Stock markets falling, the dollar benefits of its safe haven status

[RTFX-Trading]

Stock markets falling, the dollar benefits of its safe haven status

What's new:
United States: TALF unwelcome.
United States: Consumer credit drops sharply in February.
Euro area: Economic contraction in the 3rd and 4th quarter 2008.
Australia: Rebound in consumer confidence.
Japan: BoJ leaves interest rates unchanged at 0.10%.

Today:
08:00 Germany: February trade balance, expected 7.5 billion, previous 8.0 billion.
08:30 France: Banque de France survey.
08:45 France: March trade balance, expected -4.2 billion, previous -4.55 billion.
12:00 Germany: industrial production in February, expected -3.0%, previous -8.0%.
16:00 USA: inventory, expected -0.7%, previous -0.9%.
20:00 United States: FOMC Meeting Minutes March 17-18.

Rates in Asia and Indices:

EURUSD: 1.3283 - 1.3166.
USDCHF: 1.1500 - 1.1415.
GBPUSD: 1.4746 - 1.4663.
EURCHF: 1.5167 - 1.5117.
USDJPY: 100.87 - 99.89.
DowJones: 7789 -2.34%.
NASDAQ: -2.87% 1275
S & P 500: 815 -2.39%
Nikkei: -2.93% 8574
Gold: $ 887
Oil: $ 48.23

Comments:

The EURUSD is again under pressure this morning; the health of the European economy is not rosy. The euro area economy contracted slightly more than estimated in the 3rd and 4th quarters 2008, underscoring the depth of the recession in progress. A new base rate cut at the next meeting of the ECB next month seems inevitable.

In the United States, consumer credit has dropped sharply in February, according to the U.S. Federal Reserve (FED). Grants unscrewed, the major U.S. indices were down by 2.4% -3.0%, and investors anticipate another season of poor quarterly results from companies. The confidence of American business leaders is at a record low; more than two thirds have announced further job cuts and expect a sharp decline in sales for the coming six months. The second installment of TAFL has again been poorly received; investors have requested $ 1.7 billion of loans, as against $ 4.7 billion in March. This means that the Fed has to find other ways to inject liquidity into the economy, perhaps through additional purchases of Treasury bills.

Today, the Minutes of the FOMC meeting of March 17-18 are to be released. The minutes should give us further information on the reasons for the Fed to extend itsmeasures, such as purchases of government bonds. The market could anticipate a positive minutes announcement and a  resumption of "carry trade" activities. EURUSD; the support area seems to concentrate in the 1.3135-1.3170 range. The EURUSD could bounce back above 1.3346 or even 1.3385. A break of 1.3113 would question this bullish view.


Good Day

Nicolas Longchamp
RTFX Ltd
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