WEEKLY MARKET RECAP, WEEK AHEAD, AND SCHEDULE
11 May 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 $1.5595 level and was supported around the $1.5285 level.  The pair gained about 30 pips last week.  Fed Chairman Bernanke suggested the housing sector will continue to worsen and supported plans to limit foreclosures.  Kansas City Fed’s Hoenig said the Fed may need to lift rates. Treasury’s Paulson sees an end to the market turmoil.

ECB’s Trichet said inflation pressures remain “significant” and conceded economic growth may slow more than expected. The ECB’s Lending Survey showed a pullback in lending to the household and corporate sectors.

Data released in the U.S. last week saw April services PMI improve to 52.0; Q1 non-farm labour productivity was up 2.2% with unit labour costs up 2.2%; March pending home sales were off 1.0% m/m and 20.1% y/y; weekly initial jobless claims were off 18,000 to 365,000 with continuing claims up 10,000 to 3.02 million; March wholesale inventories were off 0.1%; and the March trade deficit printed at US$ 58.2 billion.

Data released in the eurozone last week saw May Sentix investor confidence fall to 3.5; the EMU-15 April PMI service index improved to 52.0; EMU-15 PPI was up 0.7% m/m and 5.7% y/y; March EMU-15 retail sales were off 0.4% m/m; March manufacturing orders were off 0.6% m/m; EMU-15 March retail sales were off 0.4% m/m and 1.6% y/y; German industrial production was off 0.5% m/m in March; and German April wholesale price inflation was up 0.6% m/m and 6.9% y/y.

Technical Outlook

Last week’s high (1) was below the 23.6% retracement of the 1.4309-1.6018 range and last week’s low (2) was above the 50.0% retracement of the same range.  The 1.5615/ 1.5854/ 1.5903/ 1.6072 levels represent upside resistance targets while the 1.5393/ 1.5219/ 1.5164/ 1.5069/ 1.4979 levels represent downside support targets.

¥/ CNY

The yen appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the ¥102.60 level and was capped around the ¥105.60 level.  The pair lost about 240 pips last week. The Nikkei 225 stock index lost 2.06% on Friday to close at ¥13,655.34.  Finance chief Nukaga called for cooperation on confronting inflation. Financial markets were largely closed for the Golden Week holiday.  BoJ chief Shirakawa speaks on Monday.

Data released in Japan this week saw the March leading index fall to 20 from 54.5; the March coincidence index fell to 33.3; and Japan’s foreign reserves fell to US$ 1.00 trillion in April.

In Chinese news, the Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.9918 in the over-the-counter market, up from CNY 6.9870.  PBoC Chief Zhou said he is monitoring the “significant hot money” flow into China. A government think-tank sees Q2 GDP growth around 10.8% y/y with CPI up 7.5%.

Data released in China last week saw the April CFLP manufacturing PMI survey improve to 59.2; April PPI was up 8.1% y/y; and the April trade balance was around US$ 16.66 billion.

Technical Outlook

Last week’s high (1) was just above the 50.0% retracement of the 114.65-95.71 range and last week’s low (2) was just below the 38.2% retracement of the same range. Upside resistance targets remain the 106.77/ 107.41/ 108.63 levels while downside support targets remain the 102.42/ 100.18/ 98.00/ 95.04/ 94.41 levels.

₤

The British pound depreciated vis-à-vis the U.S. dollar last week as cable tested bids around the US$ 1.9460 level and was capped around the $1.9785 level.  The pair lost about 230 pips last week.  NIESR saw GDP growth around 0.4% in the three months to April.

Data released in the U.K. last week saw April services PMI fall to 50.4; Nationwide consumer confidence was at a four-year low; April BRC shop price inflation was up an annualized 1.2%; March manufacturing output was off 0.5% m/m; REC April wage growth was at its weakest level since July 2003; house repossessions were up 9% q/q and an annualized 17%; and U.K. IDS pay deals reached their highest level since August 1998 in the three months to April.

Technical Outlook

Last week’s high (1) was below the 61.8% retracement of the 1.9336-2.0395 range and last week’s low (2) was below the 76.4% retracement of the same range. Upside resistance targets include the 1.9586/ 1.9741/ 1.9866/ 1.9991 levels while downside support targets include the 1.9336/ 1.9117/ 1.8631 levels.

CHF

The Swiss franc appreciated vis-à-vis the U.S. dollar last week as the greenback tested bids around the CHF 1.0390 level and was capped around the CHF 1.0625 level. The pair lost about 145 pips last week.  KOF sees GDP growth around 2.1% in 2008.

