Finotec News Archive - July 01 2008
Euro-zone inflation reaches new high
Soaring fuel and food costs are being blamed for the rise and have sparked protests by fishermenTammy Wally
01 July 2008
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| EUR/USD | USD/JPY | GBP/USD | USD/CHF | |
|---|---|---|---|---|
Resistance | 1.5960 1.5835 1.5790 | 108.20 107.20 106.45 | 2.0185 2.0045 2.0005 | 1.0325 1.0270 1.0230 |
Support | 1.5720 1.5645 1.5630 | 105.00 104.45 104.05 | 1.9925 1.9880 1.9810 | 1.0130 1.0015 1.0000 |
Inflation in the euro nations has hit a recored four cent, adding pressure on the European Central Bank to raise borrowing costs even as the economy slows. Soaring fuel and food costs are being blamed for the rise and have sparked protests by fishermen, hauliers and farmers across Europe calling for more pay. Experts believe the bank may raise the key interest rate on Thursday from four per cent to 4.25 per cent to try and cool although this raises costs for home buyers and companies seeking credit, futher slowing a stalling economy. The move would be the first time the bank has shifted the rate since June 2007, in stark contrast to several rate cuts from the Bank of England and the US Federal Reserve that aimed to boost borrowing in the wake of the sub-prime crisis.
But ECB president Jean-Claude Trichet has insisted keeping prices stable is his main task. Instead of indicating an overheating economy, inflation now running at the highest level in 16 years of keeping euro country records seems to be acting as a brake on Europe’s economy as shoppers steer clear of major purchases. EU spokeswoman Amelia Torres said they had to take care not to send prices even higher by granting wage increases that trigger a further price spiral. EUR/USD currently trading at 1.5769 as of 8:30 am, GMT
Billionaire investor Eli Broad said the U.S. economy is in the `worst period' of his adult life as a housing market recovery remains ``several years'' away. ``This is worse than any recession we've had since World War II,'' Broad, 75, said in an interview yesterday. Broad, the founder of homebuilder KB Home, said the U.S. should avoid a depression on the scale of the 1930s because the country now has sufficient ``safety nets.''
The dollar may fall to 105 yen this week provided it remains below 107.11 yen, according to Pak Lai Ng, a technical analyst at Forecast Singapore Pte. The U.S. currency is poised to decline as its daily moving average convergence/divergence chart is showing a sell signal, Ng said. The dollar may fall to its June 9 low of 104.43 yen next week on a break of first support, he said. First support at 105 yen is near yesterday's low. So-called resistance at 107.11 yen is the dollar's June 23 low, where sell orders may be clustered. Support is a price where traders may buy. ``As long as the dollar remains below 107.11 yen, then the bias is to the downside,'' Ng said. ``Momentum indicators including MACD aren't looking good.'' The dollar traded at 106.29 yen at 11:23 a.m. in Tokyo from 106.21 late yesterday. The U.S. currency rose 6.5 percent last quarter, the biggest advance since the last three months of 2001.
Finotec Analysis Team
01 July 2008
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Today's Economic Events
Time  |
Event |
Currency
|
Period | Previous | Forecast |
Significance
|
Actual | |
|---|---|---|---|---|---|---|---|---|
| 23:50 | Monetary Base y/y | JPY | -0.9% | 0.0% |  | 0.4% |  | |
| 14:00 | ISM Manufacturing Index | USD | Jun | 49.6 | 48.6 |  | 50.2 | |
| 14:00 | ISM Manufacturing Prices | USD | Jun | 87.0 |  | 91.5 | | |
| 14:00 | Construction Spending m/m | USD | May | -0.4% | -0.6% | | -0.4% | |
| 09:00 | Unemployment Rate | EUR | May | 7.1% | 7.1% | | 7.2% | |
| 08:30 | Manufacturing PMI | GBP | Jun | 50.0 | 49.8 | | 45.8 | |
| 08:00 | Unemployment Rate | EUR | Jun | 7.9% | 7.9% | | 7.8% | |
| 06:00 | Nationwide House Prices m/m GB | GBP | Jun | -2.5% | -1.0% | | -0.9% | |
| 04:30 | Interest Rate Statement | AUD | 7.25% | 7.25% |  | 7.25% | | |