WEEKLY MARKET RECAP, WEEK AHEAD, AND SCHEDULE
30 March 2008

Sunday 

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The euro appreciated vis-à-vis the U.S. dollar last week as the single currency tested offers around the $1.5845 level and was supported around the $1.5340 level. The pair gained about 330 pips last week.  JPMorgan Chase upped its bid in its tie-up with Bear Stearns. Goldman Sachs estimates there are up to US$ 460 billion in credit losses that need to be written down by banks. Chicago Fed’s Evans said monetary policy is “accommodative.” Fed Governor Mishkin said a formal inflation target would work better than “comfort zones.” Primary dealer credit borrowing totaled US$ 37.023 billion through Wednesday.

The ECB allocated a massive €216 billion in seven-day liquidity at 4.23% or higher. ECB’s Trichet sees inflation moderating later in the year and remained hawkish. ECB’s Quaden said the banks lack confidence absent transparent disclosure about their credit exposures. Quaden also said “excessive FX volatility” is a negative risk.   ECB’s Stark said the ECB is providing liquidity for proper market functioning while ECB’s Weber said the euro has been “excessively volatile” in recent times.

Data released in the U.S. last week saw February existing home sales climb 2.9%; the Chicago Fed’s National Activity Index fell to -0.87; March consumer confidence fell to 64.5, down from 76.4 in February; the S&P/ Case Shiller house price index fell 11.4% in January; February new home sales fell 1.8%; February durable goods orders were off 1.7% with the ex-transportation component off 2.6%; Q4 GDP was up an annualized 0.6%; headline GDP PCE was up 3.9% with core up 2.5%; weekly initial jobless claims were off 9,000 to 366,000 with continuing jobless claims off 5,000 to 2.845 million; February personal spending was up 0.1% with personal income up 0.5%; February headline PCE were up 0.1% m/m and 3.4% y/y with core PCE up 0.1% m/m and 2.0% y/y; and the final March University of Michigan consumer sentiment index fell to 69.5 from 70.8.

Data released in the eurozone last week saw the German Ifo March business climate index improved to 104.8; the EMU-15 January current account deficit widened to €10.6 billion; French and Italian March business sentiment improved; EMU-15 January industrial new orders were up 2.0% m/m and 7.3% y/y; German April GfK improved to 4.6; and German February import prices were up 1.1% m/m.

Technical Outlook

Last week’s high (1) was above the 23.6% retracement of the 1.4309-1.5903 range and last week’s low (2) was above the 38.2% retracement of the same range.  The 1.5854/ 1.5903/ 1.6072 levels represent upside resistance targets while the 1.5527/ 1.5393/ 1.5219/ 1.5069/ 1.4979 levels represent downside support targets.

¥/ CNY

The yen depreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the ¥99.10 level and was capped around the ¥101.05 level.  The pair lost about 10 pips last week. The Nikkei 225 stock index gained 1.71% on Friday to close at ¥12,820.47.  BoJ’s Shirakawa said current FX volatility “may take some time” to work through. Finance chief Nukaga said the economy appears to be “pausing.” The BoJ Tankan will be released this week and is likely to evidence a decline in corporate sentiment.  BoJ Deputy Governor Nishimura cited “upside and downside risks” and BoJ’s Suda suggested rates won’t come down for now.  Markets are pricing in less than a 10% chance of a 25bps BoJ rate cut at 8-9 April.  Nukaga warned he may discuss FX with foreign counterparts.

Data released in Japan this week saw the March large company business sentiment index fall to a record low of -9.3 in the January – March period; nationwide land prices rose for the second consecutive year in 2007; February supermarket sales were up 1.9%, the first rise in 26 months; the February corporate services price index climbed +0.3% m/m and +0.7% y/y; February exports rose 8.7% y/y; January-February industrial companies’ profits up 16.5%; February core CPI rose 1.0% y/y; the February unemployment rate rose to 3.9%; February household spending was unchanged y/y; and February retail sales were up 3.1% y/y.

In Chinese news, the Chinese yuan appreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 7.0120 in the over-the-counter market, down from CNY 7.0540.  

Technical Outlook

Last week’s high (1) was below the 38.2% retracement of the 114.65-95.71 range and last week’s low (2) was below the 23.6% retracement of the same range. Upside resistance targets remain the 100.18/ 102.94/ 104.91/ 105.62/ 106.77/ 108.63 levels while downside support targets remain the 98.00/ 95.04/ 94.41 levels.

₤

The British pound appreciated vis-à-vis the U.S. dollar last week as cable tested offers around the US$ 2.0085 level and was supported around the $1.9755 level.  The pair gained about 100 pips last week.  The British media reported the BoE will follow the ECB’s lead and accept more collateral for repo funding but not to the extent the Fed has done. BoE chief King said the central bank is unlikely to be as aggressive as the Fed in lowering rates and added inflation should be below 2.0% in 2009. MPC’s Bean said risks to the pound are “to the downside” while King said the MPC is “not indifferent” to the value of the pound. MPC’s Blanchflower said the BoE’s February quarterly inflation report foresaw a gradual depreciation of the pound.

