Daily Forex Snapshots

Asian Session - Geopolitics Pressures Crude

August 29, 2008 9:22 AM CEST

G10 Advancers and Decliners vs USD

	JPY	0.35
	CHF	0.25
	NOK	0.20
	EUR	0.19
	DKK	0.16
	NZD	0.09
	SEK	0.02
	GBP	-0.01
	CAD	-0.04
	AUD	-0.08

Global Indexes

Current Level

% Change

Nikkei 225 Index	13,072.87	+ 2.38
Hang Seng Index	21,392.37	+ 2.04
Shanghai Index	2,397.37	+ 2.01
FTSE futures	5,609.00	+ 1.41
DAX futures	6,436.00	- 0.02
SMI Futures	7,189.00	+ 1.29
DJIA futures	11,671.00	- 0.20

World Markets

Current Level

% Change

Gold	834.65	+ 0.07
Silver	13.72	+ 0.22
VIX	19.43	- 1.67
Crude wti	116.89	+ 1.12
USD Index	77.03	- 0.16

Todays Calender

Estimates

Country / GMT

EC Economic Sentiment (Aug)	89.3	89.5	EZ / 9.00
Unemployment Rate (Jul)	7.3%	7.3%	EZ / 9.00
CPI (Aug Prov.) EU Harm.	4.0%	-0.2%,+4.0	EZ / 9.00
Personal Income (Jul)	-0.2%	+0.1%	US / 12.30
Personal Spending (Jul)	+0.2%	+0.6%	US / 12.30
PCE Deflator (Jul)	4.5%	+4.1%	US / 12.30
Core PCE Deflator (Jul)	0.3%(+2.4%	0.3%(+2.3%	US / 12.30
GDP (Q2 1st Est.)	+0.6%	-0.3%	CA / 12.30
Chicago PMI (Aug)	50.0	50.8	US / 13.45
U. of Michigan Consumer Conf. Index (Aug Fin.)	62.0	61.7p	US / 14.00

Currency Tech

AUDUSD
R 3: 0.8846
R 2: 0.8814
R 1: 0.8693
CURRENT: 0.8688
S 1: 0.8513
S 2: 0.8505
S 3: 0.8276

EURJPY
R 3: 165.33
R 2: 164.41
R 1: 163.11
CURRENT: 161.27
S 1: 160.14
S 2: 158.61
S 3: 158.24

USDSGD
R 3: 1.4401
R 2: 1.4333
R 1: 1.4276
CURRENT: 1.4165
S 1: 1.4078
S 2: 1.4016
S 3: 1.3977

Market Brief

The Usd was weaker in Asian session, as crude prices rallied on geopolitical tensions. The EurUsd traded from 1.4673 to 1.4758, while UsdJpy slipped from 109.70 to 109.00. The AudUsd & NzdUsd were unable to hold early gains, falling to 0.8620 and 0.7030, respectively. Crude prices rose as Russia threatened to use oil supplies to Western Europe in retaliation to NATO's naval maneuvers in the Black sea and potential EU sanctions. This negative news offset much of the positive gain yesterday, as the IEA stated it would release strategic stockpiles if storm (expected to be reclassified to Hurricane) Gustav disrupted Gulf output. Crude rose to $117.00bbl. Asian stock indexes are trading higher, following yesterday's WS rally on the unexpectedly strong US GDP figure, with Nikkei leading the way up 2.38%. European futures are pointing to a higher open.

In Japan, CPI figures released surprised to the upside, coming in at 2.3%y/y vs. 2.2% exp (the highest inflation reading in a decade). The unemployment rate dropped to 4.0% vs. 4.1% prior reading. However, despite the healthy labor market consumption indicators remain soft, with household spending falling - 0.5%. Yesterday BoJ member Suda expressed concern over the higher than expected inflation readings, which might give the market some reason to begin pricing in a rate hike. However, we see a 2008 policy rate increase highly unlikely, especially considering the BoJ has repeatedly downgraded its assessment of the domestic economy and downside risk to growth.

In the European session, the market will be watching the Eurozone flash CPI. We expect that falling energy prices should help ease headline from its record 4.0% (similarly to what we saw in German earlier in the week from 3.5% to 3.3%). The EC survey will continue to paint a gloomy picture. With few of the national survey to help guild our forecast, we expect the downward trend to continue (given the high inflation, and low consumer confidence).

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