The pound was lower versus most major currencies on Friday on falling confidence among UK consumers and on slow growth in the value of a home there.

The British currency was also hurt by expectations that the Bank of England will cut interest rates when it’s Monetary Policy Committee meets in April.

Growth of the gross domestic product was at 2.8 percent from a year earlier in the final quarter of last year, less than had been expected, according to the Office of National Statistics, another factor in the pound’s decline.

Home values were up 1.1 percent in March from the same time last year, the slowest rate of growth in 12 years, after having grown by 2.7 percent in February, while home prices were down by 0.6 percent in March, all according to data from the Nationwide Building Society.

Meanwhile, consumer sentiment was at its lowest level since early 1993, according to market researcher GfK NOP, with the overall index down two points to minus 19 and general sentiment for the next 12 months down from minus 29 last month to minus 32 this month.

The pound was trading at 79.14p to the euro in late morning trade in New York, while it was at $1.9930 to the US dollar and at ¥198.5076 to the yen.

The US dollar was up on the day versus the euro after earlier declines on the possibility that Eurozone interest rates will go up soon, trading at $1.5772 to the euro shortly before noon in New York, but the US currency remained around 2.1 percent lower on the week in relation to the shared currency.

The South Korean currency is heading for more losses as the government is searching for ways to support the exporting companies and the economic growth.

The won is the second weakest major currency after the South African rand since the beginning of 2008 and is the first losing currency for March.

According to Citigroup’s analysis the Korean finance ministry will win with the Bank of Korea over the current monetary policy control. The finance ministry wants to depreciate the currency via the intervention in order to stimulate the economy, while Bank of Korea prefers a stronger won to fight the inflation.

Citigroup lowered its forecast for the Korean won rate against the U.S. dollar to 1,020 per dollar from the previous estimate of 920 per dollar. USD/KRW is trading at 991.36 as of 9:07 GMT.

The South Korean currency has already dropped 6.2% this year. A depreciation to 1,020 wons per dollar by the year end will mean a 9.7% yearly decline for the won.

Surprisingly high inflation, Retail Trade and Stocks Markets in Japan. Is Japan again doing the exact opposite of the Western economies?

Overnight News Bullets

• AU Job Vacancies (Feb) out at -2.5%. Prior 5.5%
• JN Small Business Confidence (Mar) out at 46.6. Prior 44.3
• GE Gfk Consumer Confidence Survey (Apr) out at 4.6 vs 4.4 expected. Prior 4.5
• SW Trade Balance (Feb) out at 17.1B vs 8.8B expected. Prior 11.0B
• NO Unemployment Rate (Mar) out at 1.7% vs 1.6% expected. Prior 1.7%
• UK Total Business Investment (4Q) QoQ/YoY out at 1.8%/5.3% vs -0.5%/1.7% expected. Prior -0.5%/1.7%
• US GDP Annualized (4Q) out at 0.6% as expected. Prior 0.6%
• US Personal Consumption (4Q) out at 2.3% vs 1.9% expected. Prior 1.9%
• US GDP Price Index (4Q) out at 2.4% vs 2.7% expected. Prior 2.7%
• US Core PCE QoQ (4Q) out at 2.5% vs 2.7% expected. Prior 2.7%
• US Initial Jobless Claims (Mar 22) out at 366K vs 370K expected. Prior 375K
• US Continuing Claims (Mar 15) out at 2845K vs 2885K expected. Prior 2850K
• NZ GDP QoQ/YoY (4Q) out at 1.0%/3.7% vs 0.8%/3.4% expected. Prior 0.5%/3.3%
• JN Jobless Rate (Feb) out at 3.9% vs 3.8% expected. Prior 3.8%
• JN Tokyo CPI YoY (Feb) out at 0.6% vs 0.5% expected. Prior 0.4%
• JN Natl CPI YoY (Feb) out at 1.0% vs 0.9% expected. Prior 0.7%
• JN Retail Trade YoY (Feb) out at 3.1% vs 2.0% expected. Prior 1.3%

Markets

• FX: EURUSD close the all-time high (1.5904). Overall consolidation mode in FX markets.
• Fixed Income: Consolidating or slightly lower. US Rate outlook deteriorating slightly. Now 42% chance of 50 bps. Rate cut by the 30th of April, according to STIR Futures.
• Equities: European session somewhat higher, but US again sliding and closing at day lows. Nikkei up 1.7%
• Commodities: Precious metals ranging, waiting for USD direction. Crude still higher ($107/bbl).

