 European Mid Morning Update 30th May 2008 |
 May 30 2008, 8:49
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Confusion reignsReleases from Europe:
April Forecast Actual German Retail Sales (MoM) +0.6% - 1.7% German Retail Sales (YoY) - 2.0% - 1.0% French Producer Prices (MoM) +0.6% +0.7% French Producer Prices (YoY) +5.1% +5.4% Following yesterday’s remarkable retail PMI’s from Europe it is rather difficult to reconcile April’s crash in German retail sales. The PMI numbers were for May but the contrast is so stark it almost begs asking whether they published last year’s PMI stats! Very clearly the numbers do reflect the cut backs in household spending in order to pay for energy and food related products. The French producer price figures also suggest there is no let up in inflationary pressure but there may even being comments offered once again that the ECB could now consider a rate hike which could see the seesaw route the Dollar is taking extend for some while to come… The following economic releases are due today: April Italian Producer Prices (MoM) +0.7% Italian Producer Prices (YoY) +6.5% Euro-zone Unemployment Rate 7.1% U.S. Personal Income (MoM) +0.2% U.S. Personal Spending (MoM) +0.2% U.S. Core PCE (MoM) +0.1% U.S. Core PCE (YoY) +2.1% May Euro-zone CPI (est) (YoY) +3.5% Italian CPI (MoM) +0.3% Italian CPI (YoY) +3.3% Swiss KOF Leading Indicator 1.09 U.S. Chicago Purchasing Manager 48.8 U.S. University of Michigan Confidence 59.5 The market seems to have interest rate fever under the skin today. The Dollar moves higher following treasury yields edging upwards. However, yesterday’s Dollar strength began much before the interest rate move began so the correlation is slightly strained. Just what caused the move appears to have eluded the market and frankly this promises further erratic trading, probably reacting to numbers as they are released. The problem with economic releases right now is that they are volatile, demonstrated quite clearly this week with poor European stats until last night. The rebound in the retail PMI was nothing short of astounding considering prior confidence numbers were also creaking under the strain of inflation. But yesterday’s confidence numbers, with the exception of the consumer confidence, mostly recorded solid gains. And yet the Dollar went up. U.S. numbers have begun to show a semblance of stability, still subject to the odd wobbler that undermines, but this is a common factor at turns in growth and perhaps points to the fiscal stimulus cheques being more likely to provide a lift. Still, it’ll not be a one-way street while employment numbers show such weakness so the outlook is probably the same for the Dollar over the coming month. Today shouldn’t see the same degree of directional move but should cause a little more Dollar buying later in the day. Note important support and resistance areas: USDJPY EURUSD USDCHF GBPUSD Res: 106.41-82 1.5594-16 1.0592-23 1.9849-80 Res: 105.86-04 1.5536-73 1.0526-64 1.9770-01 Spt: 105.00-05 1.5447-71 1.0470-00 1.9671-84 Spt: 104.29-66 1.5397-09 1.0405-31 1.9604-47 See Also
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