U.S. Market Update

Daily Forex Fundamentals | Written by Trade The News | Mar 10 09 15:38 GMT |

Dow +249 S&P +29 NASDAQ +60 US equity indices are enjoying the strongest rally since late January, driven by positive comments from Citigroup and a general rebound in financial stocks around the globe. Front-month crude continues to strengthen towards $50 ahead of this weekend's OPEC meeting, where another output cut potentially remains on the table. Spot gold dipped below $900 for the first time in nearly a month. The better risk appetite has taken a bite out of Treasury prices, with the 2-year yield back above 1% ahead of this afternoon's $34B 3-year note auction results. Financials are rocking this morning after weeks and in some cases months without much inspiring news. All the enthusiasm was touched off by Citi CEO Vikram Pandit, who told the bank's employees in an internal memo that Citi was profitable in the first two months of 2009. Later a filing from Citi disclosed that January and February revenues were $19B, confirming that the bank has been profitable, representing its best quarter since Q3 2007. Unsurprisingly, Pandit "remains disappointed with the movements in share price." Note that yesterday the WSJ reported that Bank of America CEO Lewis has been talking up BoA to differentiate the bank from Citi. Lewis has repeatedly insisted that Bank of America needs no more government money, while suggesting that Citi probably will. Shares of both Citi and BoA were up 25% in early trading, while other major banks were up 10-15%. But today's rally aside, multiple other headlines bode ill for the financials. Earlier today reports circulated that the SEC will not suspend mark-to-market accounting (note that on 3/12 the House Financial Sevices subcommittee will hold hearings with the SEC and FASB on mark-to-market accounting). In his speech this morning, Ben Bernanke strongly endorsed the principle of mark-to-market accounting while also noting he believes current conditions may distort marking to market. Meanwhile the newly-independent analyst Meredith Whitney warned that credit cards will be the next credit crunch, insisting that credit card lines will be cut materially, reducing consumer outlook and spending. Whitney boosted her prior estimates of the amount credit-card lines will be cut in 2009 to more than $2T and $2.7T by the end of 2010. Also note that overnight the FDIC's Bair said emerging plans to remove troubled assets from banks could force some firms to record large losses. Just a few days after President Obama said the defense sector is #1 on his wasteful spending to-do list, Morgan Stanley took a swipe at the industry, cutting the US defense and aerospace sector to cautious from in-line. Meanwhile defense giant and Dow component United Technologies cut its 2009 forecast and announced plans to lay off 4% of its workforce. UTX's CEO said the move would protect profitability and “position the company for resumed earnings growth in 2010.” These developments aren't dampening the rally for UTX, which is up 6% in early trading, while other defense names are underperforming markets. In other earnings news, Avnet cut its Q3 forecast, Kroger reported Q4 in line with all expectations and JA Solar missed Q4 earnings estimates by a country mile. In currencies, EUR/USD has rallied above the 1.28 level and above last Friday's post-US payrolls high. The cross has managed to shrug off dovish interest rate comments from ultra-hawk ECB member Weber, who noted that the Euro Zone economy could still shrink in early 2010 and rates could move below the current level of 1.50%. Note that Weber also insisted that 1% was about the lower limit for ECB rates, although this barrier was not set in stone. Some potential central bank action on the Eastern European front added to the risk environment. Ukraine reportedly warned numerous banks against selling Hryvnia below the official bank rate. Dealers were also noting that the Hungarian Central Bank said it would sell euros from EU funds to stem further losses on the Forint. In other currency news, Canadian Finance Minister Flaherty noted the upcoming jobs data set for release on Friday was not likely to be good number. However, the CAD was firmer throughout most of the morning, helped by energy and basic commodity momentum. There were some signs of stabilization in China after it noted its Feb auto sales encountered their first advance in four months. Trade The News Staff Trade The News, Inc. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

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Canada Rising!

Daily Forex Fundamentals | Written by Interactive Brokers | Mar 10 09 15:17 GMT |

Although the U.S. dollar yesterday reached its highest point in several months, investors are more likely to remember days like today when equities rally off bargain basement prices clinging on to any signs of global recovery. There's a real schism opening up between currency values and central bank action, or in some cases inaction. With no shortage of market bulls creeping out of the woodwork today, the dollar is predictably feeling the pressure and is lower against just about everything. . A catalyst apparent in leading U.S. equities higher is the internal email circulated to Citigroup employees, which states that the bank is having its best days since 2007 and that revenues are stellar. CEO Vikram Pandit notes that the share price, which slumped to less than one dollar last week, doesn't reflect the earnings potential nor the bank's capital position. Over the weekend General Electric's CEO, Jeff Immelt sounded off to Bloomberg journalists in a similar fashion and for now, investors appreciate the confidence from respective leaders. If the remaining 498 CEO's wouldn't mind stepping forward and speaking their minds on shares in their companies we could have a pretty decent rally on our hands before the weekend. And if the Treasury department would reiterate its strong dollar policy and how that benefits America, we could see fresh highs for the dollar too. The relief for equities is quite apparent and as it asserts itself the dollar is visibly losing its bid, today falling to $1.28 against the euro. Against the yen the dollar is lower at ¥98.25 while the euro has added more than one Japanese yen to ¥125.70. But here's our issue with what we see as another round of knee-jerk trading. In Australia overnight the Aussie fell as business confidence stayed pinned to the floor while jobs advertised in the media fell at the fastest ever pace. That in itself doesn't bode well for the employment report later this week. However, the fact that the Baltic dry index rose for a seventh consecutive day aroused the notion that global export demand was alive and well somewhere. This turned local stocks around and gave a shot in the arm to the Aussie now trading at 64.81 U.S. cents from 63.16 yesterday. Just around the corner in Japan, things certainly didn't turn any corners as fresh data showed leading and coincident indicators clearly showing a worsening outlook. These indicators are forward looking and deteriorated - they didn't even stand still - and it's hard to understand how both Aussie and Japanese data can coexist with dollar indifference today. Our follow-on issue today lies in the treatment of the pound relative to the euro in terms of central bank performance and rhetoric. We noted yesterday that the pound was suffering despite a persuasive performance from the Bank of England as it tackles domestic implosion. It has shown preparedness to slash interest rates towards zero and devise quantitative measures beyond what other central banks are doing, save the Fed. Today the pound continues to weaken to 92.21 pennies against the euro following the worst set of housing sales since 1978. On the one hand currency traders continue to punish the pound for the underperformance of the domestic economy - a legacy borne out of the core over extension of the banking system. At the same time the Australian dollar doesn't react to similar evidence of domestic weakness, preferring to hang its hat on a rally in an overly depressed shipping index. Further, the words of Germany's Bundesbank president, Axel Weber today cause us more of a headache. He is know stating that Eurozone interest rates shouldn't fall below 1% and as such he's setting a floor in policy expectations. Once again, this is a vital misunderstanding at this rather important central bank, where once again we note that as recently as July they were raising interest rates. Failure by the ECB to adopt a similar tone to that pursued by the Bank of England will ultimately cause further euro weakness. Today, however, is not that day and the euro is expanding its haven as a relative high-yielder following Weber's discussion. What distresses us further today is the fact that the cart appears firmly in front of the horse. It's very hard to stand in front of an equity-inspired boost to confidence, especially when investors are likely processing data in a skewed fashion. We're talking about energy prices here, which are helping to fuel demand for commodity dollars including the Canadian dollar today, which has now rebounded off a four-year low and today takes $1.2775 U.S. dollars to buy a Canadian dollar. Rising crude oil prices are helping to instill confidence that a commodity rebound is here. What's missing here though is the twofold comprehension that OPEC's supply reduction is working and second, that U.S. consumers' effective tax holiday is slowly being lifted. For sure it's great to feel confident, but it remains a long shot to expect a rebound for equities to create a solution to the weakness of the banking system. Andrew Wilkinson Senior Market Analyst Interactive Brokers Note: The material presented in this commentary is provided for informational purposes only and is based upon information that is considered to be reliable. However, neither Interactive Brokers LLC nor its affiliates warrant its completeness, accuracy or adequacy and it should not be relied upon as such. Neither IB nor its affiliates are responsible for any errors or omissions or for results obtained from the use of this information. Past performance is not necessarily indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any security or other financial instrument. Securities or other financial instruments mentioned in this material are not suitable for all investors. Any opinions expressed herein are given in good faith, are subject to change without notice, and are only correct as of the stated date of their issue. The information contained herein does not constitute advice on the tax consequences of making any particular investment decision. This material does not take into account your particular investment objectives, financial situations or needs and is not intended as a recommendation to you of any particular securities, financial instruments or strategies. Before investing, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.

