Action Insight Mid-Day Report 3-31-11

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Mid-Day Report: Euro Soars on Inflation, Testing Resistance

EUR/USD breaches 1.42 level after stronger than expected inflation data affirmed the case for ECB to raise rates in April and increases the possibility for more rate hikes down the road this year. Eurozone flash CPI rose from 2.4% to 2.6% yoy in March, the highest level since October 2008 when CPI was at 3.2% yoy. This was also the consecutive fourth months that inflation stayed above ECB's 2% target. ECB is widely expected to raise rates by 25bps from historical level of 1% next week after Trichet used the famous word "vigilance" to signal rate hike in March meeting. Today's inflation data argues that more rate hikes are needed this year to bring inflation down to ECB's target, with some speculation that ECB will raise rates once every quarter. Job data from German was also positive with unemployment dropped -55k in March while unemployment rate dropped to 7.1%. EUR/USD would possibly take out 1.4247 resistance soon to resume recent up trend. EUR/GBP is also back pressing 0.8835 resistance and should be extending recent rally.

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Featured Technical Report

EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.4069; (P) 1.4108 (R1) 1.4164; More.

EUR/USD jumps to as high as 1.4231 so far today but upside is still limited below 1.4247 resistance and thus, intraday bias remains neutral. On the upside, break of 1.4247 will confirm up trend resumption for 1.4281 resistance, which is close to medium term falling trend line (now at 1.4273). Sustained break there will have medium term bullish implication and should pave the way to 1.5143 resistance next. On the downside, below 1.4020 will bring another fall to extend the correction from 1.4247. Nevertheless, outlook remains bullish as long as 1.3751 support holds and further rally is still expected.

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Economic Indicators Update

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GMT Ccy Events Actual Consensus Previous Revised
23:01 GBP GfK Consumer Confidence Mar -28 -30 -28
00:30 AUD Building Approvals M/M Feb -7.40% 4.00% -15.90% -11.60%
00:30 AUD Retail Sales M/M Feb 0.50% 0.40% 0.40%
02:00 NZD NBNZ Business Confidence Mar -8.7
34.5
05:00 JPY Housing Starts Y/Y Feb 10.10% 7.40% 2.70%
06:00 GBP Nationwide House Prices M/M Mar 0.50% -0.10% 0.30% 0.70%
07:55 EUR German Unemployment Change Mar -55K -29K -52K -54K
07:55 EUR German Unemployment Rate Mar 7.10% 7.20% 7.30%
09:00 EUR Eurozone CPI Estimate Y/Y MAr 2.60% 2.30% 2.40%
12:30 CAD GDP M/M Jan 0.50% 0.50% 0.50%
12:30 USD Initial Jobless Claims 388K 380K 382K 394K
13:45 USD Chicago PMI Mar
69 71.2
14:00 USD Factory Orders Feb
0.50% 3.10%
14:30 USD Natural Gas Storage
-2B -6B
Forex Trade Ideas

Trade Idea Update: GBP/USD – Hold long entered at 1.6070

Current sharp retreat from intra-day high of 1.6152 has dampened our near term bullishness for retracement of recent decline and 1.6035 needs to hold to retain prospect of another rebound, break of said resistance would bring stronger corrective rise to 1.6170 (50% Fibonacci retracement of 1.6403 to 1.5937) but reckon 1.6190 would limit upside and previous support at 1.6215/20 should hold.

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Trade Idea: EUR/JPY – Buy at 116.00

Current firmness after breaking previous resistance at 116.00 adds credence to our view that the wave ii is still unfolding as ABC-X-ABC and 2nd A leg is still in progress for further gain to 117.50, then 118.00 but reckon 118.36 (38.2% Fibonacci retracement of 139.26 to 105.44) would hold on first testing.

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Candlesticks Intraday Trade Ideas Update Schedule (GMT):
1st Update: 0630 - 0700; 2nd Update: 0930 - 1000; 3rd Update: 1230 - 1300; 4th Update: 1500 - 1530
Pairs Covered: EUR/USD, USD/JPY, GBP/USD, USD/CHF

Elliott Wave Daily Trade Ideas Update Schedule (GMT):
AUD/USD, EUR/JPY: 0800 - 0830; EUR/GBP, USD/CAD: 1330 - 1400

Suggested Readings

Fundamental Highlights

Technical Highlights


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BOE: Q1 Corporate Credit Available Net 6.9% vs 3.2% In Q4

Posted:

--BOE: Q1 Corporate Credit Available Next 3M net 7.8% vs 4.8% Q4 --BOE: Q1 Secured Household Credit Available net 2.8% vs 3.4% Q4} --BOE Secured H'hold Credit Available Next 3M 14.6% vs 2.7% Q4} LONDON (MNI) - Credit availability remained broadly unchanged in Q1 with corporate credit availability ...

BOE: UK lenders expect to increase credit availability to households in Q2 after steady Q1

Posted:

Expect to offer more high LTV mortgages in Q2 despite weak prospects for house prices Lenders reported unexpected rise in mortgage defaults in Q1 (UNEXPECTED!!, these people should get out in the real world), expect further increase in Q2 (REALLY?) Expect availability of corporate loans to increase a little in Q2 after ...

