The Swiss UBS Consumption Indicator dipped by 0.5 points over July to 2.26 but remained well above the long term average which trails at 1.49. The figure is not any real surprise with the economy having been rising along for some months and suggests there is still room for continued growth while the economy is protected from the impact of the credit crunch fears. The German IFO Index surprised to the upside with the August numbers failing to decline as much as forecast:
Forecast Actual
Business Climate 105.4 105.8
Current Assessment 110.7 111.5
Expectations 100.2 100.4 These are good numbers indicating above trend growth with the current assessment still remaining decidedly firm although without too much of a surprise the expectations component was the softest of all, but still remained above forecasts. The IFO did observe that confidence has taken a knock due to the recent turmoil but still consider that consumption should soon recover. The Euro-zone M3 money supply saw a shock rise to 11.7% YoY in July showing that there is still above average strength in money supply at present. The ECB has tended to desensitize the significance of the figures but the fact that the pace of money supply has doubled over the past two years while interest rates have risen by 2.0% is somewhat of a concern. At the moment the significance of the numbers will be overrun by the current liquidity concerns but the ECB will duly take note and this number can only underline the basic hawkish sentiment in the Bank. The following economic releases are due today: August
U.S. Consumer Confidence 105.0
U.S. Richmond Fed Manufacturing Index 1.0 The minutes of the August 7th FOMC meeting are due to be released The Dollar’s recovery has continued today but there is no guarantee that it will continue for too long. It is very much a day of unknowns being within a corrective structure in which it could break either way without causing any real significant move. The German IFO and robust money supply figures for the Euro-zone should underpin the Euro with the 1.3602-16 area key support. Risk is higher back to the 1.3684 high with resistance beyond that at 1.3735-77. This may well see the Swissie dip below 1.1992 with key support at 1.1947-65 and distant support at 1.1908. The Pound on the other hand has dipped a little to far and is unlikely to get back to the 2.0190 high. Dollar-Yen remains subdued but even if there are further dips these should be limited with the underlying risk still higher. Note important support and resistance areas: USDJPY EURUSD USDCHF GBPUSD
Res: 116.74-12 1.3734-77 1.2130-60 2.0138-65
Res: 115.80-00 1.3664-84 1.2046-65 2.0090-00 Spt: 115.14-35 1.3602-16 1.1992-04 2.0005-27
Spt: 114.15-52 1.3539-67 1.1947-65 1.9900-20 | 
