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Theme of the Week - March 9, 2008 to March 14, 2008

Fed Action Boosts Dollar: On Tuesday, the Federal Reserve announced that they will inject $200 billion dollars into the banking system in order to help alleviate the credit crisis. The news that the Fed would take mortgage-backed securities as collateral helped fuel huge gains on Wall Street. The Dollar rebounded from lows against the Euro and Yen and carry trade pairs performed well as investors regained their appetite for higher-yielding assets abroad.
Market Reevaluates Effectiveness of Fed Lending Steps: Wednesday was a complete reversal of Tuesday. While the Fed's proposed actions gave hope to some, it was ultimated powerless to overwhelming consensus that the US economy is in a recession and needs more than what the bank had offered. The dollar fell to new lows against the Euro, and pared all its gains it leveraged from the announcement on Tuesday.

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Sunday, March 09
Region	EST	Indicator	Actual	Forecast	Previous
JPN	7:50pm	Core Machinery Orders	19.6%	2.5%	-3.2%
		For January Article: Bloomberg Machinery Orders surged at a fastest pace in 7 years. This brushes off some of the negative outlooks caused by the decrease in capital spending. Demand from emerging economies such as China will support exports from Japan and help it whether the US slowdown. ``People have been far too quick to link Japan's fate with the U.S.,'' said Kiichi Murashima, chief economist at Nikko Citigroup Ltd. in Tokyo. ``The resilience of emerging economies is cushioning Japan.'' The demand is there, but the profit margins have deteriorated. The rising yen and oil prices will make it harder for exporters to expand and will probably make Japanese equipments more expensive in the coming months.
JPN	7:50pm	M2+CD Money Supply y/y	2.3%	2.1%	2.1%

Monday, March 10 \| USD/JPY - Yen Strengthens as US Equity Markets Fall: Better than expected Machinery Orders helped to underpin Yen strength today. The Yen has been gaining as US equities suffer through a very rough patch, which continued today. The Dollar-Yen pair is near its 8-year low around 101.40. On Friday, the Greenback recovered slightly in what amounted to a bout of position squaring, but as the poor performance in equities continued on Monday, the Yen continued to gain. After the Sunday open yesterday the pair slid another 90 pips to continue the prevailing downward trend. GBP/CHF - Carry Trade Slackens: Pressure on financial companies played into risk aversion, causing pairs used in carry trade to fall in favor of the funding currencies, the yen and swiss franc. Unwinding of carry trade was apparent during the New York trading session. The Pound-Swiss Franc pair, a popular carry trade pair, slid 150 pips after a minor boost to the sterling in UK trading. The GBP/JPY saw similar declines. GBP/USD - Pound Weakens After Setting High: After climbing to a new high following the PPI data, the Pound-Dollar pair reversed and fell below the 2.01 level. This amounted to a 100 pip change during New York trading. Other currencies such as the EUR, NZD, and AUD have also been paring or stalling their gains against the greenback after a month long surge. USD/CAD - Loonie Falls on Concerns to North America: The Canadian Dollar felt the pressure from the slowing US economy. As 80% of its exports go to its southern neighbor, the Canadian economy has the most likely chance of being dragged down with the US. The USD/CAD pair gained 125 pips in favor of the greenback, making it a 250 pip swing since Friday's low. Market Highlights Nilsson's Commentary Full report: Carry-Trade Unwinding Continues Video Recap
Region	EST	Indicator	Actual	Forecast	Previous
JPN	1:00am	Eco Watchers Survey	33.6		31.8
		For February Outlook: 39.5; pr. 35.8 Release from Eco Watcher Survey Merchant sentiments imporved slightly, but remained at a 6-year low. Deteriorated purchasing power due to inflation also restrained spending. Businesses are feeling the pinch from record oil prices as well and has scaled back investments as shown in the Q4 Capital Spending figures last week.