O/N Data Heat map:

Calendar

Today’s Highlights:

This and Next Week’s Highlights:

What’s going on?

• After having trailed below zero for the better part of early 2000’s, Japanese CPI has now hit a decade high at 1%. Rising unemployment and continuing credit cresis, however, make it unlikely for the BoJ to raise rates anytime this year. Rising oil and food costs account for main reasons behind the latest inflation figures.
• Despite 2-day consecutive losses in the American stocks, Asian stocks registered biggest weekly gain in 2008 on speculation the profit growth will weather the credit crisis and bad news will be confined to the financials. Some of this positive sentiment can be expected to carry over to the European session.
• Despite the larger-than-expected draw in inventories, the gasoline prices, much as the crude prices, seem over-strecthed, leaving ample room for downside moves. We look to sell the May contract between $272 and $277 a gallon with a target of $258.

FX

USDJPY

FX Trading Strategies

Equities

(+)Take Advantage of The Volatility With a Breakout Play

• We expect the European markets to open marginally higher today. The US Stocks lost ground yesterday after the closing in Europe, but this has been overcompensated by the Asia session and that the S&P500 Future is trading higher. The fear, that the jump in the oil price to around us $106,5 is sustainable, will hit airlines and especially the low cost carrier during the next days. This is due to that the segment they are targeting is more price sensitive compared to traditional airliners. In addition comes that the fuel price is a larger part of their cost base. We recommend short in Air Berlin, Easy Jet or our sector “favorite’ Ryanair against the market. Important consumer related US economic data can move the equity markets at 12:30 GMT. For more details please have a look at our new economic colander below.
• Trading Strategy: (Breakout play DAX.I) Play the volatility in DAX. At the moment when Indices start to move they are moving a lot, thus we like a breakout play in the German index DAX. to the upside we buy at 6610 with a stop at 6580 targeting 6700. To the downside we recommend to sell at 6455 with a stop at 6485 targeting 6330.

Equity Index Levels

Futures

Gasoline: We still think it is overpriced.

• Sell Gasoline (rbk8) @ $272-277,
  Targets $258 & $253, stop above $277.50

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Yesterday the U.S Commerce Department said that the U.S economy grew by 0.6 percent unchanged from the previous estimate in the final reading for the fourth quarter of 2007, while early this morning Japan reported that inflation rose to the highest in a decade!

Financial markets though remain skeptical over the future of both economies, the U.S and Japan, as economists believe they both entered a phase of recession, and we’re talking about the 1st and 2nd largest economies respectively!

The Euro seems to have settled above the $1.57 against the U.S Dollar, as the pair has been trading within limited ranges consolidating slightly below the $1.58 level in order to gather more momentum to set new record highs against the deteriorating Dollar. The pair recorded a high of 1.5811 early this morning to decline afterwards and set a low of 1.5764, good demand is seen around the 1.5720s levels, while minor resistance is seen at 1.5820 ahead of the stronger one at 1.5860s.

The Pound unlike the Euro declined against the Dollar last night as the pair dropped from the resistance at 2.0190 to reach near the psychological barrier near the $2 barrier, the pair recorded today a low of 2.0034 before rising to set a high of 2.0089, today the U.K will release their final GDP estimate for the last three months of 2007, the economy probably grew by an annualized 2.9 percent unchanged from the previous estimate.

