Weekly overview and analysis. -April 21 2008 - April 27 2008 -

USD

The dollar last week slightly strengthened against the euro amid speculation the Fed will pauses interest rate cut on rising inflation. The euro was further pressured by a survey that showed France and Germany business confidence felled. We last week saw that the dollar recovers against the euro by late week amid New home sales felled fell in March to an annual pace of 580k, a 13 years low, which shows signs that the euro rally against the dollar may be out of steam as previous record rally against the dollar had attracted vast amount of investors and funds which also resulted a possible heavy selling pressure ahead.

This week we should see the dollar slowly recovers against the euro and besides rate decision which most economist expect Fed will only cut 0.25%, there would be few important economic releases from the US we need to monitor closely – US CaseShiller, US Consumer confidence, Personal consumption, GDP, Fed Rate decision, US Personal spending, Personal consumption expenditure, ISM Manufacturing, ISM Price paid, Unemployment rate and NFP. Also lookout for any new related to major corporate, cross currency important economic releases and central bank members statement/comments.


JPY

JPY weaken against most currencies last week as the dollar strengthens against the yen and stocks markets rally on better than expected corporate revenue/earnings. JPY weakness was also because economic releases showed Japan’s economy is weakened by slowing US economic growth and rising inflation as food and energy cost soars.

Most economists expect the BOJ to hold its benchmark rate at this week meeting on weakening economy amid rising inflation. This week, the yen might further weaken against most currencies as stocks markets slowly recover. Monitor Japan’s economic releases –BOJ Rate decision, Nomura Manufacturing PMI, Industrial production and Vehicle sales, US and Euro-zone economic releases and news related to major corporate.


EUR

EUR retreat against the dollar last week amid France and Germany business confidence fell on accelerating inflation and appreciating euro. Some ECB members also voiced concern over weakening dollar against the euro, which might prompt the ECB to hold its rate amid weakening economy even as inflation rose to a 6 years high.

This week, we should see EUR further weakens against the dollar, monitor Euro-zone economic releases –Germany CPI, Italy PPI, Italy CPI, Euro-zone CPI estimate Euro-zone unemployment rate, Germany retail sales and France PPI. Also monitor coss currency important economic releases, news related to major corporate and central banks member’s comments/statements.


Crude oil

Crude oil rose to record last week amid oil inventories rose and refineries operating rate rebounds. Crude oil rose as fighting in Nigeria delta had disrupted 50% of the regions oil production, raising fears that the region output would get lower on continuing unrest. Crude oil recovery and rising stocks markets failed to attracts investors to withdraw investment in commodities after Nigeria delta attacks.

This week storage report should show another inventories build with higher refineries operating rates. But also monitor the dollar movement, important economic releases and Nigeria delta condition. The media reported BP closed the Forties Pipeline System, carrying 40% of the UK’s oil production, after a strike at the Grangemouth refinery cut power supplies, but BP said operation should be returning to normal by April 29 which may put pressure on crude oil prices.

Loh Chang Yuen,

Junior Strategist

All rights reserved: Admiral Markets Ltd

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