Latest news on European Morning Update 19th March 2008
| Dollar back under pressure in Asia News from Australia: Australia Prior Current Numbers from Australia this morning were soft but not excessively and basically reflect the gentle slowdown in the economy. The leading index implied growth moderating to around 3.5%-3.8% so no one is going to get too bearish at this stage. Dwelling Starts were still firm in Q4 but it is likely that the two interest rate hikes this year will take the steam off the housing market. Jobs ads were soft again and tend to suggest that the record low unemployment may not last for too many months if the trend continues.
Japan Forecast Actual Industrial activity was a little softer in January but that wasn’t far from forecasts and again does reflect the mild downturn that has already been seen, so no great surprises. However, the Reuter’s Tankan report was not quite so rosy with corporate sentiment deteriorating due to the continuing rise in raw material prices. The Manufacturer’s MI slipped by 1 point to +8 which is less than half the level seen 3 month’s ago at +21. The scene is set for the BOJ’s Tankan report on April 1st.
January February March
For a start Friday is a bank holiday and Monday a partial one. That should keep the market subdued and this will mean the recovery seen overnight is unlikely to last too long. It is very unlikely that without any further positive input that the market will change its mind and become Dollar bullish. More likely the daggers will be out before long to know it back. Today I do see potential for further gains but not excessive. The areas I feel will cap are at around 101.23 Dollar-Yen, 1.5531 Euro, 1.9944-77 Pound and 1.0130-60 Swissie. From these areas I suspect a pullback. Whether the market will push it substantially lower is uncertain given the long weekend but the downward pressure should be renewed by Monday and more likely Tuesday next week. However, at this stage I think the Dollar has done enough to break the current downward path and I’m not really in favor of seeing new lows. Thus any approach to this week’s lows should see momentum falter and cause a pullback into range. I suspect when I get back on Thursday that I’ll see rates around current levels and possibly a touch lower. The only other comment I’ll make is a long shot but best kept in the back of minds. The sharp losses amid almost hysteria do fit the description of a spike bottom. If we are seeing a spike bottom then the implication is for a headlong rush higher. However, I’d only follow that if there is some surprising/amazing announcement to trigger it. Otherwise the bearish sentiment is just too much for the dollar right now.
USDJPY EURUSD USDCHF GBPUSD Spt: 98.32-63 1.5612-50 0.9900-34 2.0042-72 See Also
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