| 4/15/2008
3:28 PM: EUR/$..1.5774 $/JPY..101.58 GBP/$..1.9606
$/CHF..1.0068 AUD/$..0.9238 $/CAD..1.0190
USD Bounces on Data
The dollar edged up higher against the majors
in the Wednesday session following higher than
expected producer prices and a better than forecast
NY Fed manufacturing survey. The Mach PPI shot
up to 1.1%, versus 0.3% a month earlier and 6.9%
y/y from 6.4%. The NY Fed manufacturing survey
improved by more than expected to 0.63 compared
with calls for an improvement to minus 17.5 from
minus 22.23.
Sterling Retreats
The pound slumped to its lowest level in nearly
two months against the dollar just above the 1.96-level
while falling to a fresh record low versus the
euro at 0.8062. The catalyst for the weakness
in the currency stemmed from softer than expected
UK data, which supports the case for additional
rate cuts from the Bank of England. The RICS housing
index posted its worst reading in over 30-years
The March consumer price index reports were less
than consensus expectations, with the headline
figure down to 0.4% from 0.7% a month earlier
and unchanged on an annualized basis at 2.5%,
softer than calls for an increase to 2.6%. The
retail price index also declined to 0.3% versus
0.8% from February and down to 3.8% compared with
4.1% a year earlier.
In the coming session, markets await the February
labor report, with the unemployment rate seen
unchanged at 5.2%. The claimant count unemployment
change is estimated at -1k, versus -2k a month
earlier.
Cable finds support at 1.96, followed by 1.9550
and 1.95. Subsequent floors will emerge at 1.9460,
backed by 1.9430 and 1.94. Resistance is seen
at 1.9620, followed by 1.9670 and 1.97. Additional
ceilings are eyed at 1.9740, followed by 1.9780
and 1.98.
Euro Retreats vs USD
Germany’s April ZEW economic sentiment
was sharply worst than expected at minus 40.7,
versus forecasts for an improvement to minus 29.0
from minus 32.0 in March. The ZEW current conditions
survey improved to 33.2, versus 32.1 a month earlier.
Eurozone inflation reports are due out in the
Wednesday session, with Germany’s CPI expected
to edge higher to 3.1% y/y and hold steady at
0.5% m/m. The Eurozone inflation reports are also
expected to rise, up 0.9% m/m and 3.5% y/y. Stronger
than expected inflation data will likely support
the euro given market expectations for the ECB
to maintain its focus on inflation and leave policy
unchanged.
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