Data released in Switzerland last week saw April consumer price inflation up 0.8% m/m and 2.3% y/y and the April unemployment rate was unchanged at 2.6%.

Technical Outlook

Last week’s high (1) was right around the 50.0% retracement of the 1.1594-0.9647 range and last week’s low (2) was right around the 38.2% retracement of the same range.  Upside resistance targets include the 1.0620/ 1.0850/ 1.1134 levels while downside support targets include the 1.0391/ 1.0106/ 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$ 0.9995 level and was capped around the C$ 1.0195 level.  The pair lost about 140 pips last week.

Data released in Canada last week saw March building permits off 4.5%; April housing starts were off 12.0%; the March international trade surplus expanded to C$ 5.53 billion from C$ 4.97 billion in February; and April employment was up 19,000 with the unemployment rate higher at 6.1%.

Technical Outlook

Last week’s high (1) was below the 76.4% retracement of the 1.0378-0.9709 range and last week’s low (2) was below the 50.0% retracement of the same range.  Upside resistance targets include the 1.0220/ 1.0378/ 1.0462 levels while downside support targets include the 1.0044/ 0.9965/ 0.9867/ 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$ 0.9505 level and was supported around the US$ 0.9340 level.  The pair gained about 70 pips last week. Treasurer Swan said the government may reduce its spending to reduce inflation.  RBA kept rates unchanged at 7.25%, as expected. RBA chief Stevens reported “Should demand not slow as expected or should expectations of high ongoing inflation begin to affect wage and price setting, that outlook would need to be reviewed.”  RBA lifted its 2008 inflation forecast but said slowing demand will cause inflation to be in the 2% to 3% target range by the end of 2010.

Data released in Australia last week saw April ANZ job ads up 3.1% m/m; Q1 house prices were up 1.1% q/q; the TD Securities April inflation gauge was up 0.5%; the March trade deficit fell 16% to A$ 2.74 billion; the May employment indicator fell to -0.005; April unemployment printed at 4.2%;

Technical Outlook

Last week’s high (1) was near a lifetime high and last week’s low (2) was above the 23.6% retracement of the 0.8511-0.9541 range.  Upside resistance targets include the 0.9496/ 0.9582 levels while downside support targets include the 0.9263/ 0.9120/ 0.9003/ 0.8887/ 0.8744 levels.

SCHEDULE

Sunday, 11 May 2008

all times GMT

(last release in parentheses)

N/A       NZ                    April REINZ house prices

2350     Japan                April M2+CD money supply (2.2% y/y)

2350     Japan                April broad liquidity (3.1% y/y)

2350     Japan                April bank lending (1.1% y/y)

Monday, 12 May 2008

all times GMT

(last release in parentheses)

0130     Australia           March home loans (-5.9%)

0130     Australia           March investment lending (-9.5%)

0130     Australia           April NAB business confidence (-4.0)

0130     Australia           April NAB business conditions (7.0)

0430     Japan                April bankruptcies (8.0% y/y)

0500     Japan                April economy watchers’ survey, outlook (38.2)

0500     Japan                April economy watchers’ survey, current (36.9)

0600     Japan                April machine tool orders (3.3% y/y)

0800     Italy                  March industrial production (-0.8% y/y)

0830     UK                    March visible trade balance (-₤7.487 billion)

0830     UK                    April PPI, input (1.8% m/m)

0830     UK                    April PPI, input (20.6% y/y)

0830     UK                    April PPI, output (0.9% m/m)

0830     UK                    April PPI, output (6.2% y/y)

0830     UK                    April PPI, core output (0.3% m/m)

0830     UK                    April PPI, core output (3.1% y/y)

1230     Canada             March new housing price index (0.3% m/m)

2245     NZ                    April food prices (0.7% m/m)

2301     UK                    April BRC retail sales monitor

2301     UK                    April RICS house price balance

Tuesday, 13 May 2008

all times GMT

(last release in parentheses)

0645     France              March current account (-€600 million)

0830     UK                    April consumer price index (0.4% m/m)

0830     UK                    April consumer price index (2.5% y/y)

0830     UK                    April CPI, core (1.2% y/y)

0830     UK                    April retail price index (0.3% m/m)

0830     UK                    April retail price index (3.8% y/y)

0830     UK                    April RPIX (3.5% y/y)

0830     UK                    March DCLG house prices (6.7% y/y)

1230     US                    April import price index (2.8% m/m)

1230     US                    April import price index (14.8% y/y)

1230     US                    April advance retail sales (0.2%)

1230     US                    April retail sales, ex-autos (0.1%)

1400     US                    March business inventories (0.6%)

2350     Japan                April domestic corporate goods price index (0.5% m/m)

2350     Japan                April domestic corporate goods price index (3.9% y/y)

2350     Japan                March current account (¥2.467 trillion)

2350     Japan                March trade balance (¥1.035 trillion)

2350     Japan                April domestic corporate goods price index (0.5% m/m)

2350     Japan                April domestic corporate goods price index (3.9% y/y)

2350     Japan                March current account (¥2.467 trillion)

Wednesday, 14 May 2008

all times GMT

(last release in parentheses)

