Latest news on Asian Morning Update 21st May 2008
| The Dollar takes a ride on the swings and roundabouts? European releases overnight: May
But higher rates will make French and Italian officials squeal while the inflation besieged worker will begin to contemplate more aggressive union action that could provide the ECB with the slowdown they feel will curb inflation. As for where oil prices will be by then we can only ponder, but there is no sign of any topping action yet as prices burst above 9 pb. Of course the ECB sees their economy in good shape, standing by their decisions to retain an unchanged policy for the past 11 months. However, the U.K. Chancellor Darling has requested that G8 consider the current levels of oil as a threat to the global economy. Quite rightly so too.
April Forecast Actual
This too was the subject of comments from the co-chief executive officer of PIMCO who said that the credit crisis will more likely “morph rather than simply disappear” and would transfer from Wall Street to the High Street through higher inflation and lower consumer confidence. He feels this will cause the U.S. economy to remain in a recession Very clearly from my past comments I totally agree with that sentiment… Finally from overnight a sign of what will come from the FOMC minutes tonight as Kohn he offered “With the information now in hand, it is my judgment that monetary policy appears to be appropriately calibrated for now to promote both rising employment and moderating inflation over the medium term.” And if the market is looking for a definite statement of where interest rates are heading then his next comment will dampen those expectations as he commented, “But a large measure of uncertainty surrounds that judgment and as the economy evolves, so will the appropriate stance of policy.” So the Dollar lost out further yesterday and there is probably just a little more to go but should then turn into further consolidation. Yesterday’s losses tend to point to further losses into next week but we’ll then need to be more cautious. The market is slowly unwinding its premature Dollar bullishness, slapped in the face by lack of follow-through in U.S. economic releases and the less negative European ones. As mentioned last week we shouldn’t be too surprised with this since market turns tend to provide volatile statistics. The release calendar today offers less but still has the benefit of the German IFO release tonight. This will be interesting to see whether it matches yesterday’s ZEW. Overall a slowdown is more or less a given this year with the greater question being just how deep this will be and whether there is any prospect of a hike in rates by the ECB. For the moment the comments from the ZEW chief should contribute to the current weakness in the Dollar. However, as we move into next week the prospect of a slew of consumer confidence and European retail PMI numbers could see that weakness come to a halt if figures show that consumers are being more than unruffled by the attack on their wealth.
The following releases are due from Asia due today: Australia See Also
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