GER	3:00am	Trade Balance	17.1B	15.2B	10.7B
		For Jan. Exports surged despite the rising Euro. Exports grew 11.0B while imports grew 4.6B. This high level of exports will not last as the Euro has appreciated even more in February to above 1.50USD.
EMU	5:30am	Sentix Investor Confidence	0.4	2.8	4.6
UK	5:30am	Producer Price Index Input	1.7%	1.5%	2.6%
		Seasonally adjusted month-over-month for February Press Release from Office of National Statistics
UK	5:30am	Producer Price Index Output	0.3%	0.6%	1.0%
		Seasonally adjusted month-over-month for February Press Release from Office of National Statistics
UK	5:30am	Industrial Production	-0.1%	0.1%	0.0% Revised from -0.1%
		For Jan. y/y: -0.1%; forecast: 0.5; pr. 0.9% 3m/3m: 0.0%; pr. 0.2% Release from Office of National Statistics (ONS) Industrial as well as the manufacturing component outputs have been flat in the recent months. Mining and quarrying have shown some notable declines of 4.1% on the month, and 1.9% on a 3-month to 3-month basis. The declines are widespread, although transport equipments industries showed a pickup in production of 2.2% in the 3 months to January 2008 compared to the 3 months to October 2007.
UK	5:30am	Manufacturing Production	0.4%	0.1%	-0.2%
		For Jan. As seen in Industrial Production, manufacturing recovered on a monthly basis but the 3-month figure remains weak.
CAN	8:15am	Housing Starts	257K	204K	223K
		For February Provided by: Mortgage and Housing Corporation "“New home construction in February was boosted by the significant rise in multiple-family starts,” said Bob Dugan, Chief Economist at CMHC’s Market Analysis Centre. “The robust results achieved this month are mainly attributed to increased condominium starts, which reflect strong condominium sales over the past year or two. Despite this sizeable growth in February, we continue to expect that the trend in housing starts will decrease gradually between now and the end of 2008.”"
USA	10:00am	Wholesale Inventories	0.8%	0.5%	1.1%
		For January Release from U.S. Census Bureau
NZ	5:45pm	Merchandise Terms of Trade q/q	2.9%		3.6%
UK	8:01pm	RICS House Price Balance	-64.1%	-55.0%	-54.7%
		For February Release from Royal Institute of Chartered Surveyors (RICS) This is the seventh month in a row where more Chartered Surveyors have reported a drop in house prices. New enquiries continue to fall, as weak demand due to the more cautious sentiments brought about by economic uncertainty has kept prices subdued. Home inventories surged 8.5% in February for the fifth straight month where stockpiles increased more than 8%. RICS spokesperson notes "While there is very little new supply coming onto the market, it is unlikely that there will be significant price drops in the short term but the build up of unsold stocks will encourage buyers to negotiate lower asking prices." It should be noted that Scotland's housing market is booming, a completely different picture than the rest of the UK. It has a positive 25% balance, up from 7% in January.
UK	8:01pm	BRC Retail Sales y/y	1.5%	1.5%	2.6%
		For February Provided by: British Retail Consortium (BRC) Food sales were strong, but clothing and footwear were weaker despite discounting. Stephen Robertson, Director General of BRC explained what was behind the recent month's retail trends: "After a blip at the start of the year as clearance sales temporarily got customers spending, belt tightening began in earnest in February when the Christmas and New Year credit card bills came home to roost. Although a welcome boost was provided by this year’s early Mothering Sunday, which helped food sales as well as health and beauty, customers remained cautious." Food and drinks, which compose of 40% of the total market had inflated strength due to Mothering Sunday. Consumer's confidence has fallen to all-time lows, and shoppers are cautious to spending heavily.
UK	8:01pm	NIESR GDP Estimate	0.5%		0.5%
AUS	8:30pm	Home Loans m/m	2.3%	0.9%	1.1%
		For January Release from Australian Bureau of Statistics (ABS) Total home loans increased for the 3rd month in a row in January. At the moment, it appears the housing market down under is steering clear from any problems that might be connected with the US housing crisis.

