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195883 Resource 128466 128654 128654 1201593743881 1201593743881 Controlled European Mid Morning Update 29th January 2008

Even if there’s a will – at the moment there’s no way

Releases from Europe:    December                          Forecast   Actual Swiss Trade Balance    CHF    0.95bn   0.20bnJanuary French Consumer Confidence  - 30.0     -34.0 Switzerland saw its Trade Surplus squashed like a pancake in December with a shock release of just CHF 198mn. Exports sank by 3.4% while imports fell by only 1.9%. Given Roth’s comments regarding the lack of urgency in a rate decision and that inflation will be softened by lower growth this will quell any though of a rate hike and could well soften the Swiss Franc against the Euro. The continuing drop in French consumer confidence conflicts with the stronger business confidence announced last week and the high level of spending in December. The Bank of France is on the bearish side also having revised expected Q4 growth to a mere 0.5%. Elsewhere the Deloitte Economic Review has said that the decline in the housing market will be leading the economy into its weakest period of growth for 15 years – possibly even into recession. It sees house prices falling by 5% this year impacted by the credit crisis making borrowing more difficult. Add to that the highest average pay increase in 15 years and we have a nasty mix of lower growth and high inflation. The Pound may be making gains now, but it isn’t that far from key resistance with the next leg lower due to begin over the next 5 days. The following economic releases are due today:December Swiss UBS Consumption Indicator  German IFO Business Climate Survey U.S. Durable Goods Orders                    (MoM)   +1.9% U.S. Durable Goods Orders ex transport  (MoM)   +0.0%January Italian Business Confidence                                 91.3 U.K. CBI Distributive Trade Reported Sales U.S. Consumer Confidence                                  87.5The Fed begins its two day Market Committee Meeting U.S. new homes sales took a dive off the cliff and the Dow Jones Index ticked higher. It seems as if most attribute this to the prospect of lower rates at tomorrow’s FOMC meeting and this is almost a foregone conclusion. The bigger question market lies over the extent of the cut. Futures appear to be discounting a 90% chance of a 50bp cut encouraged by the drop in new home sales. This would bring rates lower by 1.25% over the past 10 days. However there is a question mark over exactly what purpose the 75bp emergency cut was targeting. Equity market fear is one thing and to ease the pressures on borrowing is another. The fiscal stimulation package is really intended to ease pressures in the housing market. There is therefore an argument that the Fed will cut by only 25 bp and save ammunition for a rainy day.The Nikkei recovered half of yesterday’s losses and today’s releases have provided a slightly better than anticipated picture of the economy. However, even the BOJ acknowledge the economy is slowing and with Dollar-Yen at current levels there is likely to be further squeeze on exports.There is little argument for the Yen to strengthen at this point.With the Dollar close to recent lows there is little appetite to push it much lower and the specter of the FOMC decision and the U.S. Q4 GDP release tomorrow the prospects remain for subdued trading ranges. Note important support and resistance areas:         USDJPY        EURUSD       USDCHF       GBPUSD Res:  107.88-30    1.4885-21    1.0988-15    1.9954-62 Res:  107.12-43    1.4796-32    1.0918-45    1.9890-00Spt:   106.00-39    1.4728-55    1.0845-71    1.9793-22 Spt:   105.23-64    1.4659-80    1.0806-11    1.9677-27 9 application/xml false consumer confidence currencies Deloitte FED FOMC Forex French FX house prices Swiss trade surplus UK US Want to know more about Forex? Read about the largest global market http://www.gftforex.com/land/index.asp?aid=446 Mozilla/4.0 (compatible; MSIE 7.0; Windows NT 5.1; hc; .NET CLR 1.1.4322; .NET CLR 2.0.50727; MS-RTC LM 8) 127.0.0.1 127.0.0.1 ICopsey 202.216.243.97 false true false false true 128466 blog blogsite/GFTForex/web