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Euro Rises Against US Dollar Despite Poor Economic Data

Daily Forex Technicals | Written by DailyFX | Mar 10 09 15:41 GMT |

The Euro began picking up bullish momentum in Asian session trading and would not be deterred into the European trading open, shrugging off a worse than expected print for Germany's February Current Account balance. The single currency would add as much as 1.3% against the US Dollar, putting in a high an intrasession high at 1.2741. A rebound on European stock exchanges fueled the rally: the dollar's safe-haven status amid recent turmoil has created an environment where EURUSD is now 91.4% correlated with the MSCI World Stock index. European shares gained as EADS, the parent company of Airbus, reported an 89% jump in profits while Citigroup's CEO said the bank is off to the best start to a quarter in more than a year. Technically, the Euro stands at critical level with EURUSD threatening to carve out a double bottom in the 1.2450-1.26 congestion area. Our DailyFX analysts weigh in on the single currency and offer their strategies for trading it in the coming days. Senior Currency Strategist Jamie Saettele My picks: Long EURUSD, against 1.2550, targets 1.35 and 1.38 Expertise: Technical Average Time Frame of Trades: My bullish bias was triggered today as the EURUSD traded above the upper diagonal line. Staying above 1.2550 keeps the trend up. There is short term support at 1.27. Those picky about entries might try and enter near there but there is also the possibility that the EURUSD surges from current levels. I say that because the EURUSD is reversing from an ending diagonal. Ending diagonals are weak 5th waves that give way to sharp reversals. The diagonal began at 1.33, which is the minimum bullish objective. 1.38 is very much in the realm of possibilities since the rally from 1.2454 is a small second wave...second waves are usually deeper retracements. Currency Strategist John Kicklighter My picks: Pending EURJPY Breakout (Long Bias) Expertise: Combining Money Management with Fundamentals And Technical Analysis Average Time Frame of Trades: 3 days - 1 week The euro has been a mixed bag among the crosses. However, the most common element to the currency's pace has been chop as speculation that the European economy would pace growth and interest rates have been unsettled by financial troubles brewing in Eastern Europe and the ECB's apparent willingness to maintain its regime of rate cuts. Looking at the euro across the spectrum, the only pair that has has bucked the trend and forced its way into a breakout was EURGBP - my setup from last week. And, unfortunately, the break was not in my favor. I had an active setup last Tuesday with a short that was in the money for until the end of last week. Not fully appreciating the lack of pace through the downswing and the rising trend, I would miss my first target by 10 points before the market reversed and stopped me out around 0.9080. This week, I will turn my focus back to the congestive euro crosses that still have pent up energy behind a possible breakout. This is similar to the situation two week's ago when we had the break through 120. We are looking for the bullish reversal from January's lows to continue its development. This will take fundamental fuel. EURJPY is one of the most liquid currency crosses to have a relatively pure correlation to risk appetite. Therefore, barring any crises in the European financial system or signs that the ECB is dramatically changing its pace of cuts, this pair will likely track the pace of sentiment. Of course, even the yen's position as a safe haven is at question nowadays. For positioning, we will wait for a technical catalyst to drive momentum and confirm the trend we are looking to follow. Following the steady advance in lows since the Jan 21st swing low, we are now finding pressure at 126.00/15. Aside from a range high, this is finds modest confirmation as a notable level through a pivot that has exacted pressure on price action since November and a 50 percent Fib retracement that is pulled from the Oct 14th to Jan 21st downdraft. The best cue for a break is a medium time frame (120 or 240-minute) close above the 126 level. A stop can be set below recent congestion (covering the Mar 3rd low if the objective is very cautiuos and the precieved potential for follow through is high). There is still an issue that a break here can once again stall around the series of spike highs around 130. This is a very obvious level of resistance and one we will have to watch with momentum in mind. The most reasonable setup would be for a first target that is set well within the 130 level and then trail stop the second half of the trade to look for the greater potential of a true trend reversal. Currency Strategist Terri Belkas My picks: Watch for EUR/AUD Breakout Expertise: Fundamentals Combined With Technicals Average Time Frame of Trades: 1 Day - 1 Week EUR/AUD has been consolidating within a large triangle, so I think it's worthwhile to look for a break higher or lower. Here are my parameters: Short EUR/AUD on a break under trendline support, which connects the August, January, February, and March lows, as indicated by a daily candle close below 1.9500. Potential targets include the 50% fib of 1.6214-2.1149 at 1.8671 and the 200 SMA, which is currently closing in on 1.8500. Such a move would likely come only on a pick up in risk appetite, or on fundamental news that was highly bearish for the euro or extremely bullish for the Aussie. Long EUR/AUD on a daily candle close above 2.0150, where we have falling trendline resistance. Potential targets include the 2008 spike highs near 2.1000. From a fundamental perspective, risk averse selling in the markets would likely need to occur for this to happen. As usual, stops should be place according to preferred risk/reward ratios. Currency Analyst David Rodriguez My picks: Range trade the EUR/USD Expertise: System Trading Average Time Frame of Trades: 2-10 weeks As I wrote last week, I continue to believe that the EUR/USD will trade within a fairly wide range through the foreseeable future. Unfortunately I called for a EUR/USD bottom at 1.2700--a full 150 points above the actual bottom. But my feelings remain unchanged on the matter. Absent a more convincing uptick in volatility expectations, I don't believe that the EUR/USD will break its fairly long-standing range. Thus a range buy at these levels seems like a reasonable risk/reward proposition, and I think there's a solid chance we return to range highs closer to 1.2950. Currency Analyst Ilya Spivak My picks: Remain Short EURUSD Expertise: Global Macro, Classic Technical Analysis Average Time Frame of Trades: 1 week - 6 months I first sold the Euro against the US dollar at 1.5510 and have been holding short since, expecting the emergence of a long-term down trend. To update yesterday's analysis, EURUSD is once again testing the upper boundary of a bearish channel that has confined prices since late January (now at 1.2750). This is the near-term line in the sand: a daily close above this level would open the door for (at least) a sizable upward correction to 1.3060-70. For the time being, however, the picture remains bearish. Currency Analyst John Rivera My picks:Long EUR/USD Expertise: Fundamentals Combined With Technicals Average Time Frame of Trades: 2-4 Days Although, I had to endure a brief dip below support at 1.2500 before bullish momentum took hold, my long Euro pick is proving to be profitable. My justification for the pick was that the support level has held so firm. My call for a break above the 20-Day SMA has come to fruition and my second target of 1.3000 appears to be in sight. Therefore, I am sticking with my long position and re-committing to my 1.300 target. However, the 50-Day SMA at 1.3015 could limit any further gains and is a level that deserves watching. Currency Analyst David Song My picks: Sell EUR/CHF Below 1.4550 - Look For Break Out Expertise: Fundamentals and Technicals Average Time Frame of Trades: 2 - 10 Days The EURCHF fell to a fresh low for 2009 earlier this week, and I expect the pair to hold its bearish trend over the near-term as investors continue to curb their appetite for risky assets. The euro-franc bounced back today after testing 1.4640-50 (78.6% Fib), and may continue to push higher over the week, but as short- term resistance firmly lies at 1.4900-10 (61.8%), gains to the upside are likely to be capped. As a result, I expect the pair to retrace the rally from the October low, and will hold my target at the 10/31 low of 1.4542. Currency Analyst Joel S. Kruger My picks: Pending Sell EUR/USD @1.2920 for 1.2580 Objective, Stop @1.3020 Expertise: Technical Analysis Average Time Frame of Trades: 1-3 Days The pair has been well capped on a close basis below the 20-Day SMA (1.2700) for the entire 2009 and until a close above can be established, intraday rallies towards and above the 20-Day should be used as opportunities to build on existing short positions. With the market already trading above the 20-Day ahead of the US session of trade, scope exists for additional upside over the coming hours. We will look to take advantage of an overdone rally today to look to get back into the overriding bear trend. Stops to be trailed to cost on a break back below 1.2870. If trade triggers and 1.2870 not broken, position to be closed out at NY close (5pm EST) on Tuesday. Recommendation to be removed if not triggered by NY close on Tuesday. Fundamental Catalyst - The Euro has been well correlated with US equities of late and any sense of an increased risk appetite and bid back into equities should help to bolster the major currency. However, as has been the case throughout the global financial crisis, rallies in the equity markets should only be used as opportunities to build on existing shorts, with the renewed optimism more often than not, reliably shot down quickly and abruptly. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