Tuesday, March 11 \| Fed Tries to Contain Crisis in Credit Markets: The Fed announced that it would make up to $200 billion available through weekly auctions. The Fed said that it will lend Treasuries in exchange for debt that includes mortgage-backed securities. The move is being coordinated with other central bank such as the European Central Bank and Bank of Canada, which will inject up to $45 billion into their banking systems. The news helped boost USD/JPY by the most in three months, and helped bring the EUR/USD away from a fresh record high near 1.55. EUR/USD - Strong Moves Back and Forth Action: The Euro-Dollar pair had a wild swing this session. Following the ZEW report the pair surged 150 pips, coming close to the 1.55 level. However as NY trading got underway, the Fed announced that it will inject $200 billion into the banking system in order to ease credit markets. The announcement was welcomed by financial firms as the Fed will lend Treasuries in exchange for debt that includes mortgage-backed securities. The news boosted US stock markets and the Dollar. In NY trading the pair fell around 180 pips. USD/JPY - Dollar Rallies as Stocks Rally: The Dollar-Yen pair rallied from its 8-year low, with the pair's gains accelerating during NY trading. US equities rallied after 3 sessions of losses, with the Dow industrials index up more than 400 points at the day's close. The Dollar-Yen pair was trading near 103, about 100 pips higher than its level at the NY open. AUD/JPY - Australian Dollar Rallies as Investor Confidence Returns: Risk appetite returned to carry trade pairs, as can be seen here in the Aussie-Yen. The Yen has been on a tear as US equities faltered. Today's rally in stocks helped push up the value of high-yielding currencies, like the Australian Dollar. The pair was up 190 pips since NY trading, and 280 pips from its session low overnight. The pair broke above yesterday's high and was trading in the range seen last Friday. USD/CAD - Dollar Gains on Loonie: The US Dollar- Canadian Dollar started the session falling in favor of the Loonie, until New York trading, when the pair found support near 0.9890. From here it recovered around 75 pips to set a session high near .9970. Market Highlights Nilsson's Commentary Full report: Dollar Gains on More Surgical Fed Measures Video Recap
Region	EST	Indicator	Actual	Forecast	Previous
GER	6:00am	ZEW Economic Sentiment	-32.0	-39.5	-39.5
		For March Official Release: ZEW Indicator of Economic Sentiment The ZEW Center for European Economic Research said its index of investor and analyst expectations rose to -32 from -39.5 in February. Its the second straight month that the data beat expectations. This data goes hand in hand with the IFO Business Climate Index, which has shown two months of improvement as well. The German economy seems to be weathering the slowdown in the US better than other Euro-zone countries. The EUR/USD rose close to $1.55 after the release, but came down after the Fed announced it would inject money into the banking system. "Considering the currently weak figures for economic growth in Germany the financial market experts expect growth dynamics to revive from September 2008 on. In particular, the experts are more optimistic for the growth of the US-economy in the next six months. Moreover, they expect the US-Dollar to appreciate versus the Euro. This should benefit the export-oriented sectors of the German economy. The experts' mood concerning the development of private consumption has also brightened in March. "The optimism of the financial analysts is presumably based on the hope that the peak of the financial market crisis will be overcome in half a year and that business dynamics will not weaken more strongly than expected to date", said ZEW President Prof. Dr. Dr. h.c. mult. Wolfgang Franz."
EMU	6:00am	ZEW Economic Sentiment	-35.0	-42.0	-41.4
		For March The German and Euro-zone ZEW Economic Sentiment indicators beat expectations, and improved, though they remain below their long term averages. Recent fundamentals have shown the Germany economy improving, even as the Euro sets record highs, and the US slows down. The ECB is concerned with fighting inflation, and is therefore keeping rates at their current levels. If the Euro-zone economy can manage to ride out the worst of the credit crunch, the Euro will stay in a strong position as the Fed continues cutting rates.
