Fundamental Analisis By InstaForex

[IFX Darika]

Australia Will Survive Crisis Better Than Others: RBA's Edey

Australia's economy is expected to weather global economic crisis more than its international counterparts as it has a better financial system compared to other economies, Reserve Bank of Australia's Assistant Governor of Economics, Malcolm Edey said Wednesday. But, he agreed that Australia will be operating in a difficult international environment this year.

"There are reasons to expect that the Australian economy can continue to perform better than its international counterparts in the difficult period that lies ahead," Edey said in a speech in Sydney.

Edey noted that Australia had more momentum than most comparable economies in the period leading into the crisis. He said the economy's financial system remains in a much better shape than its international counterparts and it helped gain much more traction from cuts in official interest rates.

He said the central bank's rate cuts have been passed through to end borrowers, especially for housing loans, since it started lowering rates in September. He noted that this was in marked contrast to other countries, where banks were hit hard by financial crisis and the degree of pass-through was limited.

Since September 2008, the RBA had cut its key cash rate by a total of 4 percentage points to a record low of 3.25%. In addition, Malcolm Edey said the depreciation of the exchange rate is also insulating the domestic economy.

Further, Edey said while major industrial countries were slowing due to crisis, China and the other developing economies in Asia and elsewhere were growing at a good pace until the September quarter. But, he said 2009 is shaping up as a very difficult year for the world economy.

Growth in virtually all of Australia's trading partners will be well below trend this year. "This would also mean that the current cycle is more highly synchronized than the three previous international recessions, in the early 80s, the early 90s and in 2001," Edey said.

Official forecasts, including those of the IMF, imply that output in the major industrial economies will contract further in the first half of this year, but start to pick up later in the year and into 2010. "The situation is still very uncertain but, for the reasons I've been outlining, that seems like a reasonable expectation."

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[IFX Darika]

India Unlikely to Achieve Trade Target For Current Fiscal- Industry Minister

India may not achieve the $200 billion trade target fixed for the current fiscal, reported the PTI quoting the Minister of State for Industry, Ashwani Kumar in Lok Sabha. He said that the government and the Reserve Bank of India are closely watching both domestic and international economic developments. He also said that the RBI has already taken various measures to reduce the cost of credit and improve liquidity for trade and industry.

Kumar said that the downtrend in exports is witnessed particularly in sectors like gems and jewellery, textiles and garments, handicrafts, automobiles, leather and leather products, marine products and plastic and linoleum and said employment in these sectors are also impacted. He added that the government is taking steps to create new jobs to solve the problem.

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[IFX Svetlana]

Dollar Jumps To 10-day High Against Euro


(RTTNews) - During early Asian deals on Monday, the US dollar climbed to 1.2571 against the European currency. This set the highest point for the dollar since February 20. If the dollar gains further, it may likely target the 1.251 level. The euro-dollar pair closed Friday's New York session at 1.2663.

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[IFX Svetlana]

UK Home Prices -0.8% on Month in Feb.


(RTTNews) - The average asking price of a home in Great Britain was down 0.8 percent in February, housing industry data collector Hometrack said on Monday, coming in at ?157,000. That follows a 1.0 percent monthly decline in January.

On an annual basis, house prices in the United Kingdom were off 10 percent after a 9.4 percent fall in the previous month.

There was a 17 percent jump in the number of new buyers registering with estate agents, as well as a 6.7 percent rise in new homes being put on to the market. The number of agreed sales soared 35.9 percent after a 5 percent fall in January, while the average time for which a home was on the market eased slightly to 12 weeks.

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[IFX Darika]

Italian February Inflation Steady At 1.6%

Italy's consumer price index, or CPI, including tobacco rose 1.6% year-on-year in February, at the same pace recorded in January, a preliminary report from the statistical office ISTAT showed Monday. Economists had expected the CPI to climb 1.5%.

On a monthly basis, the CPI rose 0.2% after recording declines in past three months.

The harmonized index of consumer prices, or HICP, grew 0.2% in February following a 1.7% fall in January. The HICP annual inflation edged up to 1.5% from 1.4%.

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[IFX Svetlana]

German Wholesale Price Y-o-Y Decline Biggest Since March 1987.

(RTTNews) - Tuesday, the German Federal Statistical Office said that the wholesale price index or WPI declined 5.9% year-over-year in January, after falling 4.2% in December. This was the strongest annual decline since March 1987. Economists were looking for a decline of 6.3%.

On a monthly basis, wholesale prices dropped 0.4% in January. Economists had predicted a decline of 2% for January.

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[IFX Darika]

US dollar falls from 12-day high against euro

The US dollar pared its Wednesday's early Asian session gains against the European currency, the British pound and the Swiss franc. The dollar thus eased from a 12-day high against the euro. On the other hand, the greenback showed strength against the Japanese yen.