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Daily Market Commentary - Fundamental Outlook

Daily Forex Fundamentals | Written by GCI Financial | Mar 10 09 15:13 GMT |

€ The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.2820 level and was supported around the $1.2580 level. U.S. equity markets jumped higher early in the North American session and the U.S. dollar declined. European Central Bank member Hurley reported the central bank “will continue to monitor closely all developments” and added “the uncertainty concerning the outlook remains very high.” Hurley also noted “I should mention that the ECB is currently studying possible nonstandard monetary policy measures. Quantitative easing is a legitimate (monetary policy) measure.” Most traders believe the ECB will conduct quantitative easing measures in H1 2009 but acknowledge the difficulties in trying to select assets to purchase with varying credit profiles. European Central Bank member Bini Smaghi noted “If the (economic) situation worsens, the ECB is ready to reduce rates further, even to zero…That is above all the case if the economy was really threatened by sustained deflation. And in such a situation, the best approach would be to act sooner rather than later.” U.K. Chancellor of the Exchequer Darling was critical of the European Union today, saying the European Union and European Central Bank should do more to aid struggling Central and Eastern European developing countries that are struggling with the several regional crisis. Data released in the eurozone today saw the French January trade balance widen to -€4.55 billion while the German February consumer price index rose 0.6% m/m and +1.0% y/y. In U.S. news, Federal Reserve Chairman Bernanke called for regulatory reform, noting “We must have a strategy that regulates the financial system as a whole, in a holistic way, not just its individual components.” Data released in the U.S. today saw January wholesale inventories off 0.7% m/m, up from the revised December fall of 1.5%. Euro bids are cited around the US$ 1.2385 level. ¥/ CNY The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥97.90 level and was capped around the ¥99.15 level. The yen was mixed across the board as risk appetite returned to some equities markets. Central bankers have been driving home the message that many of the world’s largest financial institutions are too important to fail and spreads on credit default swaps came in overnight on that message and other developments. European Central Bank President Trichet yesterday said policymakers are striving to mitigate systemic risk and Federal Reserve Chairman Bernanke again reiterated banks maintain sufficient capital. Data released in Japan overnight saw the January leading index improve to 10.0 from 8.3 in December while the coincident index printed at 0.0. Most traders expect Bank of Japan will continue to ease monetary policy through asset purchases. The Nikkei 225 stock index lost 0.44% to close at ¥7,054.98. U.S. dollar offers are cited around the ¥104.15 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥126.05 level and was supported around the ¥124.30 level. The British pound moved lower vis-à-vis the yen as sterling tested offers around the ¥137.05 level while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥85.85 level. The Chinese yuan depreciated vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8410 in the over-the-counter market, up from CNY 6.8398. GCI Financial http://www.gcitrading.com DISCLAIMER : GCI's Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

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Euro Tests Top Side of Diagonal; Bullish Case Bolstered

Daily Forex Technicals | Written by DailyFX | Mar 10 09 14:36 GMT |

EURUSD bullish against 1.2550 GBPUSD drop below 1.3740 may complete wave B AUDUSD holds critical support NZDUSD bullish against .4890 Euro / US Dollar Since the January 23th low, the EURUSD has unfolded in a triangle and terminal thrust or zigzag and ending diagonal or both. The point is that all price action for over the past month has been corrective. “As such, know that once the turn occurs, it will be fast as turns that occur from ending diagonals are. Until that turn occurs, the EURUSD likely continues its frustrating choppy trade. There are 2 areas to look for longs; the low side of the diagonal line and a break of the top side.” The EURUSD is testing the top side of the channel now. Longs on the FX Technical Weekly were triggered today. Bulls are in control as long as price is above 1.2550. British Pound / US Dollar The count on the daily, which shows 5 waves down from the 2007 high, indicates that risk of a sharp advance is high. The count that I am working with now treats the rally from 1.35 to 1.4990 as wave A of a flat (flats have subwaves 3-3-5). B waves of flats retrace a significant portion of wave A, sometimes retracing more than 100% of wave A (in the case of an expanded flat). Near term, a drop below 1.3740 may complete wave B. Australian Dollar / US Dollar It is entirely possible that a larger flat is underway in the AUDUSD in the guise of a complex W-X-Y pattern that will end above .7275. Exceeding .6562 would shift the odds in favor of this bullish interpretation. Until then, the AUDUSD is in “no-man's” land. Coming below .6283 would give scope to a test of .60. New Zealand Dollar / US Dollar The NZDUSD has declined impulsively (5 waves) since its 2008 high and that decline was followed by a 3 wave rally (from the November low). The decline from .6090 is now in 5 waves and the risk of a sharp advance back to at least .5454 in a small second wave is high. The close above the trendline from early January as well as divergence with RSI on the daily favors bulls. US Dollar / Japanese Yen Resistance for the USDJPY is at 100.50 / 101; which is the November 4 high / 61.8% of the decline from 110.71. RSI is rolling over from above 70, which warns of a top. Still, short term structure suggests that one more is needed before a more permanent top is in place. Expectations this week are for a push above 100. 101-103 is the reversal zone. US Dollar / Canadian Dollar The USDCAD has exceeded the October high and there is no chart resistance until 1.3260, which is the October 1995 and November 1996 lows. It is entirely possible that 1.40, the May 2003 high, is reached given that this break comes from a consolidation of 4+ months. US Dollar / Swiss Franc “Expectations are for the USDCHF to decline to at least 1.13. This is where the ending diagonal, which are usually fully retraced, began.” Risk can be moved from 1.1891 to 1.1690. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

