Alan’s Forex Blog

FED’s plan to swap 200 bln. USD mortgage backed bonds with US government bonds will make stocks go higher as well as the USD. But only for a while. Overnight News Bullets GE Wholesale Price Index MoM/YoY (Feb) out at -0.2%/6.0% vs. 0.5%/6.7% exp. SW CPI Headline MoM/YoY (Feb) out at 0.4%/3.1% vs. 0.6%/3.2% expected. SW CPI Underlying MoM/YoY (Feb) out at 0.4%/2.0% vs. 0.5%/2.2% expected. SW Activity Index Level (Jan) out at 122.9 vs. 123.3 prior. UK DCLG House Price YoY (Jan) out at 8.0% vs.

Carry Trades and stocks especially in danger. Fixed Income and precious metals and energy apparently the only safe havens. Overnight News Bullets AU Trade Balance (Jan) -2723M vs -2550M exp. JN Leading economic Index 30.% vs 30.0% exp. SZ Unemployment Rate (Feb) 2.7% VS 2.8% exp. UK HBOS Plc house prices sa (MoM) -0.3% vs -0,2% exp. GE Factory orders YoY (Jan) 9.5% vs 9.9% GE Factory orders MoM (Jan) -1.5% vs -0.4% UK BOE leaves Rates unchanged at 5.25% as expected. ECB leaves Rates unchanged

EURUSD edging despite “verbal” intervention from Trichet. All news apparently lead to USD weakness. Watch out for new lows in USDJPY below 102.62. Overnight News Bullets E-Z PMI Services (Feb F), out at 52.3 as expected. E-Z PMI Composite (Feb F), out at 52.8 vs. 52.7 expected. UK PMI Services (Feb), out at 54.0 vs. 52.0 expected. E-Z Retail Sales MoM/YoY (Jan), out at 0.4%/-0.1% vs. 0.3%/0.1% expected. US MBA Mortgage Applications (Feb 29), out at 3.0% vs. -19.2% expected. US Challenger Job

The supprime woes continue this morning Credit Agricole, France’s secondlargest bank by assets, posted a wider-than-estimated loss in the fourth quarter because of writedowns. Overnight News Bullets NZ ANZ Commodity Price (Feb) out at 0.9% vs. -1.4% prior. AU RBA Cash Target (Mar) out at 7.25% (+ 25 bps) as expected. SZ CPI MoM/YoY (Feb) out at 0.1%/2.4% vs. 0.2%/2.4% expected. SZ GDP QoQ/YoY (Feb) out at 1.0%/3.6% vs. 0.5%/2.8% expected. UK PMI Construction (Feb) out at 52.4 vs. 53.0

U.S. manufacturing slumped to a weakest level in 5-yr period and construction spending was lowest since 1994, adding weight to existing expectations that US is sliding into a recession Overnight News Bullets E-Z PMI Manufacturing (Feb), out at 52.3 vs. 52.3 exp. UK PMI Manufacturing (Feb), out at 51.3 vs. 51.0 exp. E-Z Euro-Zone CPI Estimate (Feb), out at 3.2% vs. 3.2% exp. CA Gross Domestic Product MoM (Dec), out at -0.7% vs. -0.2% exp. CA Quarterly GDP Annualized (4Q), out at 0.8% vs. 1.1%

Stocks, Carry Trades and the USD still looking weak. Watch out for the ISM figures today. Overnight News Bullets JN Jobless Rate (Jan) out at 3.8% vs 3.9% exp. JNHousing starts (YoY) at -5.7% vs -12.3% Annualized Housing Starts (Jan) out at 1.187M vs 1.115M JN Constructions orders (YoY) out at -2.5% vs prior 4.7% UK Nat’wide House prices (YoY) out at -0.5% vs 0.0% exp. GE Retail Sales (YoY) out at 0.6% vs -2.1% SW GDP s.s. (QoQ) 4Q 0.8% vs 0.6% exp. SW GDP w.d.a. (YoY) 4Q 2.8% VS 2.5% exp. NO

Bernanke’s comments yesterday that some small U.S. banks could fail has further bolstered the rate expectations, EURUSD to another record high at 1.5229 in a rapid succession of dollar selling. Overnight News Bullets GE ILO Unemployment Rate (Jan), out at 7.6% vs. 7.7% exp. •FR Producer Prices MoM/YoY (Jan), out at 0.5%/4.9% vs. 0.4%/4.8% exp. SZ Employment Level YoY (4Q), out at 2.7% vs. 2.5% exp. SW Current Account (4Q), out at 80.2B vs. 41.2B prior. SW PPI MoM/YoY (Jan), out at 1.3%/4.6%

Bernanke kept his soft tone yesterday before the Senate, as growth is the main concern before dealing with inflation. EURUSD sat new highs at 1.5144 in the NY session. US stocks mixed, but Nikkei red Overnight News Bullets GE Import Price Index MoM/YoY (JAN) out at 0.8%/5.2% vs. 0.3%/4.7% expected vs. -0.1%/3.7% prior read. GE GfK Consumer Confidence Survey (MAR) out at 4.5 vs. 4.4 expected vs. 4.5 prior read. SW Manufacturing Confidence (FEB) out at -1 vs. -2 expected vs. -1 prior read. SW