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 low

Raj Ratna
25 March 2008

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EUR/USDUSD/JPYGBP/USDUSD/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

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Today's Economic Events





Time Event Currency Period Previous Forecast Significance Actual
23:50Trade BalanceJPY0.86T0.77T20.60Tinformation
14:40Richmond Fed IndexUSD-5-516information
14:00Consumer ConfidenceUSD76.473.5264.5information
12:30Core Retail Sales m/mCAD-0.3%0.5%31.3%information
12:30Retail Sales m/mCAD0.8%1.4%21.5%information
12:00Consumer ConfidenceNZD110.096.52information
09:00Consumption IndicatorCHF2.1542.3212information

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