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Currency Technical Report

Daily Forex Technicals | Written by FX Greece | Mar 10 09 12:18 GMT |

EUR/USD Resistance: 1,2715-20/1,2760/ 1,2810-20/ 1,2860/ 1,2920/ 1,2980 Support : 1,2650/ 1,2590-00/ 1,2550-60/ 1,2480/ 1,2450/ 1,2400 Comment: Euro remains "trapped" within a tight price range, as uncertainty dominates in the market... Important intraday resistance is found at 1,2780-00 and 1,2880-00 area, while support emerges at 1,2580-2610 and 1,2520-30. Next target on the upside is 1,3000-50 area, which is the reversal range of the basic downtrend, while downwards our target will be at 1,2350-00. *STRATEGY: Our strategy remains the same. We try small positions at the ranges with tight stops... FX Greece DISCLAIMER The details and information included in the above analysis, are part of research based exclusively on currency charts and are of purely instructional and educational nature. None of the information featuring in the analysis can be considered as an invitation for opening positions in FOREX market or in the market of forward contracts or any securities listed on an organized or unorganized market. We assume no responsibility for any kind of losses ,profits or property loss resulting, in whole or in part, from acts that are based either directly or indirectly on the processing or the use of information, details and strategies, the reader may find in the analysis. The readers hold full responsibility for the use and the results of their actions. The recipients of the analysis must acknowledge and accept that investment choices of any kind, especially concerning the FOREX market, contain risks (high, low and occasionally zero) of reduction or even loss of their investment. Therefore, they should always be cautious prior to any kind of action. We reserve the right to change the terms and the characteristics of the analysis. The contents of the analysis are solely intended for personal use. They may not be retransmitted, reproduced, distributed, published, adapted, modified or assigned to third parties in any way whatsoever. Anyone having access to them is required to comply with the law provisions on the protection of third party intellectual property rights.

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EURUSD, AUDUSD, EURCHF Daily Outlook

Daily Forex Technicals | Written by E-Forex | Mar 10 09 07:48 GMT |

EURUSD The Euro extends rally to session highs into the 1.2720 region, eyeing Friday's top at 1.2750. Daily momentum is slightly bullish but a confirmation of the uptrend will occur on a sustained break above the 1.3 mark. Intra-day studies are bullish and a break above 1.2750 may boost the Euro to as high as 1.2880 where next important resistance is formed by the downward trendline extended through February's highs. On the lower region, support is emerging at 1.2660 backed by 1.2555/85 and 1.2455/80. While holding above yesterday's low into the mid 1.25, short-term momentum will remain slightly positive and potential rallies above 1.2750 will be favored. Current quote is 1.2691 @07:10 GMT Support levels: 1.2660, 1.2555/85 and 1.2455/80. Resistance levels: 1.2750, 1.2830, 1.2880/00 and 1.2990/00. Market sentiment: long-term : bearish, mid-term : bearish, short-term : slightly bullish AUDUSD The Aussie Dollar keeps looking for direction and trades into the fragile range of .6280/00 - .6450/80, around 100 points away from the current year's bottom at .6245. On a short-term basis, the pair maintains a bearish stance and below the key support at .6245, a decline may easily extend towards .6010-.6080. Risk of more downside action is high while below median resistance formed at .6550/65. Above the said level, momentum should turn positive, encouraging further strength to .6850-.6900. Current quote is .6385 @07:10 GMT Support levels: .6305/30, .6280 and .6250. Resistance levels: .6450, .6550, .6650 and .6730 Market sentiment: long-term : bearish, mid-term : bearish , short-term : slightly bearish EURCHF The EUR extends weakness against the Swiss Franc and last week's low at 1.4575 is under pressure. A break below 1.2575 will be extremely bearish for the EUR as the collapse may extend lower to the record low at 1.4300. On the upside, resistance starts at 1.4660 and it is followed by 1.4750 and 1.4830. Current quote is 1.4611 @07:10 GMT Support levels: 1.4550/75, 1.4500, 1.4400 and 1.4300. Resistance levels: 1.4660, 1.4750 and 1.4830. Market sentiment: long-term : bearish, mid-term : bearish, short-term : bearish E-Forex Legal disclaimer and risk disclosure Past performance does not guarantee similar performance in the future. Our forecasts do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any foreign exchange transaction. E-Forex.ro accepts no responsibility or liability whatsoever for any expense. We do not warrant or guarantee the accuracy, timelines or completeness to the service or informations you find here.

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China's CPI Falls

Daily Forex Fundamentals | Written by AC-Markets | Mar 10 09 08:53 GMT |

Market Brief The Usd was weaker in the Asian session, as fx traders lack the conviction to push markets in one direction. The EurUsd was range bound trading between 1.2580 to 1.2720, while the UsdJpy settled between 99.14 and 98.35. The Sterling was able to stabilize after yesterday's mass exodus, with the GbpUsd trading around 1.3850 and 1.3777 (with UK yields dropping significantly over the past few sessions and concerns over the UK banking sector we expect the Sterling to come under renewed pressure). The equity market sell-off continued, with the S&P500 finishing down 1.0% yesterday and Asian regional indexes are mixed with the Nikkei down by 0.4% and Hang Seng up 2.97% (partially due to the government probe in HSBC trading, which fell 24% yesterday). Crude prices continue to rise as markets have increased bets on an OPEC production cut. In the current climate, we continue to expect the greenback to stay supported, as US investors repatriate funds and risk-averse foreign investors continue to acquire safer, liquid US Treasury. In Australia, business conditions in February fell 9 points, to -20 index points. This marks the weakest outcome since the early 90s. However, business confidence rose by 10 pts, to -22 index points (although still a vey weak level). The rise was concentrated in the retail, wholesale and transport sectors which all benefited from the government stimulus package. In China, the CPI dropped 1.6% y/y, the first negative growth since December 2002, according to National Bureau of Statistics figures. The declining growth should keep inflation below China's 4% target, but should increase rapidly as China's economy gradually picks up the pace. Meanwhile, in Japan leading indicators for January fell slightly to 77.1 vs. 77.4 exp and 79.4 revised prior reading. In the UK, the industrial production data will be the highlight of the European session. The release is expected to confirm that manufacturing recession is to be as severe as in the early 1980's. Given the pressure on the Sterling in recent day, we expect this negative number will have an equally negative effect on the currency. ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

