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The Bank of England is expected to maintain interest rates steady but we expect a hike in May. In Japan we expect the Central Bank to keep monetary policy unchanged. This week there are no significant US economic releases.
Foreign Exchange:
The euro is consolidating in a range between support at 1.2050 and resistance at 1.2400/1.2450. Latter level is crucial: failure to overcome this level would suggest a further consolidation whereby the euro risks falling back to the lower consolidation area at 1.2100/1.2050.
It would take a move above 1.2450 to revive the bullish view, which would point the outlook higher again to 1.2700. The underlying trend of the USD/YEN remains bearish to 101.25. The dollar should remain below 105.25 to keep the immediate outlook bearish. Above 105.25, a further upward correction may be seen to 106.80. The risk however, remains on the downside.
Fixed Income:
As we discussed in our last week's edition, we expected yields to rise after a positive U.S. employment report. Employment figures came out largely above expectations and bond yields rose about 20 basis points after the data release. This week we expect some stabilisation after the rise on Friday. There are no key economic data to be released next week in the U.S. and economic data releases are not expected to be a driver of the European bond market.
Equities:
Last week's start was marked by the traditional window dressing related trading, that occurs at the end of every quarter. In addition investors were anticipating on the OPEC and ECB meetings, as well as the job creation figure that was published on Friday.
As mentioned above employment figures were much stronger-tan-expected and this was a clear relief for the markets. Further, we are at the end of the pre-announcement season. We interpret the lack of pre-announcements as positive as in the past negative warnings outpaced positive surprises in about every quarter.
Expectations appear to be rather low this quarter and comparisons are still favourable.
Employment figures stronger than expected
This week we expect German and French industrial production to have expanded in February on the back of strong global demand. Eurozone retail sales should reflect a mild pick in consumer spending.
Monday, April 05 - 2004 at 14:30
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InternaxxMonday, April 05 - 2004 at 14:30 UAE local time (GMT+4)
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This Article was updated on Wednesday, March 28 - 2007
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