Data released in the U.K. last week saw the Rightmove March house price index rise 0.8% m/m; the CBI March retail sales volume balance improved to +1 from -3 in February; BBA February new house purchases rose to ₤5.6 billion; Q4 business investment was upwardly revised to 1.8%; Nationwide March U.K. house prices were off 0.6% m/m; GfK consumer confidence weakened to -19; the and Q4 current account deficit improved to -₤8.5 billion.

Technical Outlook

Last week’s high (1) was above the 38.2% retracement of the 2.1159-1.9336 range and last week’s low (2) was right around the 23.6% retracement of the same range. Upside resistance targets include the 2.0145/ 2.0248/ 2.0463/ 2.0729 levels while downside support targets include the 1.9866/ 1.9741/ 1.9618/ 1.9586/ 1.9336 levels.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the CHF 0.9890 level and was capped around the CHF 1.02505 level. The pair lost about 130 pips last week.  SNB offered repurchase agreements at lower market rates.  SNB’s Roth said the long-term trend between the euro and franc is “fundamentally stable.”

Data released in Switzerland last week saw the February UBS consumption indicator print at 2.32, up from 2.15 in January, and the KOF March economic barometer fell to 1.54 from a revised 1.66 in February.

Technical Outlook

Last week’s high (1) was below the 38.2% retracement of the 1.1594-0.9647 range and last week’s low (2) was below the 23.6% retracement of the same range.  Upside resistance targets include the 1.0106/ 1.0354/ 1.0478/ 1.0620 levels while downside support targets include the 0.9647/ 0.9605/ 0.9535 levels.

CAD

The Canadian dollar appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the C$ 1.0140 level and was capped around the C$ 1.0305 level.  The pair lost about 40 pips last week.  Bank of Canada is expected to ease policy further.

Data released in Canada last week saw January retail sales up 1.5% m/m and an annualized 7.5% with ex-autos up 1.3% m/m and 7.7% y/y.

Technical Outlook

Last week’s high (1) was above the 76.4% retracement of the 1.0378-0.9709 range and last week’s low (2) was just above the 61.8% retracement of the same range.  Upside resistance targets include the 1.0378/ 1.0462/ 1.0794 levels while downside support targets include the 1.0122/ 1.0044/ 0.9965/ 0.9752 levels.

AUD

The Australian dollar appreciated vis-à-vis the U.S. dollar last week as the Aussie tested offers around the US$ 0.9240 level and was supported around the US$ 0.8975 level.  The pair gained about 140 pips last week. RBA Governor Stevens said the Australian economy is handling the global economic turmoil well.

Data released in Australia last week saw job vacancies fall 2.5% in the three months to February.

Technical Outlook

Last week’s high (1) was above the 38.2% retracement of the 0.8511-0.9496 range and last week’s low (2) was just below the 50.0% retracement of the same range.  Upside resistance targets include the 0.9263/ 0.9399/ 0.9496 levels while downside support targets include the 0.9120/ 0.9003/ 0.8887/ 0.8744 levels.

SCHEDULE

Sunday, 30 March 2008

all times GMT

(last release in parentheses)

N/A       Australia           February HIA new home sales (11.3% m/m)

2145     NZ                    February building permits (3.3% m/m)

2315     Japan               March PMI, manufacturing (50.8)

2330     Australia           March TD Securities inflation (0.3% m/m)

2330     Australia           March TD Securities inflation (4.0% y/y)

2350     Japan               February industrial production (-2.2% m/m)

2350     Japan               February industrial production (2.2% y/y)

Monday, 31 March 2008

all times GMT

(last release in parentheses)

0030     Australia           February private sector credit (1.1% m/m)

0030     Australia           February private sector credit (16.4% y/y)

0130     Japan               February labour cash earnings (1.0% y/y)

0200     NZ                    February M3 money supply (8.9% y/y)

0300     NZ                    March NBNZ business confidence (-43.9)

0400     Japan               March official reserve assets (US$ 1.008 trillion)

0500     Japan               February housing starts (-5.7% y/y)

0500     Japan               February housing starts, annualized (1.187 million)

0500     Japan               February construction orders (-2.5% y/y)

0545     CH                    March 2008 SECO economic forecasts

0645     France              February producer prices (0.5% m/m)

0645     France              February producer prices (4.9% y/y)

0800     Finland European Central Bank member Liikanen speaks

0800     Eurozone          February M3 money supply (11.5% y/y)

0800     Italy                  February producer price index (0.4% m/m)

0800     Italy                  February producer price index (5.2% y/y)

0900     Eurozone          March CPI (3.2% y/y)

0900     Eurozone          March business climate indicator (0.72)

0900     Eurozone          March consumer confidence (-12)

0900     Eurozone          March economic confidence (100.1)

0900     Eurozone          March industrial confidence (0.0)

0900     Eurozone          March services confidence (10.0)

0900     Eurozone          European Central Bank member Quaden speaks

0900     Italy                  March CPI (0.2% m/m)

0900     Italy                  March CPI (2.9% y/y)

0900     Italy                  March CPI, harmonized (0.1% m/m)

0900     Italy                  March CPI, harmonized (3.1% y/y)

0900     UK                    January index of services

0930     UK                    March GfK consumer confidence (-17.0)

1230     Canada             January GDP (-0.7% m/m)

1345     US                    March Chicago PMI (44.5)

1600     US                    San Francisco Fed President Yellen speaks

2230     Australia           March AIG performance of manufacturing index (51.4)

2350     Japan               Q1 Tankan, large manufacturers (19)

2350     Japan               Q1 Tankan, large manufacturing outlook (15)

2350     Japan               Q1 Tankan, non-manufacturing outlook (15)

2350     Japan               Q1 Tankan, large capital expenditures (10.5%)

Tuesday, 1 April 2008

all times GMT

(last release in parentheses)