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Forex Technical Analytics

Daily Forex Technicals | Written by FOREX Ltd | Mar 10 09 08:47 GMT |

CHF The pre-planned short positions from the key resistance range have been realized with attainment of minimal assumed target. OsMA trend indicator having marked the preservation of bearish advantage gives grounds to support planning priorities in favor of sells for today. Hence and because of incompletion of bullish development, we assume a possibility of rate return to the range of 1.1580/1.1600, where it is recommended to evaluate the activity development according to the charts of shorter time interval. For sells on condition of formation of toping signals the targets will be 1.1520/40, 1.1460/80 and/or further breakout variant up to 1.1400/20, 1.1320/40, 1.1280/1.1300. An alternative for buyers will be above 1.1680 with the targets 1.1720/40, 1.1780/1.1800, 1.1840/60. GBP The pre-planned breakout variant for sells has been realized with overlap of minimal assumed target. OsMA trend indicator having marked the considerable rise of bearish activity at the break of key supports gives grounds to preserve planning priorities in favor of sells for today. At present taking into account current bullish development with relative strengthening buyers' activity, we assume a possibility of attainment of close resistance range 1.3890/1.3910, where it is recommended to evaluate the activity development according to the charts of shorter time interval. For short-term sells on condition of formation of topping signals the targets will be 1.3810/30, 1.3720/40 and/or further breakout variant up to 1.3620/40, 1.3500/40. An alternative for buyers will be below 1.4040 with the targets 1.4080/1.4100, 1.4160/80, 1.4260/1.4300. JPY The pre-planned breakout variant for buyers has been realized but with a fail of attainment of assumed targets. OsMA trend indicator having generally marked the activity parity of both parties gives grounds to presume a possibility of range movement of the rate without clearness in a choice of planning priorities for today. Hence taking into account rate movement within Ichimoku cloud as well as current bearish activity, we assume a possibility of rate return to the nearest resistance range 98.60/80, where it is recommended to evaluate the activity development according to the charts of shorter time interval. For short-term sells on condition of formation of topping signals the targets will be 98.00/20, 97.60/80 and/or further breakout variant up to 97.00/20, 96.60/80. An alternative for buyers will be above 99.80 with the targets 100.20/40, 100.80/101.00, 101.60/80. EUR The pre-planned buyers' positions from the key supports have been realized with attainment of minimal assumed targets. OsMA trend indicator having marked the preservation of bullish advantage gives grounds to preserve the priority of buying direction to plan trading operations for today. Nevertheless taking into account considerably high level of bearish counteraction, we assume a possibility of rate return to the nearest boundary of Ichimoku cloud at 1.2600/20, where it is recommended to evaluate the activity development according to the charts of shorter time interval. For short-term buyers' positions on condition of formation of topping signals the targets will be 1.2660/80, 1.2740/60, 1.2800/20 and/or further breakout variant up to 1.2940/60, 1.3000/20. An alternative for sells will be below 1.2550 with the targets 1.2490/1.2510, 1.2420/40, 1.2380/1.2400. FOREX Ltd www.forexltd.co.uk

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Australian Job Ads Fall by Record Amount Amid Company Pessimism

By Jacob Greber

March 10 (Bloomberg) -- Australian advertisements for job vacancies tumbled in February by a record amount and business confidence held near a two-decade low, stoking speculation the economy is in its first recession since 1991.

Jobs advertised in newspapers and on the Internet dropped 10.4 percent from January and 39.8 percent from a year earlier, according to an Australia & New Zealand Banking Group Ltd. report released in Melbourne today. National Australia Bank Ltd.’s business sentiment index rose 10 points to minus 22, the 14th straight month pessimists have outnumbered optimists.

Slumping global demand for exports, rising unemployment and a decline in consumer spending will cause the economy to shrink 1 percent in 2009, National Australia said today, revising a previous forecast of a 0.25 percent contraction. Gross domestic product dropped last quarter for the first time in eight years, increasing pressure on the central bank to resume cutting the benchmark interest rate from a 45-year low of 3.25 percent.

“We see no fast recovery in Australian activity,” said Alan Oster, chief economist at National Australia Bank in Melbourne. “The path of growth is more U-shaped than V-shaped, with recovery not really getting under way until 2010.

“We also are very concerned about prospects for both private consumption spending and business investment in the current climate” of falling share and housing markets, he added.

The nation’s currency fell to 63.26 U.S. cents at 11:37 p.m. in Sydney from 63.55 cents just before today’s reports were released. The two-year government bond yield dropped 3 basis points to 2.52 percent. A basis point is 0.01 percentage point.

Companies Firing

Vacancies advertised in newspapers and on the Internet averaged 161,583 a week last month, the lowest number since November 2005, and 41 percent below the April 2008 record of 275,326, today’s ANZ report showed.

“New labor demand continues to contract across Australia in the early part of 2009,” said Warren Hogan, head of economics at ANZ Bank in Sydney.

“This in turn suggests that the current downturn in the economy is likely to last throughout 2009, with little prospect of a meaningful recovery before 2010.”

Companies including BHP Billiton Ltd., the world’s biggest miner, and manufacturer Pacific Brands Ltd., are firing workers after the economy shrank 0.5 percent in the fourth quarter from the previous three months as exports slumped.

National Australia’s Oster expects the jobless rate will rise to 6.5 percent by the end of this year and 7.5 percent by late 2010.

Interest Rates

Employers probably cut 20,000 jobs last month and the unemployment rate rose to 5 percent from 4.8 percent, according to a Bloomberg survey of economists. Jobs figures will be released on March 12.

The Reserve Bank of Australia, which pared its overnight cash rate target by a record four percentage points between September and February, will cut the benchmark rate by another one point during the third quarter, before lowering the rate to 2 percent late this year, National Australia’s Oster said.

His bank’s business conditions gauge, a measure of hiring, sales and profits, fell 9 points to minus 20, the lowest since June 1992.

A measure of forward orders tumbled 7 points to minus 27 and employment declined 10 points to minus 27, the report showed. Exports gained 7 points, “but remained at a historically very low level” of minus 26 points, Oster said.

Today’s survey also suggests the gain in business confidence last month was primarily driven by retail, wholesale and transport businesses after the government said it will distribute A$42 billion ($27 billion) in cash grants to families and infrastructure.

“Those sectors are the ones most likely to benefit from the next round of government cash handouts,” Oster said.

“The most startling deterioration over recent months has been in mining, especially small mining, in the face of the global downturn.”

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

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Japan May Need to Buy Stocks, Ex-BOJ Deputy Muto Says

By Mayumi Otsuma

March 10 (Bloomberg) -- Former Bank of Japan Deputy Governor Toshiro Muto said the government and the central bank may need to buy shares temporarily to support the country’s ailing stock market.

When global equities plunge, “it’s very meaningful for the government’s share-buying institution and the Bank of Japan to buy stocks to support the market,” Muto said at a forum co- hosted by Bloomberg News in Tokyo today. “However, such purchases cannot last forever and should be justified only as a tool to avert a crisis.”

The Nikkei 225 Stock Average is at a 26-year low, eroding banks’ capital and making them reluctant to lend. Finance Minister Kaoru Yosano said today that the government has a “strong will” to combat the credit squeeze resulting from the stock-market slump.

