News from Europe: There have been no releases so far this morning but a couple of snippets to note. The German HWWI group has downgraded Germany’s forecast growth for 2008 to “under 1.5%.” This comes very soon following the last downgrade 3 months ago from 2.3% to 1.7%. The macroeconomic division head commented that the downgrade was in response to higher oil prices, the weakness of the U.S. economy and the strength of the Euro. Watch out for the next downgrade in 3 months time… Out of interest it is interesting that prior to the long Easter weekend the market has turned to rumors to try and get the market moving. Apparently someone has noted the cancellations of visits by BOE and ECB officials. This obviously generated enough excitement to get traders speculating that there is an emergency central bank meeting. First was the suggestion that they are planning concerted intervention and this was quickly followed by suggestions that a non-U.S. bank was undergoing problems. It is probably more a matter of too much excitement, hangovers or hormones.
The following economic releases are due today:
January
Italian Industrial Orders (MoM) +1.3%
Italian Industrial Orders (YoY) +5.0%
Italian Industrial Sales (MoM) +1.1%
Italian Industrial Sales (YoY) +4.5%
Euro-zone Trade Balance EUR - 7.0bn
Euro-zone Construction Output (MoM)
Euro-zone Construction Output (YoY) February
U.K. Claimant Count Rate +2.5%
U.K. Jobless Claims Change - 5.0K
U.K. ILO Unemployment Rate 5.2% March
U.S. MBA Mortgage Applications
U.K. CBI Industrial Trends
The recover in the Dollar following the better than feared quarterly results from Goldmans and Lehmans stalled at Asian open as the market takes advantage of higher Dollar levels to sell into.
It is one element taken out of the manic fear that the market holds but there are few who consider that the 75bp cut by the Fed will have any impact on the general air of doom and gloom that surrounds the world’s largest economy. The housing numbers this week haven’t been that bad but the sector remains stagnant at the very best description and the slowest pace of building permits in 17 years is hardly an indication of any bottoming in the housing market. Paulson is hanging his hat on the fiscal stimulus package and the mortgage relief program. However, 7 months after the horse has bolted is a little late to effectively cause any great impact. Tax refund checks don’t get sent until May so it will be the 3rd quarter before any glimpse of economic spring buds begin to show. Currently the very best that can be hoped for the Dollar is a temporary pause as the market adjusts its positions ahead of the long weekend but even if it manages a further recovery today the upside is definitely limited.
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 100.95-23 1.5791-31 1.0132-60 2.0192-18
Res: 100.10-43 1.5727-57 1.0018-52 2.0149-74 Spt: 98.32-63 1.5612-50 0.9900-26 2.0042-72
Spt: 97.51-81 1.5495-31 0.9780-00 1.9941-77 | 
