Expert Analysis of Today's Market

• In mixed Thursday trading, the dollar gained against the euro on strong US economic data but lowered against the yen on continuing unwinding of carry trades.


• The EUR/USD broke minor support at the 1.32-handle. The pair is likely to test the next support at 1.3080.

image 1 of EUR/USD

• The EUR/JPY broke support at 156 today after further unwinding of carry trades.

image 2 of EUR/JPY

Financial and Economic News and Comments

US & Canada

• January US personal income, rising at double the rate of January personal spending, jumped more than forecast at a seasonally adjusted rate of 1.0%, after increasing an unrevised 0.5% in December, the US Commerce Department said Thursday.


• January personal spending rose a more-than-expected 0.5%, after increasing an unrevised 0.7% in December, the US Commerce Department said.


• A price index for personal consumption expenditures (PCE), excluding food and energy, increased 0.3% in January, after a 0.1% rise in December. The price index for PCE minus food and energy increased 2.3% in January y/y and the rise in December for this core inflation gauge was 2.2% y/y. The US Federal Reserve is watching the core PCE price index closely for signs of serious inflation and the two numbers are above the Fed’s comfort zone of 1.0%-2.0%.


• US new jobless claims grew by 7,000 to a seasonally adjusted 338,000 in the week ended Feb. 24, the US Labor Department said. The previous week’s level was revised to 331,000 from 332,000. The 4-week moving average increased by 7,500 to 335,250, the highest level since Oct. 29, 2005.


• The ISM manufacturing index unexpectedly jumped to 52.3 in February from 49.3 in January and 51.4 in December, the Institute for Supply Management said. Readings over 50 indicate expansion.


• US construction spending declined


• Former Fed chairman Alan Greenspan said at a CLSA Japan Forum in Tokyo that a recession in the US is possible, though not probable in 2007 as excess inventory is being reduced quickly. “By the end of the year, there is the possibility, but not the probability of the US moving into recession,” Greenspan said.


• US Treasury Secretary Henry Paulson said the US economy is “healthy,” citing rising consumer confidence, low unemployment, increased exports and restrained inflation. “I am watching developments carefully, and I believe that the US economy is healthy,” Paulson said in Washington in his first public comments since the global stock debacle.

Europe

• The purchasing managers’ index (PMI) for the eurozone manufacturing sector edged up to 55.6 in February from 55.5 in January. Readings above 50 indicate the eurozone manufacturing sector is still growing. The index was higher by strong gains in France and Italy, which more than offset a decline in Germany, which raised valued added tax to 19% from 16% on January 1.


• The UK manufacturing sector PMI rose more than expected in February. The latest survey by the Chartered Institute of Purchasing and Supply (CIPS) and the Royal Bank of Scotland showed its index of manufacturing activity at 55.4 in February. The 19th successive month of expansion was stronger than the 53.2 in January.


• Eurozone inflation stayed at 1.8% y/y in February for a second month, the European Union’s statistics office said. The figure was slighly below expectations for a 1.9% rise and below the European Central Bank’s 2% inflation ceiling.

Asia-Pacific

• Japan’s Vice Finance Minister Hideto Fujii said he will watch stock market moves closely as one kind of economic indicators. He added that the Japanese economy continues to be supported by prolonged strength in corporate sector.


• Thailand’s stocks, baht and bonds rose after the Bank of Thailand said it is lifting most remaining restrictions on investment by foreigners. The BOT yesterday cut its benchmark interest rate for a second time this year to 4.5% from 4.75% to spur growth.