Muto, currently head of the Daiwa Institute of Research, added that in principle equity values should be set by the market and authorities should avoid manipulating prices because doing so would hurt the stock market’s reputation.

The government has already allocated 20 trillion yen ($203 billion) and the Bank of Japan has set aside 1 trillion yen to buy shares owned by banks. Yosano last month ordered lawmakers within the ruling Liberal Democratic Party to study ways to bolster stocks, including the feasibility of the government directly purchasing equities in the market.

Keidanren’s Plea

Keidanren, Japan’s largest business lobby, yesterday called on the government to allow a public entity to sell state-backed bonds and funnel the proceeds into the flagging stock market.

The Nikkei slid 0.4 percent today to 7,054.98, the lowest since October 1982, on concern shrinking global demand and rising fuel prices will weigh on company earnings.

An unprecedented drop in exports since last quarter has forced Japanese manufacturers to cut production at a record pace and fire thousands of workers. The central bank forecasts the economy will shrink 2 percent in the year starting April 1, the worst in 60 years.

Muto said exports will drive Japan’s eventual recovery. Deflationary risks outweigh concerns about inflation in the world’s second-largest economy, he added.

Muto served as the central bank’s deputy chief for five years following a 37-year career at Finance Ministry. He was the government’s first choice to succeed Toshihiko Fukui as governor last year, only to be rejected by the opposition- controlled upper house, which said his stint at the ministry may hamper the bank’s independence.

To contact the reporter on this story: Mayumi Otsuma in Tokyo at motsuma@bloomberg.net

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French January Production Declines, Trade Gap Widens

By Francois de Beaupuy and Simon Kennedy

March 10 (Bloomberg) -- French industrial production tumbled for a fifth month and the trade deficit grew in January as the deepening recession and rising unemployment damped demand.

Output at factories and utilities fell 3.1 percent from the previous month when production declined a revised 1.5 percent, Insee, the Paris-based statistics office, said today. The trade gap swelled to 4.5 billion euros from a revised 3 billion euros in December, the Trade Ministry said in a separate report.

“The return of hope won’t happen until activity progressively improves, which won’t take place for at least six months,” said Marc Touati, chief economist at Global Equities in Paris.

The French economy will shrink 1.5 percent this year, the worst contraction since World War II, leading to a loss of at least 350,000 jobs and a jump in the budget deficit, Finance Minister Christine Lagarde predicted last week. The global credit crisis has sapped lending and consumer confidence, slamming the country’s largest manufacturers.

The value of French goods exported in January dropped to the lowest since March 2005, led by weaker demand for planes, ships, appliances, electronic equipment, metals and chemicals, the trade report showed. Imports fell to the lowest since October 2005.

Economists polled by Bloomberg expected a drop of 0.6 percent in industrial production and a trade deficit of 3 billion euros, according to the median forecasts.

Entering Recession

French manufacturing production, which excludes energy and food output, dropped 4.1 percent from the previous month and 16.5 percent from a year earlier, Insee said. Industrial production fell 13.8 percent in January from a year ago, Insee said.

The French economy, the second-largest among the nations using the euro, will shrink 0.6 percent in the three months through March, the Paris-based central bank estimated yesterday. That would mark the country’s official entry into a recession, following a 1.2 contraction in the fourth quarter.

To combat the slump, President Nicolas Sarkozy’s government is injecting funds into banks and helping them raise cash to lend to companies and households. In December, he introduced a 26 billion-euro economic-stimulus package to spur construction, investment infrastructure, hiring at small companies and purchases of new cars. So far, the incentives have done little to lift demand for autos. Car and light-truck sales declined 15 percent in February from a year earlier, a March 2 report showed.

Auto Aid

In February, the government announced aid to the car industry, including 6 billion euros in loans for PSA Peugeot Citroen and Renault SA after a plunge in car sales forced them to trim production. He also announced 2.6 billion euros in help for low earners and the unemployed, and pledged 8 billion euros of tax cuts for manufacturers next year.

French December industrial production was revised from a decline of 1.8 percent and the trade gap for the same month was from an originally reported shortfall of 2.5 billion euros.

To contact the reporter on this story: Francois de Beaupuy in Brussels at fdebeaupuy@bloomberg.net.

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U.S. Unemployment Rate to Reach 9.4% This Year, Survey Shows

By Shobhana Chandra and Alex Tanzi

March 10 (Bloomberg) -- The U.S. jobless rate will reach 9.4 percent this year and remain elevated through at least 2011, threatening the nation’s longer-term growth potential, a monthly Bloomberg News survey indicated.

The peak in unemployment surpasses the 8.8 percent estimated last month, according to the median of 54 projections in a survey taken from March 2 to March 9. The average rate for the next two years will exceed the 25-year high of 8.1 percent reached in February, the survey shows.

“Even if things become less apocalyptic it doesn’t mean the unemployment rate will come down,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. “It’ll be a long- term restraint on growth. Even when the economy gets back to normal, what’s normal is going to be defined down.”

The survey shows that the Obama administration’s forecasts, submitted with its budget proposal last month, are out of kilter with those of most analysts. The White House projected the jobless rate will decline to 7.9 percent next year; a worse performance means President Barack Obama’s $787 billion stimulus plan may not prove sufficient, analysts said.

The unemployment rate in February was the highest since 1983, and employers cut 651,000 workers from payrolls, the government reported last week. The U.S. has already lost 4.4 million jobs since the recession began in December 2007.

Speed Limit

Federal Reserve policy makers in January estimated U.S. long-term growth potential at 2.5 percent to 2.7 percent, with an unemployment rate of 4.8 percent to 5 percent, a level that will be exceeded for at least four years, according to the Bloomberg survey. The jobless rate averaged 5.8 percent in 2008 and 4.6 percent in 2007.

The world’s largest economy will shrink 2.5 percent this year, the most since 1946, and expand 1.8 percent next year, according to the survey median. Both figures were lower than estimated last month.

As unemployment rises, more Americans won’t be able to make mortgage or car payments, choking off growth and leading to even higher joblessness, said David Rosenberg, chief North American economist at Banc of America Securities - Merrill Lynch in New York, who projected the jobless rate would reach 10 percent by the end of the year.

“We are really in a vicious cycle,” he said. “This problem requires a massive positive shock to aggregate demand. The fiscal package as it is constructed falls short on that score.” Stimulus “has to be a lot bolder that what we have seen right now.”

No-Interest Loan

Rosenberg proposed the federal government give a $1 trillion interest-free loan to state and local governments, which account for 13 percent of the economy and employ about 20 million people.

“This comes down to the heart and soul, the fabric, of the national economy -- cops, teachers, school custodians, firefighters, highway construction workers,” he said.

While estimates for overall growth weakened, projections for consumer spending improved. Purchases, which account for 70 percent of the economy, will fall at a 1.7 percent pace this quarter, less than the 2.7 percent slump predicted last month. Economists also pared the projected decline for next quarter.

Discounters such as Wal-Mart Stores Inc., the world’s largest retailer, are benefiting. Bentonville, Arkansas-based Wal-Mart last week said sales at stores open at least a year rose 5.1 percent in February as customers sought its lower prices on gasoline, groceries and electronics.