CAN	8:30am	Trade Balance	3.3B	2.6B	2.3B Revised from 2.4B
		For January in C$ Provided by: Statistics Canada Exports increased at their fastest pace in more than a year according to StatCan. Exports totaled $38.0billion, a 3.6% increase from December. However it should be noted that volume edged down 0.6%, but prices rose 4.2%. Imports also increased 1.0% in value, but similarly to exports, it was driven by a 1.7% in prices, while volume slipped 0.7%. The trade surplus with the US improved after contracting in December. StatCan reports: Exports partially recovered from December's decline, as gains in the majority of sectors outweighed declines in automotive products, machinery and equipment and other consumer goods. Imports also rose in most sectors, with a notable surge in energy products, particularly crude petroleum.
CAN	8:30am	New Housing Price Index	0.6%	0.1%	0.1%
		For January Provided by: Statistics Canada The new housing price index improved by 0.6% in January, better than expected. The USD/CAD had been falling in favor of the Loonie, until New York trading, when the pair found support near 0.9890, and it recovered. The greenback has seen overall strength today following the announcement by the Federal Reserve that it would pump $200 billion into the money markets. "The cost of new housing accelerated for the second month in a row in January, the result of a strengthening housing market in the Atlantic and Prairie provinces. Nationally, contractors' selling prices rose 6.5% between January 2007 and January 2008, a faster pace than the year-over-year increase of 6.2% in December. These back-to-back increases followed 16 months in which the gains in new housing prices had been decelerating. On a monthly basis, prices rose 0.6% between December and January, resulting in a New Housing Price Index of 157.6 (1997=100)."
USA	8:30am	Trade Balance	-58.2B	-59.5B	-57.9B Revised from -58.8B
		For January Official Release from the Bureau of Economic Analysis The trade deficit expanded, but at a lesser extent than economists had anticipated. Total Imports grew $2.7B while exports grew $2.4B.
UK	11:30am	Leading Index	-0.2%		-0.4%
		For January Provided by: The Conference Board
NZ	4:45pm	Food Price Index	0.8%		0.4%
AUS	7:30pm	WMI Consumer Sentiment m/m	-9.1%	-2.0%	-5.5%
		For March Australian consumer confidence plunged to a near 15-year low in March. The Westpac-Melbournce Instititue consumer sentiment index fell 9.1%, undershooting expectations of an improvement from Tuesday. The fall in the indicator in the last 3 months has been rather steep showing consumers becoming more pessimistic about higher interest rates and a steep fall in the stock market. The news, along with a bigger than expected slowdown in GDP, most likely implies an end to the interest rate hiking campaign that the Reserve Bank of Australia has pursued in order to combat inflation. The Aussie has been on an uptrend in February vs the Dollar as the markets prices in the interest rate increases. The pair hit 0.9500 at the end of February, and is now heading back downward in the US Dollar's favor. The last two weeks may represent just a correction to the previous uptrend, though if the inflation comes down, and growth falters, the RBA may be forced to think about lowering rates in the future.
JPN	7:50pm	Gross Domestic Product q/q	0.9%	0.6%	0.9%
		Final Version for 4rd Quarter Provided by: Cabinet Office GDP Annualized: 3.5%, forecast 2.3%, pr. 3.7% The Japanese economy posted a growth rate of 0.9% compared to the 3rd quarter, and an annualized rate of 3.5%. The figures beat expectations of smaller increases. The data showed that exports were a main factor in driving growth, offsetting a slumping housing market. Net exports added 0.5% to growth. The Yen had a strong session following the news, as it toned down speculation that the Bank of Japan may have to cut rates in order to stimulate growth. Japanese exports are performing better than expected, especially as the US has entered a period of slowdown. Whereas in the past, a slumping US would bring down export driven economies along with it - such as Japan - the current situation is seeing these economies continue to push out exports as demand from emerging economies props up orders. The new buzzword for this recent phenomenon is "decoupling" and should limit the effect that the US slowdown may have on export-driven economies such as Japan and Germany.
