News and Media

WEEKLY MARKET RECAP, WEEK AHEAD, AND SCHEDULE
Mandus Invest SA. | 24, February, 2008 / Sunday

EURO

The euro appreciated vis-a-vis the U.S. dollar last week as the single currency tested offers around the $1.4860 level and was supported around the $1.4610 level. The pair gained about 150 pips last week. Minutes from the FOMC’s January meeting were released and Fed policymakers suggested rates will need to come down further. The Fed lowered its 2008 GDP forecast to 1.3% to 2.0%, raised its unemployment forecast to an average 4.6%, and raised its inflation forecast to 2.1% to 2.4%.

Buba reported the ECB still sees inflation as a significant threat. German trade unions are threatening strikes related to wage demands. German state-owned banks have significant exposure to U.S. sub-prime problems and may be consolidated. The European Commission reduced its EMU-15 GDP forecast to 1.8% for 2008 and sees inflation around 2.6% this year. Germany’s Ifo sees German 2008 GDP growth around 1.6% to 1.8%. ECB’s Gonzalez-Paramo cited “downside risks.” ECB’s Orphanides said the next move could be to raise rates or cut rates.

Data released in the U.S. last week saw January housing starts improve to +0.8%; the January CPI was up +0.4% m/m and +4.3% y/y with the core reading up 2.5% y/y; the January NAHB homebuilders’ confidence index improve to +20; January PPI was up 0.8% m/m and 3.3% y/y; weekly initial jobless claims fell 9,000 to 349,000 while continuing jobless claims were up 48,000 to 2.784 million; the Philadelphia Fed’s February manufacturing index fell to -24.0 from -20.9 in January; January leading economic indicators fell 0.1%; and December producer price inflation was downwardly revised to -0.3% from -0.1%.

Data released in the eurozone last week saw December construction output fall 0.6% m/m and 3.3% y/y; French January consumer prices fell 0.1% m/m and up 2.8% y/y; the EMU-13 December current account balance printed at -Ђ10.3 billion; EMU-13 December industrial orders fell 3.6% m/m; and EMU-15 January composite PMI improved to 52.7

Technical Outlook

Last week’s high (1) was above the 76.4% retracement of the 1.4967-1.4309 range and last week’s low (2) was below the 50.0% retracement of the same range. The 1.4908/ 1.4952/ 1.5070/ 1.5140 levels represent upside resistance targets while the 1.4813/ 1.4716/ 1.4631/ 1.4555/ 1.4378 levels represent downside support targets.

CNY

The yen appreciated vis-a-vis the U.S. dollar last week as the greenback tested bids around the Y106.80 level and was capped around the Y108.35 level. The pair lost about 80 pips last week. The Nikkei 225 stock index lost 0.70% to close at Y13,500.46. BoJ’s Muto is seen replacing BoJ boss Fukui. The government lowered its economic assessment for the first time since November 2006. BoJ policymakers vowed to pay closer attention to U.S. economic developments and Fukui said economic uncertainty is growth, as is risk aversion.

Data released in Japan this week saw the December index of leading economic indicators upwardly revised to 45.0 from 40.0; the December coincident index was upwardly revised to 70.0; December average monthly cash earnings were off 1.7% y/y; the December tertiary index was off 0.6% m/m; January department store sales fell 2.1% y/y; January convenience store sales fell 1.6% y/y; the December all-industries index fell 0.2% m/m; the December tertiary index fell 0.6% m/m; and the January merchandise trade deficit surged to Y79.34 billion.

In Chinese news, the Chinese yuan appreciated vis-a-vis the U.S. dollar as the greenback closed at CNY 7.1418 in the over-the-counter market, down from CNY 7.1825. The government reported CPI is likely to decelerate in H2 2008. China sees its 2008 trade surplus around US$ 320 billion. PBoC sees CPI remaining elevated in 2008 and reaffirmed it will allow the yuan to appreciate gradually.
Data released in China last week saw actual January FDI up 109.78% y/y to US$ 11.2 billion; January producer price inflation was up 6.1% y/y; and January consumer price inflation was up 7.1% y/y.