Falling Sales

Same-store sales fell at companies ranging from department- store chains Macy’s Inc. and J.C. Penney Co. to luxury retailers Neiman Marcus Group Inc. and Saks Inc. AnnTaylor Stores Corp., whose main clientele is working women, said same-store sales dropped 24 percent in the quarter ended Jan. 31.

“The financial crisis and rising unemployment” especially hurt the company, Chief Executive Officer Kay Krill said in a statement last week. She also cited “extremely weak macroeconomic fundamentals, including historically low consumer confidence and a broad-based decline in consumer spending.”

Steps to stem the slump in growth and unclog credit markets will bust the budget. Economists anticipate the federal deficit will equal almost 12 percent of GDP this year, more than doubling last year’s 5.8 percent share.

The efforts may still fall short, resulting in “a very anemic recovery that will deliver very few jobs,” said Robert Carnell, chief international economist at ING Wholesale Banking in London. He predicts the jobless rate may keep rising into 2011.

“The unemployment rate will tick up slowly but surely,” Carnell said. “People coming into the labor force looking for a job will find it very difficult.”

Companies have been paring staff further in recent weeks. Dow Chemical Co. yesterday said it’ll eliminate 3,500 workers following its merger with Rohm & Haas Co. General Motors Corp. will cut 47,000 more positions globally, and FedEx Corp., the second-largest U.S. package-delivery firm, is axing 900 jobs in addition to more than 1,100 positions pared late last year.

To contact the reporters for this story: Shobhana Chandra in Washington at schandra1@bloomberg.net; Alex Tanzi in Washington at atanzi@bloomberg.net

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U.K. Home Sales Slip to Record Low as Prices Decline, RICS Says

By Brian Swint

March 10 (Bloomberg) -- U.K. housing sales dropped to the lowest since at least 1978 as the recession pushed prices down further, the Royal Institution of Chartered Surveyors said.

The average number of transactions in a survey of real- estate agents and surveyors dropped to 9.5 per respondent in the quarter through February, the lowest since the data began three decades ago, the group said today in London. The gauge of house prices fell last month to minus 78.3 from minus 76.6 in January.

The number of new homes being built in Britain may fall to the lowest since 1921 this year as the recession deepens, the National Housing Federation predicted today. The Bank of England cut its key interest rate last week to 0.5 percent, the lowest ever, and said it will buy assets to replenish banks’ balance sheets and encourage lending.

“The lengthy process of obtaining mortgage finance, even for those with large deposits, is contributing towards the blockage in the market place,” said Jeremy Leaf, a spokesman for RICS. “Without further intervention, the housing market will continue to stagnate and the opportunity to take advantage of this renewed interest could be lost, which will inevitably have serious implications for the wider economy.”

The RICS measure of potential buyers registering with real- estate agents rose to the highest since August 2006, today’s report showed. While the index for price expectations increased, it remained negative at minus 78, indicating that surveyors predicting further declines outnumbered those expecting gains.

Construction Forecast

The number of new homes being built in Britain may fall by half from this year’s total of 140,000, the National Housing Federation said. House prices fell an annual 17.7 percent last month, Lloyds Banking Group Plc’s Halifax division said last week, the most since the survey started in 1983.

The Bank of England on March 5 lowered the benchmark interest rate by half a point to 0.5 percent and said it will spend 75 billion pounds ($104 billion) in the next three months to buy government and corporate debt. Governor Mervyn King said the bank will expand the money supply to stimulate growth.

The housing slump mirrors waning consumer demand in the U.K. after the economy contracted 1.5 percent in the fourth quarter. Retail sales fell 1.8 percent from a year ago in February, a separate report by the British Retail Consortium showed today.

“The women’s and men’s clothing sectors had their worst month since April 2008,” said Helen Dickinson, head of retail at KPMG, in a statement. “More announcements of job losses and other cost cutting measures in the sector look likely.”

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.

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German Exports Fall in January, Deepening Recession

By Gabi Thesing and Jana Randow

March 10 (Bloomberg) -- German exports dropped for a fourth month in January, pushing Europe’s largest economy deeper into a recession.

Sales abroad, adjusted for working days and seasonal changes, fell 4.4 percent from December, when they slipped 4 percent, the Federal Statistics Office in Wiesbaden said today. Economists expected a decline of 4 percent, the median of 10 forecasts in a Bloomberg News survey showed.

Germany is battling its worst recession in more than 60 years as a global economic slump curbs exports, prompting companies to scale back output and eliminate jobs. Salzgitter AG, Germany’s second-largest steelmaker, said last week it’s unlikely to break even in the first half as demand collapses.

“The global recession is showing its full impact on German export markets,” said Thorsten Polleit, chief German economist at Barclays Capital in Frankfurt. “Exports are in a free fall and we can’t even see the end of it.”

Imports fell 0.8 percent in January from the previous month, the statistics office said. The trade surplus widened to 8.5 billion euros ($10.8 billion) from 7.3 billion euros in December. The surplus in the current account, the measure of all trade including services, was 4.2 billion euros.

Exports to euro-area countries fell 17.4 percent from a year earlier while sales to non-EU countries were down 24.5 percent.

Orders Tumble

German plant and machinery orders from abroad plunged 47 percent in January from a year earlier, the biggest drop since data were first compiled in 1958, the VDMA machine makers association said on March 4. The country’s manufacturing industry shrank for a seventh month in February, a survey of purchasing managers showed, and business confidence dropped to a 26-year low.

The German economy shrank 2.1 percent in the fourth quarter, the most in more than two decades and the third consecutive quarterly drop.

“The depth of the recession will depend decisively on the extent to which private consumption can assume a stabilizing role,” the Bundesbank said in its latest monthly report.

Chancellor Angela Merkel’s government will spend about 80 billion euros on measures to stimulate growth including tax cuts and subsidies to encourage consumers to buy new cars.

Still, with the unemployment rate rising to a nine-month high in February, spending may cool as consumers fret about job security.

“If you worry about losing your job, you are not going to go on a spending binge,” said Stefan Bielmeier, an economist at Deutsche Bank AG in Frankfurt. “Some of the stimulus package elements may work, but they will not sufficiently offset the decline in exports.”

To contact the reporters on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.net; Jana Randow in Frankfurt jrandow@bloomberg.net.

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EU Finance Chiefs Rebuff U.S. Calls to Boost Economic Stimulus

By Jennifer Ryan and Francois de Beaupuy

March 10 (Bloomberg) -- European finance ministers rejected calls from the U.S. to do more to battle the economic crisis, saying stimulus plans already in place need time to work.

“Recent American appeals insisting that the Europeans make an additional budgetary effort to combat the effects of the crisis were not to our liking,” Luxembourg Finance Minister Jean-Claude Juncker said yesterday after leading a meeting of euro-area finance chiefs in Brussels. “We want to see what the effect of the recovery package is going to be.”

Euro-area finance ministers met five days before those from the Group of 20 convene near London for talks on fighting the financial crisis. That conference may witness more efforts by the U.S., as well as China, to encourage other nations to bolster government spending in a bid to end the global recession.

