News from Europe:

March                                                    Forecast    Actual
French Industrial Production         (MoM)    - 0.4%     - 0.8%
French Industrial Production          (YoY)    +1.6%      +1.0%
French Manufacturing Production   (MoM)    - 0.5%     - 1.5%
French Manufacturing Production    (YoY)    +1.8%      +0.4%

The beginning of the year made it look as if the European economy had shrugged off any negative impact of the turmoil seen in the final months of last year. However, the past few weeks have brought a series of disappointing numbers and the French industrial production numbers for March add to that series.

Vehicle production was down for the second month in a row and manufacturing output is suffering on the back of a steadily lower order book, a trend that doesn’t look likely to change.

The following economic releases are due today:

March U.S. Trade Balance   USD -61.4bn

There is just the U.S. trade balance to be released later it is a bit tough to get overly enthusiastic about the prospects of frenetic European and States sessions. Without a doubt the market’s obsessive hate complex with the Dollar was pretty much left as a memory this week and while any sustainable recovery in the greenback is hardly likely to be direct, the scene is now set for a very different H2 than we experienced last year.

Indeed, as this week closes we have probably completed the bulk of the first recovery. There may be a little more to go early next week, but while recent numbers have been better from the States there does remain two areas which will remain as detractors from outright bullishness.

The housing market is nowhere close to recovery and this will no doubt take another 9-10 months until next year’s seasonal upswing around March time. Employment remains on the defensive and this will still cause moments of concern, but this time not blind panic. With oil above 0pb and food shopping taking up a larger share of household spending consumers are unlikely to be dancing in the street.

So the market may, once again, be getting a little ahead of itself in pushing the Dollar higher. Choppy times are most likely over the next 2-3 months as economic releases more likely to be volatile during this period of transition.

Note important support and resistance areas:

           USDJPY       EURUSD       USDCHF       GBPUSD
Res:  104.30-70    1.5549-93    1.0623-65    1.9637-68
Res:  103.50-70    1.5475-14    1.0513-40    1.9570-00

Spt:   102.66-84    1.5390-20    1.0400-26    1.9500-23
Spt:   101.83-18    1.5283-20    1.0353-73    1.9413-53

See Also

• The foreign exchange market
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