European releases overnight: January Forecast Actual
German Factory Orders (MoM) - 0.4% - 1.5%
German Factory Orders (MoM) +9.9% +9.5% February
U.K. HBOS House Prices (MoM) - 0.2% - 0.3%
It is no surprise with output prices rising at their fastest pace in 8 years that the BOE refrained from cutting rates once again. Such a decision comes with no press conference but we have had clear messages from BOE officials who just don’t see justification for lower rates right now.
The downward pressures on the economy are acknowledged but the slowdown has been moderate thus far and until signs of additional slowing appear we are likely to see a stand off in the hope that current levels of interest rates can soften the inflationary impact. Frankly, given the sharp rise in food and oil prices with farmers preferring to grow bio-fuel crops rather than food there will be no real improvement in inflation but conversely could get worse. The head of the U.N. world food program warned that this rise in basic food costs could continue for a further 2 years. The ECB too kept rates on hold as expected. Trichet has altered the tone of his comments though when saying “The current monetary-policy stance will contribute' to curbing inflation.” This is a step down from his prior outright hawkish comments but there can be no doubt that he’ll not favor any cut either with a later comment “The firm anchoring of medium- to long-term inflation expectations is of the highest priority to the Governing Council.”
States releases overnight:
Q4 Forecast Actual
U.S. Mortgage Delinquencies (QoQ) 0.54% (prior) 0.83% January
U.S. Pending Home Sales (MoM) - 0.8% +0.0%
February
U.S. Continuing Claims (23rd) 2805K 2831K March
U.S. Initial Jobless Claims (1st) 360K 351K
U.S. figures were mixed once again, better figures coming in the form of a better than forecast pending homes sales number and marginally lower initial jobless claims. These were offset by the strongly higher mortgage delinquencies in Q4 (the highest in 23 years) and the steady upward trend in continuing claims.
The Boston Fed President Rosengren summed it up by observing “As long as housing prices continue to fall, the decline increases the risks to borrowers, lenders, markets and the economy. Significant further declines in home prices could greatly complicate efforts to resolve current problems.” Indeed, the U.S. economy thrives on consumer spending. We could be reviewing this period in years to come describing the end of the initial globalization bubble as the “big bang.”
So there was nowhere else for the Dollar to go except lower again. This year the Dollar has lost 5% against the Euro and 10% against the Yen. This is on top of last year’s losses. No wonder central bankers are clamoring for intervention.
Today appears to be pointing in the same direction. The economic release calendar is fairly light but does include some potential heavy hitting numbers. Given the strong PMI numbers for the past two months the German Industrial Production has more upside risk than not. The U.S. non-farm payrolls figure has more downside risk. The only barriers to stronger losses are at 1.5427 Euro, 1.0200 Swissie and 101.82-00 Yen. If we penetrate these then the outlook is for another 100-200 points. The market will take a break up until early Europe and digest the German industrial production numbers then sit back again and wait for the U.S. employment figures. It’ll take a brave trader to oppose the current trend…
More later once the daily analysis has been done…
The following are economic releases from Asia due today:
Australia AiG Performance of Construction Index
Bank of Japan Monthly Report The Bank of Japan are due to announce their rate decision | 
