Latest news on Asian Morning Update 5th May 2008
| Dollar on the brink of additional gains ? but can it make the leap? European releases from Friday April Forecast Actual
The U.K. pace is a concern and adds to the housing woes that threaten to further unsettle the nervous consumers. The BOE may well be saying the credit crunch is overstated but the Halifax building society has confirmed that house buyers are finding mortgages tougher to obtain with required deposits up at 20% of purchase price which rule out most first time buyers…
March Forecast Actual April
It should be noted that most sectors are still laying-off employees and this brought the hiring diffusion index down by 2.6 to 45.4 – well into contraction territory. ON an annual basis wages are on the decline – not a good sign for consumer spending which is the key to any recovery. With Factory Orders well above forecasts the Dollar clearly took a boost but stalled nicely at the 1.5340-56 support are in the Euro and just 5 points above the 1.0601 resistance in the Swissie. The fact that the Fed is expanding its Term Auction Facility (TAF) auctions and its swap agreements with other central banks also helped the Greenback climb higher. The expansion was made “in view of the persistent liquidity pressures in some term funding markets” which does suggest that the Fed still has concerns over the smooth running of the credit markets. It is also a better way to ease tensions compared to cutting rates and may well be another signal that the FOMC are more likely to retain an unchanged policy at the next meeting. So does this mean the Dollar’s gains can extend? It would appear to be the logical conclusion but this morning has rather surprisingly seen a small gap lower on open. The market has had the weekend to pause and reflect and while this week’s numbers were generally better than expected there are still significant doubts over whether consumers are going to use their tax refund checks to increase spending given the continuing layoffs. The 1.5340-56 Euro level is also technically important being the last major swing low. Break of this low (beyond 1.5295) would technically break the series of swing lows in the last uptrend and suggest potential for a longer lasting reversal. In general, the market tends to avoid such breaks on first attempts unless some dramatic event has occurred. However, last week’s numbers can hardly be described as dramatic. Short term momentum has also developed bearish divergences against price and could generate a correction back lower if key Dollar supports give way. Either way, if 1.5295-1.5340 breaks along with the Dollar bearish divergences the implications are really much more strongly Dollar bullish. Best strategy is to sit and observe and not commit to either direction until the markets’ will has been tested.
The following releases are due from Asia due today: Australia See Also
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