Technical Outlook

Last week’s high (1) was below the 38.2% retracement of the 114.65-104.96 range and last week’s low (2) was below the 23.6% retracement of the same range. Upside resistance targets remain the 108.66/ 109.80/ 110.04/ 111.80/ 112.89 levels while downside support targets remain the 104.19/ 101.67/ 101.20/ 98.65 levels.

GBP

The British pound appreciated vis-a-vis the U.S. dollar last week as cable tested offers around the US$ 1.9705 level and was supported around the $1.9360 level. The pair gained about 50 pips last week. The government announced it is nationalizing National Rock Plc. MPC’s Besley dovishly said “With credit conditions tightening, we might expect a significant reduction in consumption growth over the coming months.” February MPC meeting minutes were released and evidenced an 8-to-1 vote to lower the repo rate by 25bps to 5.25% with Blanchflower opting for a 50bps cut. MPC’s Barker highlighted downside risks but isn’t sure more stimulus is warranted immediately. MPC’s Sentance sees a U.K. economic recession as a “remote risk.”

Data released in the U.K. last week saw January retail sales in central London climb 3.7% y/y; February CBI industrial trends saw new orders at +3; CML January gross mortgage lending was up 11% m/m; January public sector net borrowing registered -Ј14.1 billion; January retail sales were up 0.8% m/m and 5.6% y/y; and IRS January pay deals were steady at 3.5% in the three months to January.

Technical Outlook

Last week’s high (1) was above the 38.2% retracement of the 1.7060-2.1159 range and last week’s low (2) was above the 50.0% retracement of the same range. Upside resistance targets include the 1.9767/ 1.9837/ 1.9937/ 2.0033/ 2.0149 levels while downside support targets include the 1.9602/ 1.9336/ 1.9262/ 1.9182/ 1.9103/ 1.8618 levels.

CHF

The Swiss franc appreciated vis-a-vis the U.S. dollar last week as the greenback tested bids around the CHF 1.0835 level and was capped around the CHF 1.1045 level. The pair lost about 80 pips last week. SNB sees GDP growth to decelerate in 2009 to about 2.0%.

Data released in Switzerland last week saw December retail sales climb 1.2% y/y; the January trade surplus widened to CHF 1.2 billion; and January producer price inflation was up 0.5% m/m and 3.7% y/y

Technical Outlook

Last week’s high (1) was just below the 38.2% retracement of the 1.1594-1.0728 range and last week’s low (2) was below the 23.6% retracement of the same range. Upside resistance targets include the 1.0932/ 1.1059/ 1.1161/ 1.1215/ 1.1304/ 1.1415/ 1.1594 levels while downside support targets include the 1.0740/ 1.0629/ 1.0532 levels.

CAD

The Canadian dollar depreciated vis-a-vis the U.S. dollar last week as the greenback tested offers around the C$ 1.0195 level and was supported around the C$ 1.0020 level. The pair gained about 65 pips last week.

Data released in Canada last week saw January headline CPI was up an annualized 2.2%, down from December’s 2.4% print; core CPI was up 1.4% y/y, down from 1.5% in December; and December retail sales were up 0.6% with the ex-autos component off 0.4%.

Technical Outlook

Last week’s high (1) was above the 61.8% retracement of the 1.0866-0.9055 range and last week’s low (2) was above the 50.0% retracement of the same range. Upside resistance targets include the 1.0174/ 1.0462/ 1.0794/ 1.1204 levels while downside support targets include the 1.0074/ 0.9960/ 0.9881/ 0.9747/ 0.9482/ 0.9300 levels.

AUD

The Australian dollar appreciated vis-a-vis the U.S. dollar last week as the Aussie tested offers around the US$ 0.9250 level and was supported around the US$ 0.9070 level. The pair gained about 110 pips last week. RBA policymakers discussed a +50bps tightening at their most recent meeting but instead voted for a +25bps tightening.

