Releases from Japan: Japan – January Forecast Actual
Machine Orders (MoM) +2.6% 19.6%
Machine Orders (YoY) - 4.5% 11.4% Japan – February
Money Supply M2+CD (YoY) +2.1% +2.3%
Broad Liquidity (YoY) +3.5% +3.5%
Eco Watcher’s Survey: Current 31.8 (prior) 33.6
Eco Watcher’s Survey: Outlook 35.8 (prior) 39.5 Japan’s machinery orders surged over January by a whopping 19.6% MoM and +11.4% YoY to swamp forecasts of a mere +2.6% and – 4.5% respectively. It is a very volatile series but the sheer size of the bounce is quite marked as the figure is often used as a leading indicator of corporate capital investment, which accounts for about 15% of Japan's gross domestic product. It will certainly raise some hopes that Q1 will still manage to provide a positive GDP. Another number that also surprised was the Economy Watcher’s Survey which saw the current index rising by 1.8 points in February to 33.6 while the outlook managed a rise of 0.7 points to 39.5. It does still lie well below the 50 boom/bust level but it does reflect a modest recovery in confidence in business expectations. It may possibly be linked to the price hikes currently being implemented in Japan which are restoring at least some of the profit margin lost while wholesale prices have been rising.
The following economic releases are due today:
January
German Trade Balance EUR 15.5bn
French Industrial Production (MoM) +0.0%
French Industrial Production (YoY) +2.2%
French Manufacturing Production (MoM) +0.2%
French Manufacturing Production (YoY) +1.7%
French Trade Balance EUR - 4.0bn
Italian Industrial Production (MoM) +0.6%
Italian Industrial Production (YoY) - 2.7%
Italian Industrial Production n.s.a. (YoY) - 1.2%
U.K. Industrial Production (MoM) +0.1%
U.K. Industrial Production (YoY) +0.5%
U.K. Manufacturing Production (MoM) +0.1%
U.K. Manufacturing Production (YoY) +0.1%
U.S. Wholesale Inventories (MoM) +0.5% February
U.K. PPI: Input (MoM) +1.6%
U.K. PPI: Input (YoY) 18.3%
U.K. PPI: Output (MoM) +0.6%
U.K. PPI: Output (YoY) +6.0% March
Euro-zone Sentix Investor Confidence 2.70
The Dollar express kept right on running through the day extending losses beyond the levels I had wanted to hold and kept on going to the lower weekly minimum target against t he Swissie, just above the major lows around 101.20-40 Yen but only managed to trip over the 1.5346 target in the Euro by 13 points.
Now all round the Dollar is seeing bullish divergences in both hourly and 4-hour charts following the sharp pullback from Friday’s lows. We can take these as a warning, especially as we have broadly held some important levels. However, given the relentless nature of the Dollar losses it does also tell us to take care. What we do need to do is try and work out what will confirm reversals. Well, above 103.23-51 Dollar-Yen and below 1.5279 Euro would appear to be the first signals. The Swissie is a little less clear but I’d suggest the 1.0307-35 area while the Pound needs to drop below 2.0036-66. Now this recovery would only be a correction so we shouldn’t get too carried away. It should be quite deep and last over a period of several days at least may be as long as a week. There are still new Dollar lows to come but if I have go the long term monthly chart right then it should be the last decline for the year… A bit hard to believe perhaps… but we’ll tackle that when we approach the long term targets. However, if the correction scenario works through expect it to be choppy & erratic… Take profits early.
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 103.23-51 1.5502-15 1.0335-80 2.0329-67
Res: 102.40-80 1.5430-72 1.0255-83 2.0232-48 Spt: 101.20-40 1.5313-34 1.0165-88 2.0155-78
Spt: 100.26-46 1.5254-79 1.0110-31 2.0066-96 | 
