Finotec News Archive - March 25 2008
Dollar falls as OECD downplays US growth
The euro fell to $1.5409 and was last seen trading at $1.5551 8:26GMT on speculation US consumer confidence will drop to a five year lowRaj Ratna
25 March 2008
| EUR/USD | USD/JPY | GBP/USD | USD/CHF | |
|---|---|---|---|---|
Resistance | 1.5570 1.5525 1.5470 | 101.80 101.45 101.15 | 2.0045 2.0000 1.9885 | 1.0430 1.0385 1.0350 |
Support | 1.5345 1.5330 1.5295 | 99.85 97.70 96.85 | 1.9800 1.9760 1.9740 | 1.0200 1.0050 1.0015 |
The Organisation for Economic Cooperation and Development (OECD) said on Thursday that the US economy was now expected to grow 0.1 per cent in the first quarter, down from the 0.3 per cent estimated in December, and would display zero growth in the second quarter, compared with 0.4 per cent given previously. Many economists believe the US is already in a recession due to the housing downturn.
Bear Stearns, formerly America's sixth-largest investment bank, saw its finances ravaged by the US sub-prime mortgage crisis and has agreed to sell itself to JPMorgan Chase for a revised $US10 per share or over $US 1.1 billion. There are concerns other banks and financial institutions are going to face financial instability in the coming months.
The euro fell to $1.5409 and was last seen trading at $1.5551 8:26GMT on speculation US consumer confidence will drop to a five year low. The currency gained some ground to 156.50 yen from 154.07 yen. The U.S. dollar was 99.03 yen and has recovered to near 100.65 8:30GMT. Market strategy is to buy a bounce near 97.60. Sterling continues to gain against the dollar but still under the $2.00 level.
US sharemarkets rallied on Monday as JPMorgan Chase lifted their bid for Bear Stearns. The US Dow Jones gained 187 points after lifting 261 points on Thursday. The NASDAQ posted its best two-day percentage gains in over five years. US treasury prices fell sharply investor’s embraced equities again. US existing home sales surprised the markets and rose 2.9% to a 5.03 million annual rate versus expectations of 4.85 million.
Ahead today, we expect US consumer confidence to be weaker in its response to back to back negative payrolls. The US dollar is expected to slide against the major currencies if sentiment is extremely weak. Richmond Fed index is forecasted to remain unchanged as the business activity in the manufacturing sector remains steady.
Finotec Analysis Team
25 March 2008
















