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201356 Resource 128466 128654 128654 1207633472183 1207633472183 Controlled European Morning Update 8th April 2008

Dollar soft but off lows in Asian trading

Releases from Australia:                                              Prior    Current March NAB Business Confidence   - 2.0     - 4.0 March NAB Business Conditions    11.0       7.0Following on from yesterday’s softer data from Australia the NAB business confidence survey confirmed a deterioration in conditions over March. Confidence is now at its lowest level since September 2001. Sales dropped to its lowest level since October 2005 and the employment index to its lowest level since November 2006. NAB forecast interest rates to remain unchanged until early next year when they anticipate a reversal of the up cycle. Releases from Japan:                                         Prior     Current March Bankruptcies  (YoY)   +8.3%   +23.0% Bankruptcies rise in Japan once again, from +8.3% in February to 23.0% in March, the highest level since the survey began 3 years ago. The rise in oil prices has had a major impact while construction companies have also been losers following Japan’s own housing pullback. With the global slowdown expected to hit Japanese exporters the number bankruptcies is expected to remain high and this does risk further erosion of the employment market that could consequently hit consumer spending numbers even further. Ahead of the G7 meeting Nukaga has been voicing his concern over the global problems which are impacting Japan on two fronts. With the U.S. as a major importer of Japanese products the export economy is taking a pounding while the high flying Yen is doubling the problem. He made no specific comment on FX intervention but has been vocal on this issue in the past. However, there is little appetite for such action by the States and Europe and it may be difficult to intervene unilaterally. The BOJ begin its two-day meeting today but is expected to retain an unchanged policy although there are growing calls and forecasts of a cut in rates over the next 3 months. The big problem they have right now is that there is no governor since Fukui stepped down last month and the government parties have failed to agree on a successor. However, following the disastrous Q1 Tankan Report the CB’s assessment of the economy can only be downgraded.  The following economic releases are due today:                                                                       Prior Japanese March Eco Watchers Survey: Current     33.6   Japanese March Eco Watchers Survey: Outlook    39.5                                                                     Forecast U.S. February Pending Home Sales      (MoM)   - 1.0%The minutes of the March 18th FOMC meeting are due to be published I can’t say that yesterday totally went the way I had imagined but the movement seen yesterday does overall provide a more Dollar bearish impression. I do still hold some short term concern over the Yen and Pound which have less about their respective structures to imply Dollar losses so we should still retain a fairly cautious approach. Concentrating first on the Euro and Swissie the support in the Euro held quite well and although the Swissie pushed up higher than expected I still feel the best fit is a bearish one. Any reversal above yesterday’s Dollar peaks here would prove me wrong and I’ll have to re-adjust the outlook. Now assuming this Dollar bearish view is correct then we should find little progress above the 1.5788 high seen already in the Euro and the 1.0044-70 Swissie support. Both these should produce corrections but we should find some better Dollar selling levels later on today. Dollar–Yen has support between 101.88-102.06 and this should be used as the break level for any bullish thoughts. If it holds then the 103.57-104.00 area seems possible. On the Pound I’d prefer to work on breaks – this is very confusing right now. To cover the Yen from the Euro-Yen point of view I do feel that we are close to a peak – and this is another reason why I am slightly concerned about a bullish stance in Dollar-Yen. While the hourly chart has no bearish divergence there is one building in the 4-hour chart. Thus there does seem to room for one final high but while this holds below the 161.92-162.40 area I would still prefer an eventual break lower. Note important support and resistance areas:         USDJPY        EURUSD       USDCHF       GBPUSD Res:  103.86-00    1.5887-01    1.0171-17    2.0000-45 Res:  102.84-93    1.5804-10    1.0115-20    1.9925-45Spt:   101.88-06    1.5682-98    1.0044-65    1.9811-32 Spt:   100.87-22    1.5510-20    0.9950-80    1.9755-86 9 application/xml false australia bankruptcies BOJ business conditions currencies Forex FX Japan NAB Find Forex fascinating? Learn more about the currency markets 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