0030     Australia           May Westpac consumer confidence (-1.3%)

0130     Australia           Q1 wage cost index (1.1% q/q)

0130     Australia           Q1 wage cost index (4.2% y/y)

0640     France              April CPI (0.8% m/m)

0640     France              April CPI (3.2% y/y)

0640     France              April CPI, harmonized (0.8% m/m)

0640     France              April CPI, harmonized (3.5% y/y)

0800     Italy                  April CPI (0.1% m/m)

0800     Italy                  April CPI (3.3% y/y)

0800     Italy                  April CPI, harmonized (0.5% m/m)

0800     Italy                  April CPI, harmonized (3.5% y/y)

0830     UK                    April claimant count rate (2.5%)

0830     UK                    April jobless claims change (-1,200)

0830     UK                    March average earnings, bonus (3.7%)

0830     UK                    March ILO unemployment rate (5.2%)

0930     UK                    Bank of England quarterly inflation report

1100     US                    MBA mortgage applications

1230     US                    April consumer price index (0.3% m/m)

1230     US                    April consumer price index (4.0% y/y)

1230     US                    April CPI, ex-food and energy (0.2% m/m)

1230     US                    April CPI, ex-food and energy (2.4% y/y)

2245     NZ                    March retail sales, ex-autos (0.2% m/m)

2350     Japan                March machine orders (-12.7% m/m)

2350     Japan                March machine orders (2.4% y/y)

Thursday, 15 May 2008

all times GMT

(last release in parentheses)

N/A       South Africa      Reserve Bank of Australia Deputy Governor Debelle speaks

0000     NZ                    April PMI (48.3)

0030     Australia           May consumer inflation expectations (11.2%)

0130     Australia           February average weekly wages (0.6% q/q)

0130     Australia           February average weekly wages (4.7% y/y)

0400     Japan                April Tokyo-area condominium sales (-17.8% y/y)

0545     CH                    April SECO consumer climate (14.0)

0600     Germany           Q1 GDP (0.3% q/q)

0600     Germany           Q1 GDP (1.8% y/y)

0600     Germany           April CPI (-0.2% m/m)

0600     Germany           April CPI (2.4% y/y)

0600     Germany           April CPI, harmonized (0.5% m/m)

0600     Germany           April CPI, harmonized (2.6% y/y)

0645     France              Q1 GDP (0.4% q/q)

0645     France              Q1 GDP (2.1% y/y)

0930     Australia           Reserve Bank of Australia Governor Stevens speaks

1230     US                    Weekly initial jobless claims (365,000)

1230     US                    Continuing jobless claims (3.020 million)

1230     US                    May Empire State manufacturing index (0.6)

1230     Canada             March manufacturing shipments (1.6% m/m)

1300     US                    March net long-term TIC flows (US$ 72.5 billion)

1300     US                    March total net TIC flows (US$ 64.1 billion)

1315     US                    April industrial production (0.3%)

1315     US                    April capacity utilization (80.5%)

1400     US                    May Philadelphia Fed manufacturing survey (-24.9)

1700     US                    May NAHB housing market index (20.0)

2245     NZ                    Q1 PPI, input (1.3% q/q)

2245     NZ                    Q1 PPI, output (1.5% q/q)

2350     Japan                Q1 GDP (0.9% q/q)

2350     Japan                Q1 GDP, annualized (3.5%)

2350     Japan                Q1 GDP deflator (-1.3% y/y)

Friday, 16 May 2008

all times GMT

(last release in parentheses)

0400     Japan                April consumer confidence (37.0)

0400     Japan                March industrial production (-3.1% m/m)

0400     Japan                March industrial production (-0.4% y/y)

0430     Japan                March capacity utilization (1.8% m/m)

0600     Japan                April machine tool orders

0645     France              Q1 wages (0.3% q/q)

0715     CH                    March retail sales (3.3% y/y)

1230     US                    April housing starts (947,000)

1230     US                    April building permits (927,000)

1400     US                    May University of Michigan consumer sentiment (62.6)

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.