Euro climbs to 16-day high against British pound
Wednesday, the European currency climbed to a 16-day high against the British pound. On the other hand, the euro slipped to a 6-day low versus the Swiss franc, while gained slightly from an early Asian session's new multi-month low against the yen and a new multi-week low versus the dollar.

The German Federal Statistical Office announced today that the producer price index or PPI rose 4.3% year-over-year in December, slower than the 5.3% recorded in the previous month. Economists had predicted an increase of 4.2%. On a monthly basis, the PPI dropped 1% in December, after falling 1.5% in November. Economists were looking for a decline of 1.2%.

The European currency gained ground against the US dollar after hitting a new multi-week low of 1.2848 during early Asian deals on Wednesday. The euro-dollar pair thus climbed to 1.3019 at 10:15 pm ET, compared to 1.2907 hit late New York Tuesday. Thereafter, the pair reversed its direction and is now worth 1.2935.

Against the British pound, the euro traded higher during Wednesday's early deals. At 4:30 am ET, the euro-pound pair reached a 16-day high of 0.9414, compared to Tuesday's closing value of 0.9269. If the pair gains further, 0.963 is seen as the next target level.

Bank of England policymakers stood divided while deciding to reduce the bank rate by 50 basis points to a record low in January, the minutes of the session revealed today. The minutes showed that the Monetary Policy Committee voted 8-1 on the 50 basis point reduction on January 8. The well-known dove of the rate setting body, David Blanchflower sought a 100 basis point reduction. Economists were expecting a unanimous vote.

In January's session, the MPC decided to reduce Bank Rate to 1.5% from 2%. This is the lowest rate since the central bank was established in 1694.

The Office for National Statistics or ONS reported today that the UK claimant count rate rose to 3.6% of the workforce in December from 3.3% in November. Economists were expecting the rate to rise to 3.5%.

UK's Office for National Statistics said today that the public sector net borrowing was GBP 14.9 billion in December 2008. This was GBP 7.5 billion higher net borrowing than in the previous year. Economists had expected the public sector to borrow GBP 10.5 billion.

The single currency that closed Tuesday's North American session at 1.4798 against the Swiss franc touched a 6-day low of 1.4742 at 5:00 am ET Wednesday. The next downside target level for the pair is seen around 1.472.

Against the Japanese yen, the euro declined to a new multi-month low of 115.32 during today's early Asian deals. Thereafter, the euro-yen pair reversed its direction and reached 117.22 before pulling back again. The pair is currently quoted at 116.16.

Japan's Cabinet office revealed today in a final report that the leading index declined to 81.3 in November from 85.2 in October. The November reading was revised down from the initial 81.5. A year ago, the leading index was at 94.2. Economists were looking a reading of 81.4 for November.

Across the Atlantic, the Energy Information Administration is scheduled to release its weekly petroleum inventory report at 10:30 AM ET today. The oil inventory report for the week ended January 9th showed that crude oil stockpiles rose by 1.2 million barrels to 326.6 million barrels. Crude oil inventories continued to be the above the upper limit of the average range.

The National Association of Homebuilders' is scheduled to release the results of their survey on homebuilders' confidence. Builder confidence remained at a record low in December, with the housing market index holding at its November lows of 9, as buyers feared to move forward and builders found it impossible to compete with the cut-rate product that is continually flooding the market from mounting foreclosures.

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Published: 2009-01-20 21:46:0

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Israeli shekel slips to 6-week low against dollar
The Israeli shekel lost ground against the US dollar in early New York trading on Wednesday. The shekel slipped to a 6-week low of 3.9528 against the greenback by 8:35 am ET. On the downside, the shekel may find support near the 4.0 level. The dollar-shekel pair that was worth 3.886 at Tuesday's close is currently trading at 3.9227.

Investors continued to weigh as Standard & Poor's reaffirmed its "stable" outlook on Israel's credit rating yesterday, saying the 22-day Gaza conflict would only have a short-term impact on the economy. S&P, however, noted that the conflict is expected to widen the country's fiscal deficit this year and next year. S&P has an A/A-1 rating on Israel's foreign currency debt and AA-/A-1+ on its local debt. The S&P also said that Israel's fiscal deficit would expand to 6% of gross domestic product in 2009 and 3% in 2010.

