Daily Forex Snapshots

The Dollar on the Back Foot

May 22, 2008 2:10 PM CEST

G10 Advancers and Decliners vs USD

	DKK	.0010
	NOK	.0016
	CAD	.002
	GBP	.0034
	NZD	.0056
	SEK	-.0064
	AUD	-.0062
	EUR	-.004
	CHF	-.003
	JPY	-.02

Global Indexes

Current Level

% Change

Nikkei 225 Index	13,978	+ 0.37
Hang Seng Index	25,033	- 1.64
Shanghai Index	3485	- 1.65
FTSE 100 Index	6188	- 0.15
DAX Index	6985	- 0.80
SMI Index	7513	- 0.08
DJIA futures	12,640	+ 0.21

World Markets

Current Level

% Change

Gold	927	- 1.40
Silver	18	+ 0.08
VIX	18.59	0.00
Crude wti	129.07	0.00
USD Index	1.00	0.00

Todays Calender

Estimates

Country / GMT

CBI Industrial Trends Oders (MoM) (May)	-12	-13	UK/10:00
Retail Sales (MoM) (April)	.4%	-.7%	CAN/12:30
Housing Price (Mom) (March)	0	.06	US/14:00

Currency Tech

AUDUSD
R 3: 0.9826
R 2: 0.9723
R 1: 0.9618
CURRENT: 0.9580
S 1: 0.9511
S 2: 0.9392
S 3: 0.9291

EURJPY
R 3: 163.88
R 2: 163.10
R 1: 163.04
CURRENT: 161.71
S 1: 161.27
S 2: 160.79
S 3: 160.14

USDSGD
R 3: 1.3850
R 2: 1.3774
R 1: 1.3732
CURRENT: 1.3638
S 1: 1.3633
S 2: 1.3571
S 3: 1.3554

Market Brief

USD was little changed in Asia from the close seen in States on Wednesday. Concerns are growing though that U.S. inflation could rise significantly while growth falls producing a deeper slowdown in the economy. The Dollar is being strangled by the surge in oil prices which hit record highs again. Oil rose to over $133 barrel. This is helping the Canadian dollar: the loonie rose .9 per cent against the dollar.

As the Fed released its minutes from the April FOMC it also raised its expectations for inflation and suggested that it has now finished its cycle of cutting rates that saw them fall to 2% recently. Add to the mix the falling stock markets over the last few days and investors are feeling a little nervous about holding onto Dollars.

EUR rose to 1.5800 before falling back to 1.5758 respectively. Recent data, especially the surprise rise in German business confidence, suggests the ECB are more likely to raise interest rates than cut them which has been very supportive to the Euro.

GBP sat around 1.9840 area with little movement in Far East session. Against the Euro the Pound rose to .7993 from .8014 on profit taking. There is a very important by-election today that could see the Labour Party lose what is deemed a 'safe seat' to the Conservative opposition. This would be a huge blow to PM Brown and may well lead to a challenge to his leadership. Furthermore, there is growing pressure that could see strike action from public sector workers who are growing angry about pay settlements that fall way below inflation.

Asian markets are unsurprisingly down for another day, as record crude prices weighed on sentiment, with the Nikkei managing to post a small gain of 0.2%, the Hang Seng is down 2.0% and the MSCI A-P is down 0.5%.

Despite the gloom, Japanese export growth rose more than expected in April, as Asia and emerging markets demand helped offset the US slowdown. New Zealand is following other nations in launching fiscal stimuli, announcing a cut in income tax worth $8.2bn over four years.

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