News from Japan: Following the rate decision from the Bank of Japan it noted in its post meeting report that “Japan's economy is expanding moderately as a trend, although the pace of growth has been slowing, mainly due to the drop in housing investment and the effects of high energy and material prices.” It also commented “Corporate profits have remained high, although they are leveling off” with margins being squeezed by higher prices for materials and energy. Pretax profits of non-financial companies fell for the 2nd consecutive quarter in Q4 and this is a trend that is likely to continue.
The following economic releases are due today:
January
German Industrial Production (MoM) +0.3%
German Industrial Production (YoY) +4.6%
Euro-zone Leading Index
U.S. Consumer Credit USD 7.0bn February
U.S. Change in Non-Farm Payrolls 30K
U.S. Unemployment Rate 5.0%
U.S. Change in Manufacturing Payrolls - 25K
The Euro and Pound are up just over 1% over the week while the Swissie has gained nearly 2% and the Yen has seen less movement this week. Since the beginning of the year the numbers are obviously larger – at +4.6% for the Euro, almost 10% for the Swissie, 8% for the Yen and a meager 1.2% for the Pound.
And we haven’t yet seen one quarter go by. The U.S. economy has weakened by far greater than the Fed had bargained for – or admitted – and U.S. consumers are tightening their belts with the threat of jobs losses looming just overhead. Yet the Fed still maintains that the year will see positive GDP growth by year end based on the mortgage relief plan and fiscal stimulation package. But has it come in time? Recent economic releases have repeated highlighted the sharp decline and Bernanke has almost verbalized a promise for further rate cuts. But for the moment nothing appears to be suggesting that there could be a reprieve. European numbers have improved marginally and that is expected to be exemplified in today’s German industrial production while the States is battered by blow after blow. Today could well be a repeat of the same with the non farm payrolls expected to reflect the growing layoffs which have been shown though the rising continuing claims figures and suggested by the private surveys by Challenger and ADP. So what will stop the Dollar from falling? Technically there are no outstanding signs except for the weekly and monthly charts which suggest that the losses are probably being over extended. However, as a timing tool these are very vague and would still allow quite further losses. Fundamentally we need better releases from the States but these do not like being forthcoming in the near future. This only leaves central bank intervention but it is hard to rely on a process which has been locked away in dusty cupboards for more than a decade. Times are tough and the circumstances exceptional by any definition. It could be another tool to win time and stall the increasing inflationary pressures in the States that could further depress the consumer spending market. It’s not an impossibility so don’t rule it out…
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 103.26-55 1.5472-02 1.0380-00 2.0222-48
Res: 102.83-13 1.5428-46 1.0280-07 2.0138-85 Spt: 101.82-00 1.5345-49 1.0190-08 2.0060-81
Spt: 101.20-25 1.5255-75 1.0110-23 2.0000-15 | 