Against the European currency, the US dollar lost ground after hitting a 12-day high of 1.2540 during early Asian deals on Tuesday. At 10:55 pm ET, the dollar touched a low of 1.2640 against the euro, compared to 1.2579 hit late New York Monday. The euro-dollar pair is currently trading at 1.2621 with 1.29 seen as the next target level.

The US dollar that closed Monday's North American session at 1.4057 against the British pound, climbed to 1.3996 during Tuesday's early Asian deals. Thereafter, the dollar reversed its direction and was quoted at 1.4091 against the pound at 11:45 pm ET. The next downside target level for the greenback is seen around 1.43.

Against the Swiss franc, the US dollar touched 1.1720 at 10:55 pm ET, moving down from an early Asian session high of 1.1784. If the dollar-franc pair falls further, 1.159 is seen as the next target level. The pair that closed Monday's New York deals at 1.1755 is currently quoted at 1.1731.

The US dollar traded higher against the Japanese yen during today's early deals. At 11:05 pm ET, the dollar-yen pair reached a high of 97.62, compared to Monday's closing value of 97.49. On the upside, 99.1 is seen as the next target level for the dollar.

Japan's monetary base was up 6.4 percent on year in February, the Bank of Japan said today, standing at 93.653 trillion yen. That follows a 3.9 percent annual advance in January to 93.504 trillion yen.

Switzerland's fourth quarter GDP and the UK February construction PMI reports are expected in the European session today.

Turning to the US, Atlanta Federal Reserve Bank President Dennis Lockhart is scheduled to speak about the U.S. economy on a panel in Tampa, Florida at 8 AM ET.

Data on Pending Home Sales, which is a leading indicator of housing market activity released by the National Association of Realtors, is due out at 10 AM ET. The index is likely to show a 3% decline for January.

The pending home sales index rose 6.3% to 87.7 in December compared to November. On a year-over-year basis, the index was up 2%.

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[IFX Svetlana]

Dollar Rises To 3-1/2 - month High Against Euro.


(RTTNews) - Wednesday morning in Asia, the US dollar showed strength against its major counterparts. The dollar rose to a 3-1/2 -month high against the euro and a 12-day high against the Swiss franc.

The dollar, which closed yesterday's trading at 1.1759 against the Swiss franc climbed to 1.1828 during early Asian deals on Wednesday. This set the highest point for the dollar since February 20. On the upside, 1.189 is seen as the next target level for the dollar-franc pair.

In early Asian trading on Wednesday, the dollar surged to a 3-1/2 -month high of 1.2458 against the European currency. If the dollar gains further, it may likely target the 1.233 level. The euro-dollar pair was worth 1.2563 at yesterday's close.

The dollar advanced against the yen in early Asian deals on Wednesday. At about 9:25 pm ET, the dollar-yen pair hit 98.59, up from Tuesday's close of 98.20. The next upside target level for the pair is seen at 99.8.

Despite the steps taken by the Bank of Japan to combat recession, the Japanese economy remains likely to continue to worsen in the near term, BoJ board member Miyako Suda told local business leaders today morning in Kyoto City.

The bank should take extraordinary steps to aid the economy, Suda said, in making the utmost efforts to support economic recovery. At the same time, Suda cautioned that the board must me mindful about the health of the Bank of Japan's balance sheet.

Suda also predicted that the Japanese financial markets would remain under significant pressure, while the weak global economy would ultimately lead to a decline in exports.

During early Asian deals on Wednesday, the dollar strengthened to 1.3988 against the pound. This may be compared to yesterday's North American session close of 1.4054. If the dollar moves up further, 1.396 is seen as the next target level.

According to the Nationwide agency, consumer confidence in Great Britain improved slightly in February. The agency reported today that U.K. consumer confidence improved to 43 percent compared to January's reading of 41 percent.

In the European session, the services PMI report from Germany, France, Italy, UK and the Euro-zone are expected.

Across the Atlantic, the ADP National Employment report, which sheds light on non-farm private employment, is scheduled to be released at 8:15 am ET. The report is usually released two days prior to the Labor Department's employment report. The private sector in the U.S. is likely to have lost 613,000 jobs in the month.

Dallas Federal Reserve Bank President Richard Fisher is due to speak on the economic outlook at the 8th annual Global Supply Chain Conference sponsored by the Supply & Value Chain Center at the Neeley School of Business at Texas Christian University in Fort Worth at 8:30 am ET. Lockhart is scheduled to speak about the U.S. economic outlook in Miami, Florida at 12 pm ET.

The ISM is scheduled to release the results of its non-manufacturing survey at 10 am ET. The non-manufacturing index is likely to show a reading of 41.3 for February.