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Published: 2009-01-21 02:00:00

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US dollar falls to 2-day low against Canadian counterpart

The US dollar edged down against is Canadian counterpart during early deals on Thursday. At 4:15 am ET, the dollar-loonie pair touched a 2-day low of 1.2539, compared to 1.2553 hit late New York Wednesday. The next downside target level for the pair is seen around 1.247.For comments and feedback: contact editorial@rttnews.com

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Published: 2009-01-21 20:22:00

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Dollar Stable Versus Other Majors Ahead of Jobless Claims Report

The dollar was steady versus other majors Thursday morning in New York, staying near a 22-year high versus the sterling amid deepening concerns that the global recession has intensified.

With traders expressing little hope that a quick recovery is on the horizon, the dollar and yen have strengthened of late due to increased risk aversion.

Economic data is likely to attract some attention on Thursday, with the Labor Department due to release its weekly jobless claims report, while the Commerce Department is due to release its report on housing starts in the month of December.

The dollar has skyrocketed versus the slumping sterling over the past weeks, culminating in yesterday's 22-year high of 1.3617. The dollar has since leveled off to trade at near 1.3800 Thursday morning.

In economic news from the UK, results of the January 2009 Industrial Trends Survey by the Confederation of British Industry's or CBI showed that manufacturers in the UK expect sharp fall in output over the next three months.

The dollar was stable versus the euro Thursday morning, hovering near 1.3000 after pulling back from a 6-week high of 1.2823. The buck has picked up 10 cents over the past two weeks.

Thursday, the Eurostat said Eurozone's industrial new orders dropped 4.5% month-on-month in November, after falling a revised 5.7% in October. Initially the October decline was reported as 4.7%. Economists had predicted a decline of 5% for November.

The buck consolidated its attempts to recover from yesterday's 13-year low against the yen Thursday morning. The buck held steady near 89 in early dealing, having stabilized since hitting a 1995 low of 87.08 on technical trading.

The Bank of Japan's Board of Governors voted unanimously to keep the overnight call rate unchanged at 0.10 percent, the BOJ said on Thursday at the conclusion of its two-day monetary policy meeting in Tokyo.

The bank also lowered its median view for real GDP in the current fiscal year, now forecasting that it will contract 1.8 percent versus expectations in October for a 0.1 percent expansion. The next fiscal year is expected to see GDP shrink 2 percent, the bank added, versus the 0.6 percent expansion predicted in October.

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Published: 2009-01-22 00:16:00



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Eurozone Private Sector Activity Contracts In January
Eurozone private sector activity contracted at a slower pace in January, a closely watched survey revealed Friday.

Reports said citing the Markit Economics that the flash composite purchasing managers' index or PMI for Eurozone rose slightly to 38.5 in January from a record low of 38.2 in December. The increase was surprising as economists were expecting the index to fall to 37.4.

A PMI reading above 50 indicates expansion in the sector, while below 50 suggests contraction. The composite PMI showed an improvement for the fist time in five months, although it logged a below 50 reading.

The PMI for Eurozone's manufacturing sector climbed to 34.5 from 33.9 in December, while the consensus forecast was for the index to decrease to 33.1. Further, the gauge for the service sector went up to 42.5. Economists were expecting the services PMI to drop to 41.5 from December's reading of 42.1.

Also on Friday, the Markit Economics released flash PMI reports for France and Germany. The manufacturing PMI for France climbed to 38.1 from 34.9, while expectations was for the index to decline to 34. Further, the services PMI rose to 42.9 from 40.6. The Markit/CDAF composite PMI rose to 40.8 from 37.6 in December, the first rise in the index since September.

Meanwhile, a sharp contraction observed in German private sector activity. The composite PMI fell to 38 from December's 39.5. That marked the lowest reading on record. The flash PMI for German manufacturing sector stood at its lowest level since records began in 1996. It marked 32 in January down from 32.7.

The index for German services sector was 45.4, down from 46.6 recorded in the previous month. Economists were expecting the manufacturing PMI to record 32 and the services PMI to post 45.7.