0330     Australia           Reserve Bank of Australia interest rate decision

0500     Germany           February ILO unemployment rate (7.6%)

0600     Germany           February retail sales (1.6% m/m)

0600     Germany           February retail sales (0.6% y/y)

0730     CH                    March PMI (60.5)

0745     Italy                  March PMI, manufacturing (50.6)

0750     France              March PMI, manufacturing (52.0)

0755     Germany           March unemployment rate (8.0%)

0755     Germany           March unemployment change (-75,000)

0800     Italy                  February hourly wages (2.0% y/y)

0800     Germany           March PMI, manufacturing (54.9)

0800     Eurozone          March PMI, manufacturing (52.0)

0830     UK                    March PMI, manufacturing (51.3)

0900     Eurozone          February unemployment rate (7.1%)

1230     Canada             February industrial product prices (0.9% m/m)

1230     Canada             February raw materials price index (3.4% m/m)

1400     US                    February construction spending (-1.7% m/m)

1400     US                    March ISM manufacturing (48.3)

1400     US                    March ISM, prices paid (75.5)

2350     Japan               March monetary base (0.1% y/y)

Wednesday, 2 April 2008

all times GMT

(last release in parentheses)

0645     Eurozone          European Central Bank member Noyer speaks

0700     Germany           DIW economic growth forecast

0830     UK                    February M4 money supply (0.3% m/m)

0830     UK                    February M4 money supply (12.3% y/y)

0830     UK                    M4 sterling lending (₤16.4 billion)

0830     UK                    February net consumer credit (₤900 million)

0830     UK                    February net lending secured on dwellings (₤7.4 billion)

0830     UK                    February mortgage approvals (74,000)

0830     UK                    February BSA mortgage approvals (₤4.296 billion)

0830     UK                    March PMI, construction (52.4)

0900     Eurozone          February producer price index (0.8% m/m)

0900     Eurozone          February producer price index (4.9% y/y)

1100     US                    MBA mortgage applications

1130     US                    March Challenger job cuts (-14.2% y/y)

1215     US                    March ADP employment, change (-23,000)

1330     US                    Federal Reserve Chairman Bernanke testifies

1400     US                    February factory orders (-2.5%)

2230     Australia           March AIG performance of service index (53.2)

2350     Japan               Foreign equities and bond purchases

Thursday, 3 April 2008

all times GMT

(last release in parentheses)

0200     NZ                    March ANZ commodity prices (0.9%)

0400     UK                    March HBOS house prices (-0.3% m/m)

0400     UK                    March HBOS house prices (4.2%)

0400     US                    San Francisco Fed President Yellen speals

0745     Italy                  March PMI, services (47.2)

0750     France              March PMI, services (57.3)

0800     Eurozone          March PMI, services (51.7)

0800     Eurozone          March PMI, composite (51.9)

0830     UK                    March PMI, services (54.0)

0900     Eurozone          February retail sales (0.4% m/m)

0900     Eurozone          February retail sales (-0.1% y/y)

1030     Germany           European Central Bank President Trichet speaks

1100     Netherlands       European Central Bank President Wellink speaks

1230     US                    Weekly initial jobless claims (366,000)

1230     US                    Continuing jobless claims (2.845 million)

1400     US                    March ISM, non-manufacturing (49.3)

2200     Australia           Reserve Bank of Australia policymakers testify

2330     US                    Federal Reserve Governor Mishkin speaks

Friday, 4 April 2008

all times GMT

(last release in parentheses)

0000     US                    San Francisco Fed President Yellen speaks

0130     Australia           February retail sales (0.0%)

0545     CH                    March consumer price index (0.1% m/m)

0545     CH                    March consumer price index (2.4% y/y)

1000     Germany           February factory orders (-1.5% m/m)

1000     Germany           February factory orders (9.5% y/y)

1100     Canada             March unemployment rate (5.8%)

1100     Canada             March employment, net change (43,300)

1230     US                    March unemployment rate (4.8%)

1230     US                    March non-farm payrolls, change (-63,000)

1230     US                    March average hourly earnings (0.3% m/m)

1230     US                    March average hourly earnings (3.7% y/y)

1400     Canada             March Ivey PMI (62.0)

1400     Spain                European Central Bank member Gonzalez-Paramo speaks

1600     US                    European Central Bank member Bini-Smaghi speaks

1845     US                    Federal Reserve Governor Kroszner speaks

DISCLAIMER: GCI’s Weekly Market Recap and Week Ahead is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.