The Energy Information Administration is scheduled to release its weekly petroleum inventory report at 10:30 am ET.

The Federal Reserve is due to release its Beige Book, which is a compilation of anecdotal evidence on economic conditions from each of the 12 Federal Reserve districts, at 2 pm ET.

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[IFX Darika]

European Economics Preview: ECB, BoE Forecast To Cut Rates By 50 Bps

Thursday, the European Central Bank is expected to cut its key interest rate by 50 basis points to a record low of 1.5% as leading economic indicators increasingly point downwards. In the UK, the Bank of England is also expected to cut interest rates to near zero and announce non-conventional measures to improve liquidity.

At the end of two day rate setting meeting, the Monetary Policy Committee of the central bank is widely expected to reduce the Bank Rate by another half a percent to a historic low of 0.5% to kick start the British economy that is falling into deeper recession.

Further, the Treasury is expected to give authority to the central bank to print money and provide funds through purchase of assets. At 2.00am ET, the Federal Statistical Office is scheduled to release the German retail sales report for January. Retail sales are expected to grow 0.2% month-on-month in January, after rising 0.1% in December.

Thereafter, the French ILO jobless rate is due at 2.45am ET. The French unemployment rate is seen at 7.9% in the fourth quarter, up from 7.7% in the prior quarter.

At 2.50am ET, the French statistical office INSEE is slated to issue producer prices results for the month of January. On a yearly basis, producer prices are forecast to fall 0.4%, after remaining flat in December.

Spanish industrial production and Hungarian trade balance are due at 3.00am ET. Spanish industrial production is forecast to fall 20.2% year-on-year in January.

At 5.00am ET, the Eurozone GDP data is expected from the Eurostat. According to the flash estimate, Eurozone GDP contracted 1.5% sequentially in the fourth quarter, larger than the 0.2% decline seen in the second and third quarters of 2008. Compared with the same quarter of the previous year, seasonally adjusted GDP decreased 1.2% in the fourth quarter.

The statistical office is expected to confirm the GDP estimate released on February 13.

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[IFX Svetlana]

Australian dollar falls from 5-day high against loonie.


(RTTNews) - The Australian dollar pared its Monday's early Asian session gains against other major currencies. The aussie thus declined from a 5-day high against the Canadian dollar.

The Australian stock market was trading higher today, led by resource stocks, as commodity prices rise and following a mixed closing on Wall Street on Friday. At 9:06 p.m. ET, the benchmark S&P/ASX 200 index was gaining 21 points or 0.67% to 3,167, after closing 1.35% lower on Friday at almost six-year lows. The broader All Ordinaries index was up 21 points or 0.68% to 3,133.

Against the US dollar, the Australian currency edged higher to 0.6453 during Monday's early Asian deals. Thereafter, the aussie-dollar pair reversed its direction and is presently quoted at 0.6400. If the aussie falls further, 0.628 is seen as the next target level. The pair closed Friday's North American session at 0.6408.

The Australian dollar reached a high of 1.9721 against the European currency at 9:40 pm ET Sunday. Thereafter, the aussie reversed its direction and is currently quoted at 1.9811 against the euro, compared to 1.9741 hit late New York Friday. On the downside, 1.999 is seen as the next target level for the Australian currency.

The Australian currency that closed Friday's New York deals at 63.05 against the Japanese yen climbed to 63.41 at 8:30 pm ET Sunday before losing ground. The Aussie-yen pair is currently trading at 62.80 with 61.1 seen as the next target level.

Japan's unadjusted current account swung to a deficit for the first time in 13 years in January, the Ministry of Finance said today, posting a record shortfall of 172.8 billion yen for the 10th straight month of surplus contraction.
That was sharply lower than analyst expectations for a 15.3 billion yen deficit after the 125.4 billion yen surplus in December. The current account surplus was 581.2 billion yen in November and 960.5 billion yen in October.

Also, Japan's M2 money supply was up 2.1 percent on year in February, the Bank of Japan said, coming in at 743.1 trillion yen. That follows a revised 2.0 percent annual expansion in January. The M3 money supply added an annual 1.1 percent, the data showed, coming in a 1041.9 trillion yen. Included in that figure, M1 was down 0.4 percent while CDs were up 1.3 percent.

The aussie that hit a 5-day high of 0.8280 against the Canadian dollar during Monday's early Asian deals weakened thereafter. At 11:35 pm ET, the aussie-loonie pair slipped to 0.8234, compared to Friday's closing value of 0.825. If the pair falls further, 0.814 is seen as the next support level.

German producer price index for January and the euro-zone Sentix investor confidence report for march are expected to be released in the upcoming session.

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News are provided by InstaForex in partnership with RTT.