Inflation rose in the land of the rising sun at the fastest pace in a decade, while their unemployment rate rose unexpectedly! Many believe the Japanese economy will follow the U.S economy on their path to recession, while rising inflation could make the situation a lot more difficult for the BOJ to deal with, investors believe the BOJ will be forced into cutting their interest rates by 25 basis points this year, while official releases from the BOJ indicates the BOJ might actually hike their interest rates!

The USD/JPY pair seems to have settled within the 99 levels, as the pair didn’t successfully breach the 100 levels or the 98! The pair recorded today a high of 99.88 and a low of 99.28.

The Euro inclined against the Yen near the critical resistance level at 157.75 yet couldn’t breach it as the pair had set its highest for the day so far at 157.70, while the Pound couldn’t hold on to yesterday’s gains as the pair dropped back to 199 levels setting its highest so far at 200.46, meanwhile the Euro went back to its winning ways against the Pound as the pair settled well above the 0.78 levels recording ahigh of 0.7878 and a low of 0.7858.

Crown Forex

disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.

How high can you go?

EUR/USD

Yesterday, the EURUSD was losing power to go upside. The pair opened at 1.5842 but closed at 1.5778, forming a hammer formation on the candle chart. Remember, the last time EURUSD made a reversal about 560 pips (from 1.5904 to 1.5341), it formed a doji a day before (see Chart #1). Immediate support is still at 1.5558 (23.6 % Fibonacci retracement from 1.4450 to 1.9504).

EURUSD Daily Supports and Resistances:

• S1= 1.5720
• S2= 1.5662
• S3= 1.5600
• R1= 1.5840
• R2= 1.5902
• R3= 1.5960

So, EURO! How high can you go?

FX Instructor LLC
www.fxinstructor.com

The information has been prepared for information purposes only. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. This information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXInstructor LLC assumes no responsibilities for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FXInstructor LLC does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXInstructor LLC shall not be liable for any indirect, incidental, or consequential damages including without limitation losses, lost revenues or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results

It seems that the EURO wants to continue its ascent that started in November 2005 but has arrived at an interesting decision point. Since it was at 1.1650, the pair has been on the most impressive climb that any financial assets can have.

Only the last leg up, starting at 1.49, seems a bit "vertical" but in general the whole move was a nice 45 degree angle, which is a sign of great bullishness.

The ebb and flow of the pair gave us 5 possible waves up (blue numbers), while the last one is still in development. In the attached weekly chart, we can see the following TA details to assess our possible positioning in this currency:

1. The whole move is contained in the general upward channel (in black) while most of the action and reaction points sit on parallel lines of the channel boundaries.
2. In the weekly overall view, it seems that the last wave (5) has some way to go before it will top out. The possible ends should be points on the parallel lines of the up trend line that stopped wave 3 and the last top at 1.60. These lines (1 and 2 in mauve) look very excessive but everything can happen in these hard times of financial crisis. Trichet’s stance on inflation is pushing this pair to values that nobody thought about before.
3. On the other hand, many traders look at the whole bull market here as completed. For them, we have drawn the possible retracement levels of the whole campaign. Look how well the Fibonacci percent levels sit near previous areas of large activity (support-resistance). Some of them are even where we have placed the end of the whole waves construction (3 and 4).

Conclusions:

We look at this pair with amazement. Then, we have two scenarios: Bulls, that look at the current price action as a small corrective phase inside wave 5 (that should bring the price near its 200 DMA or previous lines, blue, black or 3 in mauve by an ABC series). Bears, that look at the whole move as finished and wait for a serious retracement to relief the long awaited USD crash process.

ForexManage

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By no means do any part of this newsletter recommends, advocates or urges the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author and his company express personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. The content of this newsletter was created with the best known data at the time. The writer and his company are not responsible for the accuracy or completeness of the mentioned data. The writer is not a registered consultant of any kind and so the reader should not see any single part or the whole analysis as an advice for any kind of action in the financial markets.