JPN	7:50pm	Corporate Goods Price Index y/y	3.4%	3.2%	3.0%
		For February CGPI m/m: 0.4%, forecast 0.3%, pr. 0.2% The amount of inflation faced by corporations when purchasing goods increased 0.4% on the month and 3.4% on the year, higher than economists forecasts. The annual rate was the fastest pace for the indicator in 27 years, as higher commodity prices cuased prices to increase rapidly. The export price index rose 1.2% on the year, and 0.7% on the month while the import price index, was up 21.1% from a year ago, and 1.9% from January.
JPN	7:50pm	Current Account	2.07T	1.93T	1.86T
JPN	7:50pm	GDP Deflator	-1.3%	-1.3%	-1.3%
JPN	7:50pm	BOJ Meeting Minutes
		Minutes of the Monetary Policy Meeting from the Bank of Japan
AUS	9:30pm	NAB Business Confidence	-2		-4
		For February Provided by National Australia Bank Business Confidence: 11, pr. 13

Wednesday, March 12 \| AUD/USD - Near Breakout? Aussie bulls took a break in March as can be seen in this flag formation. Today's poor consumer confidence report did not have an impact as the Aussie gained on the greenback. A continuation breakout may be emerging, as this recent retraction from a 950 pip month-long uptrend, bounced off the 61.0% fibo level and penetrated the upper band of the trading channel. USD/JPY - Dollar Down on Investor Scrutiny of Fed Proposal: The Yen gained today, but not based on the positive fundamental data. The main drive of yen strength risk aversion as investors scrutinized yesterday's Fed proposal. After yesterday's rally, the USDJPY pair dipped 150 pips. GBP/JPY - Yen Strengthens on Risk Aversion: The bout of risk appetite was short lived as shown by carry trade favorite, the GBP/JPY pair. After a 400-pip upswing, the pound stalled its gains, as the pair slid 180 pips overnight and into New York trading session. Similar movements were seen in the AUD/JPY and NZD/JPY. EUR/USD - Euro Hits Fresh Record High: The greenback failed to extend yesterday's rally, and fell to new record lows again against the euro. Investor's are not so sure that the Fed's announcement yesterday would have the impact needed to turn the economy around. The pair is up about 200 pips from the session open. Market Highlights Nilsson's Commentary Full report: Dollar Reverses Yesterday's Gain Video Recap
Region	EST	Indicator	Actual	Forecast	Previous
JPN	1:00am	Consumer Confidence	36.1	37.5	37.5
		For February Provided by: Cabinet Office Japan's consumer confidence slipped to a 5 year low in February, dipping to 36.1, the lowest since March 2003. The sentiment index for general households includes views on incomes and jobs, and shows Japanese households increasingly pessimistic as food and energy costs rise, and the housing sector enters a recessionary phase.
UK	5:30am	Trade Balance	-7.5B	-7.5B	-7.5B Revised from -7.6B
		Visible Trade Balance for January Official Release from National Statistics Office The UK trade deficit for January was 10 million pounds less than in December. The goods trade gap was 7.5 billion pounds, with exporters being helped by weaker levels of the Pound. The Pound drifted lower after the central bank lowered rates in an attempt to help boost growth. The weaker currency fueled exports to increase by 6.3%, with imports rising 4.4% for the period. Exports totaled 20 billion pounds, the highest since June 2006. Imports, at 27 billion pounds, was the highest in 19 months. The Bank of England is counting on export growth to help offset some of the decline to GDP that is sure to come from weaker domestic consumer spending.
SWZ	6:00am	ZEW Expectations	-71.7		-55.6
		For March Provided by: Credit Suisse
EMU	6:00am	Industrial Production	0.9%	0.4%	0.0% Revised from -0.2%
		For January Provided by: EuroStat Industrial Production y/y: 3.8%, forecast 2.6%, pr. 1.7% (rev from 1.3%) Industrial production grew by 0.9% on the month, and 3.8% on the year. Both figures beat expectations, and even December's data was revised up. The Euro was up on the Dollar today as investors began to doubt that the Fed's announced action yesterday will be the magic bullet needed to cure the US financial institutions' problems.
