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At 6:00:00 AM E-12 Q4 Labor Costs earnings/ 1st rel (exp 3.3% , prev 3.4%) E-12 Dec Trade Balance rev. (exp n/f, prev 7 bln) Jan Trade Balance Prel (exp 3 bln, prev 8.7 bln) At 2:50:00 AM France Feb HICP y/y final (exp n/f, prev 2.3%) France Feb CPI y/y final (exp 2%, prev 2%) France Feb CPI m/m final (exp 0.1%, prev 0.1%) France Feb HICP m/m final (exp n/f, prev 0.2%) France Jan Current Account (exp n/f , prev 4.3 bln)
EUR/USD is trading around 88.14 facing a support at 88.10 as the single currency await for more econmic news from the Eurozone today. The chief of German Verdi Union Bsirske said they did not rule out going on strike over pay demands, and furthermore, recommended the ECB to concentrate on cutting rates and not lecturing the German unions. The union-employer haggling over pay rises has been an issue of concern, especially given its likely impact on inflation. In addition, more troubles sprang upon the German leadership today as German Chancellor Schroeder expressed his regret that the banks rejected a rescue package for Holzmann, but added his hopes that the bankruptcy proceeding will preserve as many jobs as possible. This week's remaining economic data from the Eurozone include Euroarea foreign trade, Euro area labor costs and French CPI. Labor costs will be closely watched by the ECB in the coming months and plans for labor market reform are a highly sensitive issue to many Europeans. Labor unrest in Germany, France and Italy is likely to dominate the political landscape in this election year and the lack of headway will retard a key element to Eurozone growth. The ECB wants to see faster labor market reform, but in this election year, that is highly unlikely. Technically, if the euro breaks its 200-day moving average at 88.62, followed by 88.71 - which marks the 61.8% retracement of the 90.63-85.63 move the dollar could come under further pressure, and fall as far as 89.50.
The yen is trading at almost the same levels vs. the dollar around 132.35 after the BoJ upgraded its overall view of economy in March for the first time since July 2000, but remained cautious that downward pressure continues to weight from exports and inventories. Vice Economic Min. Kobayashi said he expected capex to be weak in 1st half of 02/03 and that risk of March crisis almost completely gone.PM Koizumi said on Thursday that he does not see a need for additional anti-deflationary measures, saying his government is unlikely to draw up such measures in the near future. "No anti-deflation measures can be as effective as the fiscal 2002 budget," he said. The government unveiled its first round of measures aimed at fighting deflation in late February, but those measures largely disappointed markets. Today, Econ Min Takenaka clairified that the anti-deflation measures focused on the financial sector and that progress on banks' non-performing loans and further monetary easing is continuing. Resistance is sent at 132.45 and 133. Support at 131.70 and 131.20
The Swiss franc hovered around 1.6580 against the dollar slightly stronger after traders bought then sold USD/CHF in the run up to yesterday's monetary policy announcement where the Swiss National Bank kept rates unchanged. No move was seen supportive of the franc, which has also benefited across the board on safe-haven flows sparked by fears of US military action in Iraq added to recent gains. USD/CHF support remains above overnight lows around 1.6526. Swissy also remains safely above last week's lows around 1.6480 after ending a sharp five-franc retreat that week. Upside is seen capped at 1.6675 and 1.6747, the 38.2% retracement of the 1.7115-1.6517 move. Support is seen at 1.6520 and 1.6480.