Releases from Japan:
Prior Current
March Machine Tool Orders (P) (MoM) -0.5% +6.9% At long last the BOJ has acquiesced to the market’s clear decline and has dropped the prior assessment of being in a “moderate expansion” in favor of a “slowing in economic growth” due to high energy prices. However, it still insists that following the current situation it will return to moderate growth once more. In spite of CAPEX plans crashing in the Tankan Report it also maintains that CAPEX and consumption will remain firm. It also notes that small firms are feeling the squeeze in current market conditions but sees supply-demand as more or less balanced. All I can say is that in my experience Japanese consumers are more conservative than their U.S. or European counterparts and this places domestic demand under continued pressure while energy prices remain high. One should also remember that overseas investments have been popular with Japanese with local returns low and I know of several people personally who have been burned by subprime linked investments…
Releases from Europe:
February Forecast Actual
German Trade Balance EUR 15.7bn 16.9bn March
Nationwide Consumer Confidence 77.0
Germany’s February Trade Balance narrowed from January’s EUR 17.1bn but actually came in higher than forecasts. Of all the EU member countries Germany has remained the most stable performer. Even so it is seeing a gradual erosion in growth but this has been fairly mild up to this point. How consumers react could prove to be the single biggest issue to face the economy.
In an unexpected release the Nationwide Building Society saw its consumer confidence index drop to its lowest level since launch in May 2004. Weakening property prices, uncertainty over the credit crisis and inflation are undermining confidence in their jobs. Only 14% of the respondents felt their economic situation will be better in six months time…
The following economic releases are due today:
Q4
Euro-zone GDP (F) (QoQ) +0.4%
Euro-zone GDP (F) (YoY) +2.2% February
U.K. Industrial Production (MoM) +0.1%
U.K. Industrial Production (YoY) +1.2%
U.K. Manufacturing Production (MoM) +0.0%
U.K. Manufacturing Production (YoY) +1.5%
U.S. Wholesale Inventories (MoM) +0.5% Globally, consumers appear to be closing their check books and cutting up their credit cards to preserve capital ahead of what is quickly being recognized as a systemic hemorrhaging of the global credit markets. The act of consumers shutting up shop will only serve to deepen the crisis and this will no doubt be a topic of discussion at this week’s G7 meeting. Confusion has set in as the Dollar fails to bend to the collective bearish will of the market. In Asia it has remained range bound but with a mild bullish bearish bias. However, with the BOE and ECB rate decisions due tomorrow the easy option of succumbing to the general malaise looks to be likely as the motivation to push the Dollar’s limits in either direction remains low. Early European numbers are having no impact and mainland numbers to come are unlikely to inspire any strong reactions. If there is any weak area to aim for then it is in the Pound with the February industrial and manufacturing production numbers capable of undermining the Pound further if these turn out less than forecast. Equally, any much stronger numbers will probably cause the market to review the expectation of a 0.25% cut tomorrow by the BOE. Otherwise today could see a repeat of yesterday’s subdued trading.
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 103.86-00 1.5887-01 1.0249-73 1.9750-74
Res: 102.45-82 1.5750-98 1.0171-17 1.9690-12 Spt: 101.74-16 1.5644-72 1.0065-90 1.9605-50
Spt: 100.87-22 1.5578-10 0.9980-13 1.9505-46 | 
