capped around the CHF 1.1845 level. The pair reached its lowest level since March 2005. Data released in Switzerland today saw August producer and import prices expand more than expected, up 0.3% m/m and 2.7% y/y. The August trade surplus widened to CHF 637.1 million and the indicator for economic expectations indicator fell 21.6 points to -26.7 in September. U.S. dollar offers are cited around the CHF 1.1880 level. The euro and British pound weakened vis-à-vis the Swiss franc as the crosses tested bids around the CHF 1.6445 and CHF 2.3505 levels, respectively.



A$/ NZ$



The Australian dollar moved higher vis-à-vis the U.S. dollar today as the Aussie tested offers around the US$ 0.8660 level and was supported around the $0.8550 level. The pair reached its highest level since 27 July. Data released in Australia today saw August new home sales fall 8.6% m/m, the lowest level since January. Australian dollar bids are cited around the US$ 0.8430 level. The New Zealand dollar gained ground vis-à-vis the U.S. dollar as the kiwi tested offers around the US$ 0.7450 level and was supported around the $0.7325 level. Data released in New Zealand today saw the annual current account deficit expand slightly in Q2. New Zealand dollar bids are cited around the US$ 0.7275 level.



C$



The Canadian dollar appreciated sharply vis-à-vis the U.S. dollar today as the greenback tested bids around the C$ 0.9995 level and was capped around the C$ 1.0155 level. The last time the pair reached parity prior to today was November 1976. Data released in Canada saw July wholesale sales rose 2.0% m/m while wholesale inventories were up 0.6%. U.S. dollar offers are cited around the C$ 1.0155 level.



Technical Outlook at 1230 GMT (EDT + 0400)



(Bid Price) (Today’s Intraday Range)





EUR/ USD 1.4037 1.4065, 1.3955

USD/ JPY 115.09 116.08, 114.94

GBP/ USD 2.0080 2.0112, 1.9972

USD/ CHF 1.1737 1.1844, 1.1711

AUD/ USD 0.8629 0.8637, 0.8550

USD/CAD 1.0014 1.0153, 1.0003

NZD/USD 0.7430 0.7435, 0.7324

EUR/ JPY 161.57 162.38, 161.35

EUR/ GBP 0.6990 0.7005, 0.6974

EUR/ CHF 1.6478 1.6533, 1.6443

GBP/ JPY 231.09 232.24, 230.70

CHF/ JPY 98.09 98.53, 97.89



Support Resistance Support Resistance





L1. 1.3515 1.4075 114.55 116.55

L2. 1.3415 1.4140 112.55 117.85
L3. 1.3245 1.4225 111.60 119.35



GBP/ USD USD/ CHF



L1. 1.9915 2.0150 1.1800 1.1960

L2. 1.9805 2.0270 1.1740 1.2055

L3. 1.9530 2.0415 1.1650 1.2120







AUD/ USD USD/ CAD



L1. 0.8270 0.8430 1.0150 1.0340

L2. 0.8160 0.8585 1.0080 1.0485

L3. 0.7940 0.8870 1.0010 1.0550





NZD/ USD EUR/ JPY



L1. 0.6985 0.7200 157.25 161.70

L2. 0.6760 0.7375 154.50 164.45

L3. 0.6640 0.7545 149.25 168.95



EUR/ GBP EUR/ CHF



L1. 0.6855 0.7010 1.6400 1.6535

L2. 0.6790 0.7070 1.6325 1.6680

L3. 0.6705 0.7140 1.6240 1.6770



GBP/ JPY CHF/ JPY



L1. 228.15 235.20 95.90 98.15

L2. 226.80 238.95 94.50 99.55

L3. 221.05 239.60 92.20 101.85





SCHEDULE



Thursday, 20 September 2007
all times GMT
(last release in parentheses)



N/A CH European Central Bank President Trichet speaks

0130 Australia Reserve Bank of Australia monthly bulletin

0615 CH August trade balance (CHF 1.57 billion)

0700 Japan August convenience store sales (-0.1% y/y)

0705 Japan Bank of Japan Governor Fukui speaks

0715 CH August producer and import prices (0.1% m/m)

0715 CH August producer and import prices (2.8% y/y)

0830 UK August retail sales (0.7% m/m)

0830 UK August retail sales (4.4% y/y)

0830 UK August public sector net cash requirement (-₤13.1 billion)

0830 UK August public sector net borrowing (-₤6.5 billion)

0830 UK August M4 money supply (1.0% m/m)

0830 UK August M4 sterling lending (₤24.6 billion)

0830 UK August BSA mortgage approvals (₤3.594 billion)

0830 UK August M4 money supply (13.0% y/y)

0900 CH September ZEW survey, expectations (-5.1)

0900 Eurozone July construction output (0.6% m/m)

0900 Eurozone July construction output (2.7% y/y)

1000 UK September CBI industrial trends

1230 US Weekly initial jobless claims (319,000)

1230 US Continuing jobless claims (2.585 million)

1230 Canada July wholesale sales (0.2% m/m)

1400 US August leading indicators (0.4%)

1400 US Federal Reserve Chairman Bernanke testifies

1600 US September Philadelphia Fed survey (0.0)

2350 Japan July all-industry activity index (0.2% m/m)

2350 Japan Foreign net stocks and bonds investment

2350 Japan July all-industry activity index (0.2% m/m)



Friday, 21 September 2007
all times GMT
(last release in parentheses)



N/A Germany European Central Bank members Papademos and Stark speak

0300 NZ August credit card spending (7.8% y/y)

0700 CH European Central Bank President Trichet speaks

0800 Eurozone July current account (€5.9 billion)

0800 Eurozone September PMI, manufacturing (54.3)

0800 Eurozone September PMI, services (58.0)

0800 Eurozone September PMI, composite (57.4)

0900 Germany Federal Reserve Governor Mishkin speaks

1230 Canada July retail sales (-0.9% m/m)

1230 Canada July retail sales, ex-autos (-0.3% m/m)

1245 US Philadelphia Fed President Plosser speaks

1235 US Federal Reserve Governor Warsh speaks


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