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Published: 2009-01-22 23:20:00


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Canadian dollar surges to 12-day high against greenback

The Canadian dollar spiked higher against its major counterparts on Monday in early trading. The loonie advanced to a 12-day high against the US dollar, 13-day high versus the euro and a weekly high against the Japanese yen. The petro-linked loonie gained despite a drop in oil prices today. The crude oil for March delivery dropped $0.74 or 1.59% to $45.73 in the session.

Traders continued to weigh Friday's report on Canadian inflation. The Statistics Canada report showed that consumer price index dropped 0.7% in December after falling 0.3% in the previous month. Consumer prices rose 1.2% in the 12 months to December 2008, more slowly than the 2.0% increase in November, the report added. It was the smallest increase since January 2007 and reflected a sharp decline in the price of gasoline. Meanwhile the core CPI continued to hold steady at 2.4% for the second month.

The Bank of Canada's monetary policy report released last week showed that the Canadian economy is expected to face a sharp recession and will continue it in three quarters before growth returns in the second half of 2009.

In its update to its Monetary Policy Report, the central bank said it sees a quarter-to-quarter decline of 2.3 per cent in the fourth quarter of 2008, followed by a 4.8 percent drop for the first three months of 2009 and a drop of one percent in second quarter of this year.

However, the bank expects the downturn may be reversed by the third quarter of the year, when it forecasts two percent growth and 3.5 percent expansion in the last three months of the year.

The Canadian dollar advanced to 1.2210 against the US dollar by 4:15 am ET, the highest level since January 14, 2009. If the loonie moves further up, it may likely target near the 1.2155 level. The loonie-buck pair that closed Friday's deals at 1.2336 is currently trading at 1.2226.

Turning to the U.S, the National Association of Realtors is scheduled to release its report on existing home sales for December at 10 AM ET today. Economists estimate existing home sales of 4.40 million for the month.

The Conference Board is also scheduled to release a report on the U.S. leading index for December at the same time. The consensus estimate calls for a 0.3% decline in the leading indicators index for the month.

Against the euro, the Canadian dollar extended its early morning strong rally in early European trading. The loonie soared to near a 2-week high of 1.5811 against the euro by 4:50 am ET, compared to last week's close of 1.6026. On the upside, the Canadian dollar may find resistance near the 1.572 level. The pair is presently trading at 1.5825.

The Canadian currency soared to near a 6-week high of 0.7991 against the Australian dollar by 4:20 am ET and leveled off thereafter. The aussie-loonie pair that closed Friday's deals at 0.8085 is currently trading at 0.7993.

The Canadian dollar climbed a weekly high of 73.03 against the Japanese yen by 4:15 am ET Monday. This may be compared to last week's close of 72.06. As of now, the loonie-yen pair is trading at 72.78 with 73.5 seen as the next target level.

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Published: 2009-01-25 21:09:00

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US - The Day Ahead
Several key economic indicators are scheduled for release at the start of the week.

At 10 am ET, the National Association of Realtors is expected to announce the existing home sales data for December. Economists are looking for a figure of 4.40 million, smaller than November's 4.49 million. The month-on-month decline is forecast at 2% in December, less severe compared with the 8.6% slump in November.

Elsewhere, the Conference Board is expected release the leading economic index for December. The index reading is forecast to fall 0.2% in December, after declining 0.4% in the previous month.

The Federal Reserve Bank of Dallas is set to reveal the results of the Texas Manufacturing Outlook Survey for January at 10.30 am ET. The headline index was down 61% in December.

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Published: 2009-01-26 00:20:00

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Canadian Dollar Spikes Up To New Multi-Day High Against Yen

The Canadian dollar staged a sharp spike against its US and Japanese counterpart by about 2:05 am ET Tuesday. The Canadian dollar is now worth 1.2176 against the dollar and a new multi-day high of 73.95 against the yen, compared to Monday's closing values of 1.2229 and 72.91, respectively. The next upside target level for the loonie is seen around the 1.187 level against the dollar and 75.9 level against the Japanese unit.

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Published: 2009-01-26 18:53:00


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Dollar Drifts Lower Versus Euro and Sterling Tuesday Morning

The dollar extended its losses from the previous two sessions versus the euro and sterling amid speculation that its dramatic recent run-up has been way overdone.

