Latest news on European Morning Update 12th March 2008
| Dolalr edges back lower over the Asian session Releases from Australia:
And Australians won’t be happy with the fact that Australian banks are hiking mortgage rates by 35bp which is more than the RBA’s 25bp hike last week. There seems little doubt that Australia’s economy has peaked but the slowdown has been limited with employments at 32 year highs. Rather than see a dramatic fallout the economy should continue to slow gradually over the coming months.
Forecast Actual January February Quite a few releases from Japan today have seen a mixed result. Q4’s GDP was revised lower by a much smaller margin than expected while January’s trade balance was marginally above forecasts. However, we are seeing price rises filtering through into Japan, today’s domestic CGPI seeing a slightly larger rise that anticipated and will pass through to retail prices over this month and next as companies announce price rises – in some case up to 5%-10%. The 3.4% YoY increase is the strongest pace in 27 years. No wonder the Japanese consumer is becoming more morose with February consumer confidence dipping for to the lowest level in almost 5 years at 36.1. Households are watching the deterioration in economic conditions while inflation begins to take a stronger hold. Elsewhere the MOF has reported declining corporate profits which saw a -4.5% drop in last year. It does show that with rising prices and lower retail sales that Japanese businesses are finding life difficult following the fallout from the subprime.
January February March
The second favored alternative would be for further direct gains but then followed by sideways consolidation. What both these imply is time. I don’t think this correction will be a brief affair and therefore I am more inclined to more complex corrections. Overall I see approximate Dollar caps around 1.5072-1.5144 Euro, 1.0480-09 Swissie, 1.9864-1.9916 Pound and 104.63-80 Yen. So the first thing we need to do is watch the support levels which separate the two favored scenarios so that if the supports break then the messy and choppy correction becomes favored. Of course given the circumstances we may find some divergence between currency pairs and this may complicate the short term picture. Overall I still see this as a correction within the larger Dollar decline and this should still imply new lows by April and possibly into May.
USDJPY EURUSD USDCHF GBPUSD Spt: 102.48-70 1.5281-06 1.0242-82 2.0050-80 See Also
Read More Here
|
|
0 15 30 45 60 75 90 105 120 135 150 165 180 195 210 225 240 255 270 285 300 315 330 345 360 375 390 405 |