Germany March SA Unemployment Down For 13th Consecutive Month

Posted:

SA Unemployment: -55k (pan-German), -38k (West), -17k (East) MNI survey median: -27.5k m/m MNI survey range: -40k to -8k m/m -- FRANKFURT (MNI) - Unemployment in Germany fell for the 13th consecutive month in March by more than even the most optimistic analysts had forecast, ...

Did I ever tell ya…..

Posted:

I really hate month end, and this time round it's being compounded by fact it's quarter end as well!!! I get told month end flows, which experience tells me I should ignore and life just seems to get that little bit more complicated. Well we've been up to have a look at the aforementioned ...

Italy February PPI +0.5% m/m, +5.3% y/y

Posted:

Below median forecasts of +0.7%, +5.6% respectively.

German March s.a jobless total -55,000 to 3.005 mln – Labour Office

Posted:

Better than median forecast of -25k. Unemployment rate down to 7.1% from 7.3% in February, better than median forecast of 7.2%.

Moody’s: Cannot rule out further ratings cuts for stressed euro zone states after EU measures to tackle debt crisis

Posted:

Whatever.

Japan chief cabinet secretary: Considering evacuation zone on day-to-day basis, no need to widen it for now

Posted:

USD/JPY pretty much unchanged since Europe got in, presently at 82.70. Talk of buy orders 82.50/60, light stops below there. More stops seen through 82.25. Topside looks messy. Talk of decent sell orders starting at 83.25, but also reports of buy stops through 83.30 (not surprising given it's post-earthquake spike high)

Cable edges higher

Posted:

Bit late now, but was told there was going to be interest to buy cable at the fix. Whilst trying to ascertain what fix/fixes it ofcourse had a little rally. Such is life. The buying coincided with the 08:00 GMT fix and could well be month-end related. We've been to ...

Roll up, roll up, time’s a wastin….

Posted:

It's that time again, yes NFP's contest time!!!! Whoopeee..... Hit this link and give it your best shot

Japan govt considering introducing quake recovery tax – Nikkei

Posted:

Considering issuance of special bonds to finance reconstruction May ask BOJ to underwrite bonds under envisioned reconstruction bill

FRANCE DATA: Feb PPI +0.8% m/m, +6.3% y/y; Jan +0.9%.

Posted:

FRANCE DATA: Feb PPI +0.8% m/m, +6.3% y/y; Jan +0.9% m/m, +5.6% y/y --Feb manufacturing PPI +0.9% m/m, +6.3% y/y --Feb oil product prices +4.0% m/m, +35.3% y/y --Feb food and tobacco prices +1.0% m/m, +4.9% y/y --Feb industry import prices +1.1% m/m, +9.9% y/y

French February producer prices +0.8% m/m

Posted:

Slightly above median forecast of +0.7%. EUR/USD steady after early flurry as Europe entered the fray, presently at 1.4158. Talk of sell orders clustered 1.4190/00. Trailing sell stops through 1.4080.

Japan Feb Supermarket Sales +0.6% Y/Y, 1st Y/Y Rise in 27 Mo

Posted:

...

Germany’s Retail Sales Unexpectedly Weak In February

Posted:

Real, seasonally adjusted retail sales: February: -0.3 m/m, +1.1% y/y MNI survey median: +0.4% m/m MNI survey range: +0.2% to +0.9% m/m January: +0.4% m/m, +2.4% y/y (revised from +1.4%/+2.6%) -- ...

Germany’s ILO Employment Level Hits Record High In February

Posted:

-- Feb +43k, Jan +37k, Dec +50k, Nov +41k, Oct +9k, Sep +18k FRANKFURT (MNI) - The German labour market continued to expand in February, as the number of employed hit a new record high, the Federal Statistical Office reported on Thursday. Taking into ...

FRANCE DATA: Public deficit fell to 7.0% of GDP in…

Posted:

FRANCE DATA: Public deficit fell to 7.0% of GDP in 2010 from 7.5% in 2009, undershooting the official target by 0.7 pct point - Public debt ratio rose to 81.7% of GDP from 78.3% in 2009

Correct: MNI Survey: BOJ Tankan Major Mfg Index Seen Down

Posted:

-- Correcting Median Forecast To +3 From +4 In 3rd Paragraph of Story Published at 0305 ET on March 25 -- Most Firms Likely Responded to March Survey Before March 11 Quake -- See Separate Table For Details Of Individual Forecasts By Shigeo Kodama TOKYO (MNI) - ...

France’s Sarkozy Wants Beefed Up Yuan Role In G20 Reform Meet

Posted:

NANJING (MNI) - Representatives of the world's major economies gathered here Thursday for talks on reform of the global monetary system which began with French President Nicolas Sarkozy noting that recent currency movements have underlined the need for an immediate overhaul. Sarkozy told delegates ...

German February retail sales -0.3% m/m, +1.1% y/y

Posted:

Weaker than median forecasts +0.4%, +1.8% respectively.