Latest news on Asian Morning Update 13th March 2008
| The brief spell of hope dissipates as the market resumes Dollar selling European releases overnight: January Forecast Actual March
Indeed, the U.K. Chancellor has lowered growth targets from 2.25%-2.75% down to 1.75%-2.25%. However, do remember that no salesperson or politician will forecast doom and gloom. That is the preserve of third party commentators. The Euro-zone’s Juncker expressed his natural vigilant nature in considering the value of the Euro repeating the old chestnut that exchange rates should reflect economic fundamentals. However, he added a rather strange comment “The U.S. economy is on the verge of recession and inflation is at 4.3 percent ... this policy would be a bad inspiration at the moment in which I am speaking.” Perhaps he is a Dollar bear also… March Bloomberg Global Confidence 14.34 (prior) 13.08
The NABE survey highlights manufacturers expecting slower growth and fewer jobs. However, they also stated in their outlook “Net exports will keep the U.S. economy out of recession in 2008.” They expect exports to grow by 7% this year and should contribute 47% growth to GDP which they estimate at 1.1% in 2008. This is split between a stagnant H1 and growth of 2.3% in H2. They also expect unemployment to hit 5.7%. MasterCard’s SpendingPulse saw February spending take a -1.1% dive which was described by the group as the “biggest drop in our history.” This is only 5 years old but they are allowed to make their noise as they are a third party commentator. President Bush doesn’t see a recession but the latest Duke-U/CFO Magazine survey found that 54% of CFO’s believe that the States is already in recession. This brought their optimism index down to the lowest level in their 7 years of operation. And after a brief love affair with the Dollar the market’s belief in the efficacy of the concerted action by central banks to inject liquidity faded into a distant memory as they do not see this as a cure-all for the root cause of the economy's problems: falling home prices and a mounting wave of mortgage defaults. But OPEC countries appear to be rallying around. The Qatar Central Bank announced they will retain the Dollar peg while the Saudi Monetary Authority claims “The Dollar is a good buy.” The chief Al-Sayari added “I think the dollar is now a good buy. I said the dollar is undervalued, but the market determines the movements.” Nor did he see any impediments in using the euro as a reserve currency.” And after the brief spell thinking we should see a slightly more sustainable period of consolidation the Dollar crashed to new lows. All may still not be lost as the market normally reigns back ahead of the FOMC which is next Tuesday. However, even if there is any second pullback the Dollar would still find it hard to surpass yesterday’s highs. That still leaves the underlying direction as lower with the next larger targets around 1.5797 Euro, 0.9960 Swissie and possibly as low as 98.90 Yen. The Pound should find the going tough beyond 2.0446-86. For today the important levels to watch are at 1.5575 Euro, 1.0073 Swissie, 2.0304 Pound and 100.55 Yen. While these areas hold there is still some chance of seeing a move back to yesterday’s highs else the downtrend continues relentlessly towards its targets.
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