Releases from Japan:
Prior Current
April Machine Tool Orders (YoY) +3.3% +0.3%
No real news from Europe as yet but the Italian Industrial Production is due very soon.
The following economic releases are due today:
March
Italian Industrial Production (MoM) +0.0%
Italian Industrial Production (YoY) - 1.0%
U.K. Visible Trade Balance GBP - 7.5bn
U.K. Total Trade Balance GBP - 4.4bn April
U.K. PPI Input (MoM) +1.8%
U.K. PPI Input (YoY) 21.4%
U.K. PPI Output (MoM) +0.6%
U.K. PPI Output (YoY) +6.4%
The Dollar has started the week on a firm note following the decline into Friday’s session and given the poor news from Australia and Japan it highlights how the global slowdown is spreading its influence across the entire globe.
Australia’s economy was rising high at the close of last year but numbers have recently taken a nose dive with both consumer and business confidence suffering under the combined weight of high inflation and high interest rates. With Australia seeing new orders take a tumble to the lowest levels in 6 ½ years the golden years have quickly become a distant memory. The same is true for Japan as it comes under the triple pressure of the strongest rise in inflation since the early 90’s, a sharp pullback in the housing market and industry that has succumbed to weakening global demand and a prohibitively high Yen value. The BOJ governor may well want to hike rates when he can but the prospect seems very dim with the current conditions and knowing that any hike would send the Yen even higher which will threaten exporters’ ability to compete. As we move into a week which is has a good range of industrial production and inflation numbers the market is going to be facing decisions on which of the U.S. and European economies is likely to face the larger decline. Quite clearly European numbers are worsening but is probably still at the earlier stages and this is likely to still present some volatile data releases which could see the market swinging first one way and then the other. The U.S. has provided some modestly stable numbers over the past 2 weeks but there is no guarantee that these will continue. Indeed, it is still too early for the tax rebates to begin to make any strong impact and with corporate profits still in an unstable patch the prospect of those more positive numbers continuing is unlikely. Indeed, it seems as if the Dollar’s recovery over the past few weeks has been used to establish further short positions as the IMM data highlights an increase in Dollar short positions over last week. With the market focusing on the fact that the ECB will unlikely be cutting rates anywhere in the near term the prospect for the Dollar to maintain its gains is very slim. There may be room for some short term gains still, but look for the week to end with the Dollar on the back foot again.
Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 104.50-60 1.5549-93 1.0590-23 1.9619-31
Res: 103.83-08 1.5487-13 1.0524-56 1.9500-30 Spt: 102.85-05 1.5331-74 1.0430-50 1.9413-53
Spt: 102.18-40 1.5250-83 1.0331-69 1.9335-61 | 
