NEWS / Foreign Exchange

U.S. Forex Market Commentary

EURO

The euro gained marginal ground vis-? -vis the U.S.dollar todayas the single currency tested offers around the US$ 1.3370 level and wassupported around the $1.3325 level.  Technically,today??™s intraday high was just below the 76.4% retracement of the move from$1.3410 to $1.3255.  Traders are weighingeconomic data against heightened geopolitical risks and testimony from FederalReserve Chairman Bernanke.  Data releasedin the U.S.today saw February durable goods orders rise 2.5% from a revised -9.3% inJanuary.  The ex-transportation componentwas off 0.1% and the ex-defense component was up 2.5%.  Chicago Fed President Moskow spoke overnightand reiterated the ???risk of inflation remaining too high is greater than therisk of growth falling too low??? but he did indicate the U.S. economyshould expand below its long-term growth potential in 2007 with lingeringdownside risks to the housing market.  Ineurozone news, EMU-13 M3 money supply growth accelerated 10.0% y/y in Februaryfrom a revised 9.9% in January.  Thesedata reinforce the belief the European Central Bank will continue to tightenmonetary policy.  ECB memberGonzalez-Paramo reiterated ???the balance of inflation risks is clearly on theupside??? and added ???holding the line on wages is key.???  GfK reported its April consumer climate indexprinted at 4.4 from a revised 4.3 in March. Euro bids are cited around the US$ 1.3285 level.

JPN/CNY

The yen appreciatedvis-? -vis the U.S. dollar today asthe greenback tested bids around the ??116.85 level and was capped around the??118.00 figure.  Technically, today??™sintraday low was right around the 50% retracement of the move from ??115.50 to??118.50.  The yen scored sizable gainsacross the board as traders reduced global risk on account of heightenedgeopolitical pressures, especially involving the hostage standoff between the United Kingdom and Iran.  The yen is used as a funding vehicle in shortyen carry trades in which proceeds are invested in the assets of higheryielding currencies. Traders await the release of February consumer price andindustrial production data on Friday followed by the quarterly tankan survey onMonday.  The Nikkei 225 stock index lost0.64% to close at ??17,254.73.  Dollarbids are cited around the ??116.65/ 25 levels. The euro weakened vis-? -vis the yen as the single currency testedbids around the ??156.05 level and was capped around the ??157.55 level.  TheBritish pound and Swiss franc moved lower vis-? -vis the yen as the crossestested bids around the ??229.60 and ??96.50 levels, respectively.  TheChinese yuan appreciated vis-? -vis the U.S. dollar as the greenback closedat CNY 7.7295 in the over-the-counter market, down from CNY 7.7334.  There were unconfirmed reports overnight thatChinese regulators are planning to issue warnings about investments intoChinese equities following strong recent performance. Data released in China today sawFebruary consumer confidence fall to 95.8 from 96.3 in January and 96.9 inDecember. 

STERLING

The British pound gained marginal ground vis-? -visthe U.S. dollar today as cable tested offers around the US$ 1.9680 level and was supportedaround the $1.9595 level.  Technically,today??™s intraday low was right around the 23.6% retracement of the move from$1.9180 to $1.9725.  Traders continue tomonitor developments involving the fifteen U.K.military personnel who were captured by Iran last week in Iraqiwaters.  One report today suggests thelone female solider may be released by Iran.  Data released in the U.K. today saw Nationwide March house pricesclimb 0.4% m/m and 9.3% y/y, an indication that the Bank of England??™s continuedinterest rate hikes may be slowing growth in the U.K. housing sector.  Other data released today saw U.K. Q4 GDPgrowth revised down to 0.7% q/q from 0.8% q/q while the Q4 current accountprinted at -?‚¤12.7 billion.  Cable bidsare cited around the US$ 1.9595 level.  The euro gained marginal groundvis-? -vis the British pound as the single currency tested offers around the?‚¤0.6800 figure and was supported around the ?‚¤0.6785 level. 

SWISS

The Swiss francappreciated vis-? -vis the U.S. dollar today as the greenback tested bids around the CHF1.2080 level and was capped around the CHF 1.2140 level.  Technically, today??™s intraday low was justbelow the 23.6% retracement of the move from CHF 1.2770 to CHF 1.1875.  Data released in Switzerland today saw the March KOFeconomic barometer rise to 1.90 from a revised 1.81 in February and 1.74 inJanuary.  The Swiss franc is benefitingfrom increase risk aversion related to the war games taking place off the Iraniancoast.  Dollar offers are cited aroundthe CHF 1.2155 level.  The euro and British pound depreciatedvis-? -vis the Swiss franc as the crosses tested bids around the CHF 1.6145 andCHF 2.3755 levels, respectively.

AUD

The Australian dollar came off vis-? -vis the U.S.dollar todayas the Aussie tested bids around the US$ 0.8040 level and was capped around theUS$ 0.8090 level.  Technically, today??™sintraday low was just above the 23.6% retracement of the move from $0.7795 to$0.8105.  Many traders continue to expectthat Reserve Bank of Australiawill tighten monetary policy in April. Australian dollar bids are cited around the US$ 0.7990 level.

CAD

The Canadian dollar appreciated marginally vis-? -visthe U.S. dollar today as the greenback tested bids around the C$ 1.1555 level and was cappedaround the C$ 1.1610 level.  GDP andearnings data will be released on Friday. U.S. dollar bids are cited around the C$ 1.1510 level.