With traders expressing a glimmer of hope that government intervention can help to shorten the global recession, riskier higher-yielding currencies have seen some renewing buying interest.

Tuesday's trading may be impacted by the release of the Conference Board's report on consumer confidence in the month of January as well as the S&P/Case-Shiller home price indices for November.

On Monday, a report from the National Association of Realtors showed an unexpected increase in existing home sales in the month of December, with some buyers taking advantage of lower home prices.

Looking at Tuesday morning's currency charts, the dollar eased further versus the euro, slipping to a weekly low of 1.3359 before improving to 1.3200. With the retreat, the buck moved away from a 6-week high of 1.2764, set last Thursday.

Tuesday, the European Central Bank said working day and seasonally adjusted current account of the euro area recorded a deficit of EUR 16.0 billion in November. The current account deficit widened from EUR 6 billion deficit recorded in October.

The dollar also stayed under pressure versus the sterling, easing to a weekly low of 1.4242 before stabilizing to trade at 1.4075. The dollar has leveled off since hitting a 23-year high of 1.3501 last week.

The buck continued its run of choppy trading versus the yen, slipping back to 89 after briefly touching above the 90 mark. The dollar has been able to find its footing since hitting a 13-year low of 87.08 on technical trading last week.

The Japanese government is planning to use public money to support companies, which are facing difficulty in surviving in an unfavorable economic condition. Companies that are struggling to raise funds due to credit crunch would be getting benefits of the new plan.

Also Tuesday morning, the buck held steady near 1.2200 versus the loonie after slipping to a nearly 2-week low of 1.2150 on Monday.

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Published: 2009-01-26 23:03:00

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Sweden Expected To Have Zero-Growth, Low Inflation In Next 12 Months: Survey

Wednesday, the latest Inflationary Expectations survey for Sweden showed that inflation and gross domestic product growth expectations in the one and the two-year perspective have tumbled since the previous survey, a report from research agency TNS Prospera revealed.

"Zero-growth and inflation slightly above the "tolerance floor" is the overall assessment for the year to come", the report said.

Decline was also witnessed in the wage increase expectations. That said, the survey found that an economic recovery with its ensuing inflation effects is expected to happen after the next twelve months.

Inflation is seen at 1.1% for the first year and at 1.5% for two years, according to the survey. After stagnation in the first twelve months, the GDP is expected to record 1.1% growth in two years.

In the October survey, inflation was seen at 3.2% for the first year and 2.8% in two years time. GDP was expected to rise 1.8% in the first twelve months and 2.1% in two years.

Further, the survey participants predicted a 0.5% reduction in Riksbank's benchmark, the repo rate within a 3-month horizon to 1.5%. Meanwhile, expectations of money market players were more aggressive. They expect the repo rate to fall to 1.3% in three months time.

With regard to currencies, the EUR and USD rates forecasts are substantially higher, compared to SEK, than were expected last survey, the report said. "The trend is however clear; SEK is believed to strengthen".

TNS Prospera conducts the survey on behalf of Sveriges Riksbank, four times a year, aiming to track inflationary and wage increase expectations in Sweden among labour market parties, purchasing managers and money market players. The survey also maps expectations of future GDP-growth and repo rates, for money market players also the five-year government bond rate, the SEK/EUR and SEK/USD rates.

Thlabore latest survey was carried out between January 12 and 22.

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Published: 2009-01-27 19:02:00

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Australian dollar extends downtrend; falls to 15-day low versus kiwi

During early European deals on Tuesday, the Australian dollar extended its Asian session's downtrend against other major currencies. The Aussie thus declined to a 15-day low against the New Zealand dollar and a 4-day low versus the euro.

The Aussie plunged today as business confidence in Australia fell to a record low in January. According to the survey results published today by National Australia Bank, business confidence index declined 12 points for January to a reading of minus-32, the lowest since the bank began the survey in 1989. In December, the Business Confidence Index improved to minus-20, following the November reading of minus-30.

Australian firms are expected to face exceptionally challenging economic conditions in 2009, the latest Dun & Bradstreet (D&B) business expectations survey revealed today. "Australian firms have had a difficult start to the New Year and executives are anticipating the quarter ahead will be the most challenging yet," D&B said.

