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Euro Falls Against Dollar On Bank Writedowns
By Grace Cheng on April 2, 2008 | More Posts By Grace Cheng | Author's Website
Today is the start of a fresh quarter, and it is Euro’s turn to have its sentiment undermined, at least against the dollar. After failing to test its record high on Monday, the Euro has fallen steeply against the US dollar on renewed concerns about the European banking system as Swiss bank UBS announced another $19 billion in write-downs on illiquid US mortgage-backed assets and Deutsche Bank suffered big write-downs too. Tuesday saw disappointing Eurozone data such as German retail sales which fell 1.6% in February vs expectations of small 0.6% gain; Eurozone manufacturing PMI for March fell to a six-month low.
US Manufacturing
The March ISM manufacturing index came in at 48.6, better than expectations of 47.5 and rising slightly from February’s reading. It still indicated a contraction in manufacturing activity.
Bernanke Speaks
Traders and investors will next focus on Fed chairman Bernanke’s testimony later Wednesday to a Congressional committee in the US. Bernanke is likely to continue to talk about the downside risks to economic growth, and leave the door open to future rate cuts.
Forex Trading
EUR/USD’s nearest base is around 1.5550-60, and if this breaks, it could slide towards 1.5500, 1.5470. We could be seeing the formation of a double top, but the near-term outlook for the pair shall depend heavily on Friday’s US non-farm payrolls. As for USD/CHF, after three days of lurking below strong resistance around 1.0000, it finally broke upward with a huge force to an intraday high around 1.0140. Its nearest upside targets are around 1.0170, 1.0200, 1.0250. GBP/USD fell to a three-week low around 1.9730. USD/JPY surged 250 pips Tuesday to a three-week high of 102.15 on the back of a rise in US stocks and poor Tankan survey.
Wednesday:
UK mortgage approvals 0830 GMT
Eurozone PPI 0900 GMT
US MBA mortgage applications 1100 GMT
US ADP employment 1215 GMT
Fed’s Bernanke testifies before Joint Economic Committee 1330 GMT
US factory orders 1400 GMT
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