Latest news on European Morning Update 7th May 2008
| Asian trading sees the Dollar trade in narrow ranges Releases from Asia: April AiG Performance of Construction Index -5.1 points to 42.6 Australia’s construction sector saw activity slump even further in April to 42.6 to confirm the industry is now in contraction. This is the lowest reading since September 2005. Higher interest rates, tighter credit restrictions and a general slowdown in the economy have all contributed. New orders fell to their lowest level in 20 months which confirms further contraction in the months ahead. British consumers are digging their trenches as they see the recent golden years turn back into gloom. The Nationwide reported their confidence index had dropped to the lowest level since inception 4 years ago to 70.0. Indeed, the one month drop was the largest on record. Higher food and energy prices, lower house prices, higher interest rates and concern over their jobs are all taking their toll so it is no wonder that confidence surveys are seeing sizeable drops and this report echoes the GfK report that saw confidence drop to the lowest level since the 1990’s recession.
March April
However, if that is the case I still feel there is a little further to go in this correction and thus today does have slightly greater odds of seeing losses moving to new near-term lows. These losses appear to be valid across the board with even Dollar-Yen sharing the same corrective downward move but an eventual high around 106.82 has always been my target and that still has not changed. Therefore, for the moment, Dollar losses should be limited and I suspect these will stall around 1.5640 Euro, 1.0353-73 Swissie and 102.84-103.33 Yen. Where there is a bigger headache is in the Pound where the degree of erratic swings has really clouded the entire picture. Yesterday’s whiplash down to 1.9634 looks to have been a hangover from the previous day but to confuse things momentum does till look particularly weak and this needs to be handled with kid gloves. Here I’d really like to see some break one way or another to provide a little more clarity in terms of wave relationships to clear up exactly what pattern is developing. The prior medium term view of a drop to 1.9335-61 could well be resurrected if we see a clean break below 1.9599 but even then we’d have to respect support around 1.9548. Back above 1.9808 would help the upside more.
USDJPY EURUSD USDCHF GBPUSD Spt: 104.50-60 1.5450-76 1.0426-50 1.9634-75 See Also
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