Data released in Australia last week saw average weekly earnings increase 0.6% in the September-November period from the May-August period and were up 4.7% y/y

Technical Outlook

Last week’s high (1) was above the 76.4% retracement of the 0.9399-0.8511 range and last week’s low (2) was right around the 61.8% retracement of the same range. Upside resistance targets include the 0.9340/ 0.9420 levels while downside support targets include the 0.9114/ 0.9075/ 0.8992/ 0.8851/ 0.8740/ 0.8549/ 0.8332 levels.

SCHEDULE

Sunday, 24 February 2008
all times GMT
(last release in parentheses)

N/A

Monday, 25 February 2008
all times GMT
(last release in parentheses)

N/A Japan February small business confidence
0645 CH Q4 GDP
0700 Germany January import price index (-0.1% m/m)
0700 Germany January import price index (3.7% y/y)
0900 Eurozone December retail sales
0930 UK January BBA house purchase loans
1500 US January existing home sales
2300 US European Central Bank President Wellink speaks
2350 Japan January corporate services price index

Tuesday, 26 February 2008
all times GMT
(last release in parentheses)

N/A Japan February PMI, manufacturing
0610 Germany March GfK consumer confidence
0700 Germany Q4 GDP
0745 France January housing starts
0745 France January housing permits
0830 Italy February business confidence
0900 Germany February Ifo business climate
0900 CH January UBS consumption indicator
1100 UK February CBI distributive trades, reported sales
1315 UK Q4 total business investment
1330 US January producer price index
1500 US February consumer confidence
1500 US February Richmond Fed manufacturing index
1500 US Q4 house price index
2145 NZ January building permits

Wednesday, 27 February 2008
all times GMT
(last release in parentheses)

0030 Australia Q4 construction work done
0730 US European Central Bank member Wellink speaks
0900 Eurozone January M3 money supply
0930 UK Q4 GDP
0930 UK December index of services
1200 US MBA mortgage applications
1330 US January durable goods orders
1500 US January new home sales
2300 Australia December leading index
2350 Japan January industrial production
2350 Japan Foreign purchases of equities and bonds
2350 Japan January retail trade

Thursday, 28 February 2008
all times GMT
(last release in parentheses)

0030 Australia Q4 private capital expenditures
0200 NZ January M3 money supply
0200 NZ February NBNZ business confidence
0500 Japan January construction orders
0800 Germany January ILO unemployment rate
0745 France February consumer confidence
0750 France January producer prices
0855 Germany February unemployment rate
0855 Germany February unemployment, net change
0900 Eurozone February PMI, retail
0900 Germany February PMI, retail
0900 France February PMI, retail
1330 US Q4 GDP, annualized
1330 US Q4 GDP price index
1330 US Q4 PCE. Core
1330 US Weekly initial jobless claims
1330 US Continuing jobless claims
2145 NZ January trade balance
2330 Japan January jobless rate
2330 Japan January overall household spending
2330 Japan February Tokyo-area CPI
2330 Japan February CPI, nationwide

Friday, 29 February 2008
all times GMT
(last release in parentheses)

N/A Germany January retail sales
N/A Germany January consumer price index
0030 Australia January private sector credit
0500 Japan January housing starts
0645 UK February Nationwide house prices
0700 Germany January consumer price index
0930 UK January M4 money supply
0930 UK January net consumer credit
0930 UK January net lending secured on dwellings
0930 UK January BSA mortgage approvals
1000 Eurozone January consumer price index
1000 Eurozone January unemployment rate
1000 Eurozone February business climate indicator
1000 Eurozone February consumer confidence
1000 Eurozone February economic confidence
1000 Eurozone February industrial confidence
1000 Eurozone February services confidence
1030 Germany February GfK consumer confidence
1030 CH February KOF leading indicator
1330 US January personal income
1330 US January PCE deflator
1330 US January personal spending
1330 US January PCE, core
1330 Canada Q4 current account
1330 Canada January industrial product prices
1330 Canada January raw materials price index
1445 US February Chicago PMI
1500 US February University of Michigan consumer sentiment
1700 US St. Louis Fed President Poole speaks