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204755 Resource 128466 128654 128654 1211528687031 1211528687031 Controlled European Mid Morning Update 23rd May 2008

Market mixed on today’s numbers as we move into a long U.S. weekend

Releases from Europe:April                                          Forecast    Actual French Consumer Spending (MoM)  +0.5%    - 0.8% French Consumer Spending (YoY)   +2.0%    +0.4%May French Manufacturing PMI                 51.0       51.3 French Services PMI                         52.9       50.7 German Manufacturing PMI               53.2       53.5 German Services PMI                       54.0        53.7Yesterday saw Italian retail sales slump in March and today we have French consumer spending following that lead. We do have to take into account an upward revision of +0.7% in the prior month but overall the figures are disappointing and this is highlighted by the larger shortfall against forecasts in the YoY number. Very clearly consumers are watching their budgets. From these French numbers are notable declines in textiles and cars. Is it really wise to bet against this trend continuing? Probably so - with no let up in both producer and consumer prices…And further evidence that the slowdown in Europe is maintaining a steady pace came through the French and German PMI releases. Manufacturing still appears to be holding up although perhaps not as strongly as the German ZEW and IFO surveys suggest. Where there is a more clear indication of softness is through the services components both of which fell short of consensus forecast. In particular the French services PMI was significantly short of forecast and this will be a concern. Still all figures are still above 50 which indicates an expanding economy but that pace is decelerating each month. The following economic releases are due today:Q1 U.K. GDP                              (QoQ)    +0.4% U.K. GDP                               (YoY)    +2.5% Italian GDP (P)                     (QoQ)     +0.2% Italian GDP (P)                      (YoY)     +0.4%April Italian Trade Balance Non-EU   EUR     -1810K U.S. Existing Home Sales       (MoM)    - 1.6% U.S. Existing Home Sales                   4.85mnMay Euro-zone Manufacturing PMI                  50.5 Euro-zone Services PMI                          51.7 Euro-zone Composite PMI                      51.5 Another quiet day in Asia and this may set the tone for the rest of the day as market players square up before the long U.S. weekend. On the slate today are a few numbers that could throw spanners into the works though the most likely outcome will be a neutral, range trading day. Of note are the European manufacturing and services PMI, French consumer spending and U.S. existing home sales. Already the French numbers are out together with the German PMI’s and the results will not provide the market with much to buy the Euro or even sell the Dollar. There is little doubt that following the burst of optimism following the German ZEW and IFO releases that the ECB will find it tough to hike rates. On this basis the current status quo should remain. Some market commentators are suggesting the Dollar can drift lower again on profit taking from yesterday’s modest Dollar recovery while others feel that Paulson’s positive comments will provide more two-way trading. The basic message is that traders are fairly neutral in the short term though this week’s Dollar weakness will probably stretch into next week. Technically there still is a little room on the upside in this correction and that raises the chances of a quiet drift into the end of the week. Note important support and resistance areas:          USDJPY        EURUSD       USDCHF        GBPUSD Res:  105.43-68    1.5894-10    1.0428-74    1.9909-40 Res:  104.77-05    1.5752-84    1.0372-02    1.9847-74Spt:   103.75-90    1.5661-92    1.0261-94    1.9730-50 Spt:   103.10-15    1.5586-30    1.0203-32    1.9650-96 9 application/xml false consumer spending currencies existing home sales Forex French FX German manufacturing PMI services US Find Forex fascinating? Read 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