Latest news on European Morning Update 8th April 2008
| Dollar soft but off lows in Asian trading Releases from Australia: Prior Current Following on from yesterday’s softer data from Australia the NAB business confidence survey confirmed a deterioration in conditions over March. Confidence is now at its lowest level since September 2001. Sales dropped to its lowest level since October 2005 and the employment index to its lowest level since November 2006. NAB forecast interest rates to remain unchanged until early next year when they anticipate a reversal of the up cycle.
Prior Current
With the global slowdown expected to hit Japanese exporters the number bankruptcies is expected to remain high and this does risk further erosion of the employment market that could consequently hit consumer spending numbers even further. Ahead of the G7 meeting Nukaga has been voicing his concern over the global problems which are impacting Japan on two fronts. With the U.S. as a major importer of Japanese products the export economy is taking a pounding while the high flying Yen is doubling the problem. He made no specific comment on FX intervention but has been vocal on this issue in the past. However, there is little appetite for such action by the States and Europe and it may be difficult to intervene unilaterally. The BOJ begin its two-day meeting today but is expected to retain an unchanged policy although there are growing calls and forecasts of a cut in rates over the next 3 months. The big problem they have right now is that there is no governor since Fukui stepped down last month and the government parties have failed to agree on a successor. However, following the disastrous Q1 Tankan Report the CB’s assessment of the economy can only be downgraded.
The following economic releases are due today: Forecast The minutes of the March 18th FOMC meeting are due to be published
Concentrating first on the Euro and Swissie the support in the Euro held quite well and although the Swissie pushed up higher than expected I still feel the best fit is a bearish one. Any reversal above yesterday’s Dollar peaks here would prove me wrong and I’ll have to re-adjust the outlook. Now assuming this Dollar bearish view is correct then we should find little progress above the 1.5788 high seen already in the Euro and the 1.0044-70 Swissie support. Both these should produce corrections but we should find some better Dollar selling levels later on today. Dollar–Yen has support between 101.88-102.06 and this should be used as the break level for any bullish thoughts. If it holds then the 103.57-104.00 area seems possible. On the Pound I’d prefer to work on breaks – this is very confusing right now. To cover the Yen from the Euro-Yen point of view I do feel that we are close to a peak – and this is another reason why I am slightly concerned about a bullish stance in Dollar-Yen. While the hourly chart has no bearish divergence there is one building in the 4-hour chart. Thus there does seem to room for one final high but while this holds below the 161.92-162.40 area I would still prefer an eventual break lower.
USDJPY EURUSD USDCHF GBPUSD Spt: 101.88-06 1.5682-98 1.0044-65 1.9811-32 See Also
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