USA	10:30am	Crude Oil Inventories	6.2M		-3.1M
NZ	5:45pm	Retail Sales m/m	0.3%	0.3%	0.1%
		For January Official Release for Statistics New Zealand Grocery and supermarket stores marked the largest contributions to retail sales. However, with the food price index up 0.4%, this retail growth was inflation driven, rather than volume-driven. Also, the sales trend, on average up 0.5% a month, has been supported by the recent rise in fuel industry.
NZ	5:45pm	Core Retail Sales	0.3%	0.1%	0.3%
AUS	8:30pm	Employment Change	36.7K	15.0K	21.4K Revised from 26.8K
		February - Seasonall Adjusted Provided by: Australian Bureau of Statistics Jobs are abound in Australia as another 36,700 jobs were created in February to a record high total of 10,649,700. China's boom is bringing tides of demand to countries like Australia who provides a variety of raw materials for construction of new infrastructures. The ABS reports: The trend estimate of employed persons rose from 8,542,800 in February 1998 to 9,056,400 in September 2000. The trend then fell slightly to 9,037,500 in December 2000, before generally rising to stand at a high of 10,649,700 in February 2008.
AUS	8:30pm	Unemployment Rate	4.0%	4.2%	4.1%
		February - Seasonall Adjusted Provided by: Australian Bureau of Statistics The Unemployment rate decreased 0.1% and has been on a steady decline since October 2001. Jobs are springing up due to strong demand from emergin economies for Australia's natural resources.

Thursday, March 13 \| USD/JPY - New 12-Year Low: The Greenback reached a 12-year low against the Japanese yen, and was trading below 100 in the European session. The US session capped the steam from the dollar bears. As stocks rebounded by 2:00PM in New York, the USD/JPY pair was up 140 pips since hitting the 12-year low. EUR/USD - Euro Sets Another New Record High: The continuing weak data muffled what the Fed hoped to be a spark of hope for investors. Instead, the stock market started the day under, although it did manage to crawl back to positive by 1:30 PM EST. The EUR/USD pair climbed another 50 pips to make it a total of 250 pips since Tuesday. USD/CHF - Swiss Franc Approaching Parity: The Swiss franc was a safe haven alternative and has been performing very well against the greenback. It neared the parity level today, but failed to break through, stopping at 1.0050, before the US stock market snapped its decline. AUD/JPY - Follows Equity Market: The Aussie Yen pair followed the flow of the US stock market today. Overnight, it dropped heavily, reflected by Dow Jone Industrial Average's almost 100 point drop to start the day. New York trading reversed the situation, and risk appetite came back. The AUD/JPY pair then pared all overnight losses, and gained 200 pips by 2:30PM EST. Market Highlights Nilsson's Commentary Full report: USD/JPY at 13-Year Low Video Recap
Region	EST	Indicator	Actual	Forecast	Previous
JPN	12:30am	Industrial Production m/m	-2.2%	-2.0%	-2.0%
		Final Version for January Provided by Ministry of Economy, Trade and Industry Industrial Production y/y:2.2%; pr. 2.5%
CAN	8:30am	Industrial Capacity Utilization Rate	81.8%	82.0%	83.4% Revised from 82.7%
USA	8:30am	Retail Sales	-0.6%	0.2%	0.4% Revised from 0.3%
		Advance Retail sales for February Official Release from US Department of Commerce Economists were surprised by the 0.6% decline in retail sales in February, the fastest in more than 5 years. Declines were led by auto sales dropping 1.9% and sales at the pump down 1.0% despite oil prices surging. Consumers are scaling back on spending as the job market weakens.
