Latest news on European Morning Update 29th May 2008
| Dollar firm in Asian trading Releases from Australia: That’s quite a shortfall against forecasts and raises a lot of questions for growth prospects over the rest of the year. However, to offset this it still seems as if Australian businesses still retain a mildly bullish outlook and still expect to raise CAPEX over the rest of the year. This comes predominantly from mining and manufacturing although retail & financial remain soft. Thus the main risks to look out for are from lower consumer confidence and spending together with rising input costs being passed into inflation which could stifle domestic demand.
April Undoubtedly the downward pressure on spending is already in place here in Japan as retail sales slipped to a mere +0.1% YoY and kept up only by the high level of fuel costs. The Ministry of Economy, Trade and Industry surprisingly maintained their assessment of sales as “showing a sign of picking up.” However, this is the worst reading since last July and the +0.1% YoY rise can hardly be described as “picking up” when so much is being diverted into rising fuel and food costs. Fuel retailers recorded a rise of 3.4% over the month while cars were on demand following the petrol tax expired at the end of March. It has since been reintroduced. We should remember that consumer confidence is at a five year low, the outlook for exports remains weak and the prospects for sales to “pick up” are very unlikely.
Q1 April May
However, there are some levels we need be mindful of and given the situation in the Aussie and possibly Cable too the Dollar’s upside may begin a little more erratically for a day or two. The Aussie is bubbling just below the key 0.9666 & 0.9720 targets, the lower seeming more likely. The Pound actually held up quite well but an alternative larger picture does suggest fairly good resistance between 1.9880-1.9909 and while this holds the downside begins to beckon. As for Dollar-Yen it reached the 105.33 resistance almost perfectly and I still see potential for another rally here to 105.68-00 at least. I’d still prefer 106.82 but I’ll wait for that one. So if anything is favored today it is a little more upside for the Dollar followed by a correction. Key Dollar resistance levels seem to be around 1.5549 Euro (max 1.5513) and 1.0452-86 Swissie. While these hold a pullback is possible else the Dollar could well accelerate quite strongly higher…
USDJPY EURUSD USDCHF GBPUSD Spt: 104.37-44 1.5549-88 1.0348-57 1.9732-64 See Also
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