News from Europe:

The Bank of France has retained its estimate of Q1 GDP at +0.4% based on a survey of business leaders. On Friday the central bank released its business sentiment index that eased by 1.0 to 105 from February.

The survey reported that industrial activity remained stable in March, new orders were little changed and order books were down from February but were above normal levels. It retained a favorable outlook over the coming months.

However, an independent poll of French institutional economists by the government found that the average GDP growth forecast for the current year is 1.6% and thus below the government’s estimate of 1.7%-2.0%.

And away from Europe the new BOJ governor Shirakawa stated, “Japan's economy currently faces many downside risks at home and from the rest of the world.”

He noted that the instability in the financial markets, the slowdown in the global economy, and worsening sentiment among smaller firms because of high energy and raw material costs are all contributing to increased uncertainty.

The following economic releases are due today:

February
Euro-zone Industrial Production   (MoM)    +0.2%
U.S. Business Inventories                        +0.5%

March
U.K. PPI: Input                         (MoM)     +1.9%
U.K. PPI: Input                          (YoY)     19.3%
U.K. PPI: Output                       (MoM)     +0.5%
U.K. PPI: Output                        (YoY)     +5.6%
U.S. Advanced Retail Sales         (MoM)     +0.1%
U.S. Retail Sales less Autos        (MoM)     +0.2%

So the G7 meeting is over, done dusted and the impact of the slightly firmer communiqué on Forex rates has made its impact and Europe is squeezing the rebound in the Dollar seen at this morning’s open.

Unless a firmer statement is backed up with concrete action there is little value in it. Quite clearly finance ministers and central bankers are uncomfortable with the movements seen but there is little value in making empty statements.

Bottom line – if recent movements are considered excessive, causing the current market uncertainty to worsen the credit crunch then they must act to contain the moves. If these moves are not considered damaging to the credit crunch then they must accept that unless there are reasons to hold Dollars the market will continue to play pass the parcel during which the Dollar’s value will decline.

If they feel that the moves are excessive and are being pushed by excessive leveraged trading then they must act to solve the problem. Indeed, a large part of the credit crisis is the poorly managed risk of highly leveraged financing.

Cure that and they’ll cure the weakness in the Dollar.

Until then the market will need action and not words to cause them to doubt that holding short Dollar positions is too risky.

Note important support and resistance areas:

         USDJPY        EURUSD       USDCHF       GBPUSD
Res:  102.56-93    1.5854-87    1.0151-71    1.9842-48
Res:  101.60-97    1.5785-00    1.0050-75    1.9746-67

Spt:   100.30-40    1.5653-91    0.9949-64    1.9605-48
Spt:     99.34-60    1.5587-94    0.9872-02    1.9505-46

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