Focus of attention on oil

Economics

The March employment report fell short of market expectations. This week in the US we expect consumer credit growth for February to have slowed compared to January. Eurozone PMI service sector confidence should have fallen slightly in March.

The ECB and Bank of England are expected to keep interest rates unchanged on Thursday. The Bank of Japan is expected to keep monetary policy unchanged at its monthly meeting on Friday. Machinery orders for February are likely to have picked up slightly.

Foreign exchange

EUR/USD: Oversold daily indicators that are at the point of turning bullish suggest an upward correction into the 1.3080/1.3150 area. To keep this bullish outlook valid, the euro must now remain above 1.2860 as a decline below this level would imply a test of the long term support line at 1.2730.

USD/JPY: The neighborhood of a long term resistance line at 107.75/108.00 in combination with overbought daily indicators suggest a downward correction back into the 106.15/105.70 support range.

Fixed Income

After the storm of the last weeks, the market is calming down and awaits fresh US data to make up its mind on the future direction of interest rates and spreads.

Euro bond yields are down again, on the back of renewed pessimism on Eurozone growth prospects. All spread products made a nice come back and regained some of their losses, but we still keep away from those, as our targets have not been reached yet.

Equities

Due to a very light corporate results agenda, the focus last week was strongly on macro-economic data.

Investors focused on inflation and interest rates, after the Fed commented that inflation was more of a concern. Oil prices moved indexes up and down all week as it was very quiet on the pre-announcement front.