Expert Analysis of Today's Market

After G-7 Meeting, Yen Drops vs. Euro, Dollar

Hans Nilsson 2007-04-16

The dollar remained lower against the euro but higher against the yen on Monday. The yen dropped to a record low against the euro and fell to the lowest against the dollar in almost seven weeks after G-7 finance officials did not mention the yen’s weakness. The Australian and New Zealand dollars were higher, supported by carry trades. Sterling rallied overnight after an unexpected jump in UK output prices in March.

The EUR/USD hit a new 2-year high overnight. The pair is likely to test the resistance at the Jan. 2005 all-time high in the 1.36-1.37 area. The pair is overbought, requiring some consolidation in that area. However, the longer-term trend is still up.

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Financial and Economic News and Comments

US & Canada

US retail sales rose a stronger-than-expected 0.7% in March, after rising 0.5% in February, the US Commerce Department said. Excluding the auto and gasoline sectors, all other retail sales increased 0.4% in March.

The Federal Reserve Bank of New York’s general economic index rose to 3.8 in April from 1.9 in March. The measure of new orders increased to 3.9 from 3.1 and shipments fell to 8.7 from 18.5.

US business inventories increased 0.3% in February to a seasonally adjusted $1.368 trillion, after rising 0.2% in January, the US Commerce Department said. Business sales rose 0.4% to leave an unchanged 1.29-month inventory to sales ratio.
Total purchases of US equities, notes and bonds fell to a net $58.1 billion in February from a revised $98.8 billion in January, the US Treasury Department said.

Europe

Germany’s final harmonized consumer price inflation for March was downwardly revised to 0.2% m/m and 2.0% y/y from the preliminary estimates of 0.3% and 2.1%, Federal Statistics Office said.
UK output prices rose the most in 11 months in March increasing bets that the Bank of England will raise interest rates. Output prices, unadjusted for seasonal swings, gained 0.6% m/m in March after rising a revised 0.4% m/m February, the Office of National Statistics said.

Asia-Pacific

Chief Cabinet Secretary Yasuhisa Shiozaki said Japan must move quickly to keep its financial markets competitive enough to attract global investors.

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