Latest news on Asian Morning Update 29th May 2008
| Dollar balancing on a knife edge Releases from Europe: May Forecast Actual
April Poor European data and positive durable goods orders from the States combined to trigger a further round of Dollar buying overnight that threatens to call an and to the correction from the 1.5283 Euro low. What may provide the final nail in the coffin for the Euro are the series of retail PMI numbers and general confidence numbers from the Euro-zone later today. However, the line between Dollar buying and selling appears so fine at the moment that any better numbers than expected could take it higher for one last attempt. What is very clear is that States figures are beginning to show a semblance of modest stability while European numbers continue to become more and more volatile. ECB officials have announced their resignation to a larger slowdown and this does seem to be the more likely medium term trend. The only uncertainty for the market are the renewed hawkish comments as Trichet and Co. continue to threaten consumers that they shouldn’t expect to recoup the large dents to their budgets through wage settlements else they’ll hike rates. Even if they did, to me it would be a very bearish sign indeed for the economy. As for the States there appears to be a more “sit back and wait” attitude. The Fed appear (without verbally acknowledging as such) that they feel they have done enough for now and look towards the fiscal stimulation package to take over the process of reviving demand from an ever ill-confident consumer. Recent housing figures have been less negative (not yet positive) and signs from the Fed regions have been cautiously positive, although still fragile. Cutting interest rates will not bring confidence back to the consumer and this must be the focus for the administration in the drive to encourage a sustainable recovery. Dollar-wise the outlook remains mixed in the short term but it shouldn’t be too long before it manages to confirm further gains and this time it should be sustainable beyond the highs seen so far…
The following releases are due from Asia due today: Australia Q1 Private Capital Expenditure +3.0% Japan – April See Also
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