The International Monetary Fund said in a report last week that only the U.S., Saudi Arabia, China, Spain and Australia are on track to meet the IMF’s target of introducing fiscal stimulus equivalent to 2 percent of gross domestic product this year. Germany’s efforts currently amount to 1.5 percent of GDP, which is double what France has passed, according to the IMF.

Lawrence Summers, President Barack Obama’s top economic adviser, said on Feb. 13 that officials in Europe are “probably not” doing enough to counter the economic slump. U.S. Treasury Secretary Timothy Geithner the same day urged other governments to take “exceptional” steps to battle the economic crisis.

European governments “are not prepared to go further in the recovery package that we’ve put together,” Juncker said in Brussels, adding that economic aid already in place amounts to at least 3.3 percent of the European Union’s gross domestic product.

‘Stable Door’

“The EU doesn’t look like it’s taking big further fiscal measures,” Paul Mortimer-Lee, chief economist at BNP Paribas SA, told Bloomberg Television yesterday. “They seem to want to talk about regulation, hitting tax havens, basically shutting the stable door after the horse has bolted.”

Governments from Dublin to Athens have committed more than 1.2 trillion euros ($1.5 trillion) to protect their banking systems and European leaders pledged to spend a combined 200 billion euros to haul their economies out of the worsening slump. The World Bank this week forecast the global economy will suffer the biggest recession since World War II this year.

“We are confident that monetary-policy decisions, fiscal stimulus, and the packages of support to the banking sector will have positive effects in the coming months and quarters,” EU Monetary Affairs Commissioner Joaquin Almunia said after attending the Brussels meeting. “But it is still too soon to perceive these positive effects.”

Bigger Punch

The IMF has recommended greater coordination so that the global economy can receive a bigger punch from individual budget policies. The impact on U.S. GDP of higher public spending is almost half as strong if it isn’t matched elsewhere, the Fund’s economists estimate.

“Clearly it’s part of Obama’s theme that multilateral action is needed,” BNP’s Mortimer-Lee said. The Europeans are “trying to deal with the next episode rather than really dealing with the here and now. And that’s what they need to do.”

European budget deficits have swelled as governments pumped billions into their economies in an effort to revive growth. The EU, which forecasts that the 27-nation bloc’s overall budget shortfall will more than double this year to 4.4 percent of GDP, warned national leaders last month to bring their deficits back in line as soon as possible.

Automatic Stabilizers

German Finance Minister Peer Steinbrueck said his government is “not discussing any additional measures” to boost Europe’s largest economy. “We just passed a second economic-stimulus package worth 50 billion euros ($63 billion), we’re letting automatic stabilizers work, and we have a constitutional court ruling that is worth 8 billion euros in commuter subsidies,” he said.

Almunia said ministers at yesterday’s meeting agreed on the need to boost the IMF’s resources as it helps to recapitalize banks in central and eastern Europe. Dominique Strauss-Kahn, the Fund’s managing director, is seeking to double the funds the IMF has available from its pre-crisis level of $250 billion.

European leaders meeting in Berlin on Feb. 22 endorsed the increase to $500 billion. Japan has already pledged an extra $100 billion.

To contact the reporters on this story: Jennifer Ryan in Brussels at jryan13@bloomberg.net; Francois de Beaupuy in Brussels at fdebeaupuy@bloomberg.net.

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China Consumer Prices Fall for First Time Since 2002

By Li Yanping and Nipa Piboontanasawat

March 10 (Bloomberg) -- China’s consumer prices fell for the first time since 2002 as food, clothing and fuel costs declined, threatening growth in the world’s third-largest economy.

Consumer prices dropped 1.6 percent in February from a year earlier, when they reached an 11-year high, the statistics bureau said today. The median estimate in a Bloomberg News survey of 10 economists was for a 1 percent decline. Producer prices fell 4.5 percent, the most in a decade.

The drop in prices raises the risk that deflation will become entrenched, prompting consumers to delay purchases, squeezing company margins and triggering wage cuts. Premier Wen Jiabao, who last week set a 4 percent inflation target for 2009, is relying on a surge in lending and a 4 trillion yuan ($585 billion) stimulus package to spark an economic recovery.

“Deflation, though a real concern, is expected to be a temporary phenomenon,” said Jing Ulrich, head of China equities at JPMorgan Chase & Co. in Hong Kong. The government may cut interest rates and banks’ reserve requirements and add measures to spur consumption to avoid “extended” deflation, she said.

The yuan traded at 6.8398 against the dollar as of 12:32 p.m. in Shanghai from 6.8402 before the data was released. The Shanghai Composite Index of stocks rose 0.5 percent.

“We can’t yet draw the conclusion that deflation has arrived,” the statistics bureau said in a statement. It cited falling raw-material prices and one-off factors, including the timing of a Lunar New Year holiday and blizzards that pushed up food prices a year ago.

Food, Metals, Oil

Food, which accounts for about a third of the consumer price index, fell 1.9 percent in February from a year earlier, with pork plunging 18.9 percent. Metal and oil prices have fallen because of weaker demand caused by the global slump.

The government’s efforts to reverse a slide to the weakest growth in seven years have included lifting lending restrictions on banks. New loans in February surged to more than 1 trillion yuan, more than quadruple the amount a year earlier, according to the statistics bureau statement today.

China’s decline in consumer prices was bigger than in Ireland, Taiwan and Thailand, the other places to report deflation in their most recent figures, according to Bloomberg News data covering 78 countries.

The U.S. reported unchanged CPI in January from a year earlier -- the first time it hasn’t risen since 1955. Prices were also unchanged in Japan.

Global Deflation?

A trend toward global deflation is becoming more obvious as the international financial crisis keeps spreading, Premier Wen said March 5 in his annual speech to China’s parliament, as he reaffirmed the nation’s 8 percent growth target for this year.

Still, European Central Bank President Jean Claude Trichet, who chaired a meeting of global central bankers yesterday in Basel, Switzerland, said deflation was “not something we consider a high probability at all at a global level.”

“The government has to make sure its stimulus package kicks in in time to boost domestic demand,” said Wang Tao, a Beijing-based economist at UBS AG. “Faltering global demand will result in exporters selling more goods back to China’s domestic market, adding deflationary pressure.”

Volkswagen AG last month reduced the prices in China of some locally made models by as much as 12 percent. House prices in 70 cities fell 1.2 percent in February from a year earlier, the biggest drop since data began in 2005, the government said today.

Spurring Spending

Temporary deflation in China may spur consumer spending and cut production costs, according to UBS’s Wang. “The current low-price environment has also offered an opportunity for the government to raise controlled prices such as utility prices including electricity and water,” she said.

China isn’t yet facing “typical” deflation, where falling prices are accompanied by shrinking loans and money supply and an economic recession, central bank vice governor Yi Gang said, according to the state-run Xinhua News Agency.

The central bank has “sufficient” policy tools to combat deflation, Yi said, without elaborating.

Likely declines in consumer prices from February through June won’t trigger “aggressive” interest-rate cuts, partly because the government’s stimulus package will be inflationary, said Sun Mingchun, a Hong Kong-based economist at Nomura Holdings Inc.

The central bank may make a single 27 basis-point reduction this year, taking the one-year lending rate to 5.04 percent, as “a symbolic reaction to deflation,” Sun said.

To contact the reporters on this story: Li Yanping in Beijing at yli16@bloomberg.net

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