Latest news on Asian Morning Update 11th April 2008
| Two hurdles cleared and now for G7 European releases overnight: February Forecast Actual With the BOE cutting rates by 0.25% and the ECB retaining an unchanged policy that’s two hurdles out of the way. The BOE cited the balance of risks to inflation justified a cut as well as credit availability which has worsened. Business groups argue for further cuts to ensure that wealth generating business contribute to growth. Trichet remained steadfast in his views. “The sentiment of the Governing Council is the same as last time, so if there is any interpretation that it goes in another direction, it is a wrong interpretation,” he opined. Inflation has been more persistent than forecast as he complained “in fact we are experiencing a rather protracted period of temporarily high annual rates of inflation resulting mainly from the increase in energy and food prices.”
This was confirmed by SpendingPulse, an arm of MasterCard, which reported higher sales but mostly fueled by high gasoline prices. The group commented “We are seeing fairly weak retail numbers after you take out gasoline sales.”
As I wrote yesterday, anything above 1.5901 is risky and so it proved. Does this mean we have seen the high? I need to a little more analysis this morning to get a better feel, but I wouldn’t rule it out. However, I can’t say that there is any great technical sign for a reversal except that the Euro now boasts a shiny new bearish divergence in the daily charts to team up with the weekly one. That in itself is not enough to make a call for a top. That requires some more (Euro) support levels to give way. With the current situation and the market with its “I sold Dollars” T shirt there is little chance they’ll give up the chance to buy into dips. Indeed, unless G7 comes up with something more solid than the rather stodgy “foreign exchange rates should reflect fundamentals” and “excessive volatility is not welcome” comments I wouldn’t want to bet against a lower Dollar still. Let’s just say the technical conditions are ripe but there is still a long way to go for confirmation of a larger Dollar reversal. It’s G7 day today. It could possibly indicate a long weekend and a range bound market. However, ears will be firmly placed to the ground awaiting rumors or statements. Not sure I’ll do that here though – there have been too many earthquakes here recently…
More later once the daily analysis has been done… There following releases are due from Asia due today: Japan – March See Also
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