USA	8:30am	Retail Sales excl. Autos	-0.2%	0.2%	0.5% Revised from 0.3%
USA	8:30am	Jobless Claims	353K	355K	353K Revised from 351K
		For Week Ending March 8 Official Release from The Department of Labor Continuing Claims (Mar 1): pr. 2.831M
USA	8:30am	Import Prices	0.2%	0.8%	1.6% Revised from 1.7%
		For February Release from US Department of Labor Import/Export Price Indexes IPI y/y: 13.6%; pr. 13.7% Export Prices m/m: 09%; pr.1.2% Petroleum prices have been declining in recent months, but is up 60.9% on the year. Excluding petroleum, prices rose 0.6%, as industrial supplies rose sharply in prices. Food prices dropped 0.1%, after an annual increase of 11.0%. January's tame inflation is something the Fed would be looking for in it's interest rate slashing and money printing campaign.
SWZ	9:00am	SNB Interest Rate Statement	2.75%	2.75%	2.75%
		Provided by: Swiss National Bank The SNB held rates for the second session in a row, after 2 years of rate hikes. Growth expectations have been scaled back. Inflation expectations have also reduced. The Swiss franc, which is a safe haven currency has been gaining steadily in these times of financial market uncertainty. Against the ailing greenback, it is coming real close to parity as the USD/CHF is hugging at the 1.01 level today.
USA	10:00am	Business Inventories	0.8%	0.5%	0.6%
		For January (S.A). Provided by: US Department of Commerce Stockpiles grew, driven by a 1.3% increase in manufacturer inventories. Sales rebounded in January, but as we saw in today's February retail sales figures, that was short lived. Inventories will rise again in February as consumers are tightening their belts and hanging on their wallets.
NZ	5:45pm	Manufacturing Sales q/q	8.3%		-2.1%

Friday, March 14 \| Wall Street Firm, Bear Stearns, in Bailout: JP Morgan Chase and the Federal Reserve Bank of New York provided the brokerage firm with short-term financing after the firm's liquidity "deteriorated significantly" in the past 24 hours. The news sent the company's stock sliding more than 30%, and had an adverse effect on US stock markets. The news will undoubtedly help the Japanese Yen and other currencies that benefit from risk aversion. EUR/USD - Inflation Picture Doesnt Change as Euro Hits New Record: The Euro-Dollar pair rose following the inflation news from the US, as it implies the Fed will not alter course in its approach and is ready to cut rates aggressively in its meeting next week. The ECB is most likely to hold rates steady as long as inflation remains a problem. The pair touched a new record high at 1.5687, and has gained more than 250 pips from the start of the week, with most of the gains coming on Wednesday. GBP/USD - Pound Gains 430 Pips in Last 2 Weeks: The Pound-Dollar pair also rose today, though it turned back at resistance near 2.04 and fell in what looks like a round of profit taking. The pair is set for another weekly gain. Looking at the past two weeks we see that the Pound has climbed 430 pips, with a small correction earlier this week. USD/JPY - US Stocks Fall, Dollar Follows vs. Yen: The Dollar fell vs. the Yen today, going below the 100 level for the second time this week. The Yen strengthened as risk aversion hit the investors on news that Bear Stearns needed to be bailed out after the firm's liquidity "deteriorated significantly" in the past 24 hours. The news sent the company's stock down as much as 40%, causing declines in the broader indexes. USD/JPY 280 Pip Slide This Week: In this look at the pair for the week, we see the pair is testing support at 100 yen per dollar, an important psychological barrier. If US equities continue to perform poorly, the pair is set to break down below this level next week. The Dollar is down around 280 pips from its weekly open. USD/CHF - Hits Parity for First Time: The Dollar-Swiss Franc pair hit parity for the first time ever. The Swiss Franc, similar to the Yen, is used to fund carry trade, and today's increase of risk aversion prompted investors to sell higher-yielding assets funded in Switzerland. Also, with the US set to cut rates, the Swiss Franc is going to enjoy a higher yield compared to the Dollar. For the week, the pair is down around 200 pips, and seems to be set for further declines next week. Market Highlights
Region	EST	Indicator	Actual	Forecast	Previous
GER	3:00am	Consumer Price Index m/m	0.5%	0.5%	0.5%
		Final Release for February News Release from Federal Statistics Office