Meanwhile, the Reserve Bank of Australia Governor said today that the global financial crisis boils down to a combination of extreme borrowing and optimism.

He noted the financial system is characterised by cycles of optimism and pessimism, but the scale of the latest crisis is new.

Mr Stevens says central banks now face the challenge of creating policy that can handle the complexity of the financial system.

Against the US dollar, the Australian currency traded down during early deals on Tuesday. At 4:10 am ET, the aussie-dollar pair slipped to 0.6635, compared to 0.6788 hit late New York Monday. The pair is currently trading at 0.6650 with 0.64 seen as the next target level.

U.S. President Barack Obama is demanding an economic stimulus bill on his desk before Congress leaves for the Presidents' Day holiday on February 16. The U.S. legislation passed a key test in the Senate earlier today with a 61-36 vote to end delaying-tactics by conservative Republicans that had pushed debate into a seventh day. This has set the stage for a final vote, which would send the package into a House-Senate conference to resolve significant differences between the chambers' respective bills.

Treasury Secretary Timothy Geithner also plans to outline rules today for $350 billion in bailout funds designed to help the financial industry as well as homeowners facing foreclosure.

The Australian dollar that closed Monday's North American session at 1.9168 against the European currency touched a 4-day low of 1.9466 at 4:50 am ET Tuesday. The next downside target level for the Aussie is seen around 1.962.

Italy's unadjusted industrial production dropped 12.2% year-on-year in December, after falling 12.7% in November, the ISTAT said Tuesday. The decline was severe than the expected fall of 11.3%. Production dropped for the eighth straight month.

French industrial production declined 1.8% month-on-month in December, slower than November's revised 2.8% fall, the statistical office INSEE said Tuesday. The decline in December matched economists' expectations.

Against the Japanese yen, the Australian currency showed weakness during Tuesday's early deals. At 4:20 am ET, the aussie-yen pair dropped to 60.39, compared to Monday's closing value of 62.10. If the pair falls further, 59.4 is seen as the next target level.

Japanese household consumer confidence rose to 26.4 in January from 26.2 in December, a monthly survey from Cabinet Office showed today. Economists had expected the indicator to fall to 25.2 in January.

The Australian dollar edged down to 1.2436 against its New Zealand counterpart at 4:10 am ET Tuesday. This set a 15-day low for the pair. The next downside target level for the aussie-kiwi pair is seen around 1.229. The pair closed Monday's New York deals at 1.2615.

Against the Canadian dollar, the Aussie hit a low of 0.8167 at 4:10 am ET Tuesday. The aussie-loonie pair that closed yesterday's late New York trading at 0.8265 is now worth 0.8199. On the downside, 0.807 is seen as the next support level for the pair.

Turning to the US, all eyes will be on Treasury Secretary Timothy Geithner's announcement of plans for the remaining $350 billion left in the U.S. Troubled Asset Relief Program (TARP).

Also, New York Federal Reserve President William Dudley will speak on inflation at 9:30 am ET.

The Commerce Department is due to release its wholesale inventories report at 10 am ET. Economists expect wholesale inventories at the end of December to show a 0.6% decline.

In the afternoon, the US Federal Reserve Chairman Ben Bernanke will testify in front of the House Financial Services Committee.

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Spanish GDP shrinks in Q4 as consumer spending, investments dip


Spain's gross domestic product contracted 1% sequentially in the fourth quarter, from a 0.3% fall in third quarter, the latest report by the National Institute of Statistics said.
The latest data on gross domestic product confirms the initial estimates released on February 12 that the Spanish economy has entered recession for the first time in 15 years. Two consecutive quarters of decline in GDP is defined as recession.

Year-on-year, GDP fell 0.7% in the fourth quarter, in contrast to the 0.9% growth in the third quarter.

In 2008, the GDP grew 1.2% compared to a 3.7% growth in the previous year.

Among the sub components of the GDP, domestic demand fell 3% year-on-year in the fourth quarter compared to a 0.2% fall in the previous quarter, reflecting a large fall in consumer spending and the gross fixed capital formation.

Final consumption expenditure by households fell 2.3% in the fourth quarter, at a much faster pace than the 0.2% fall in the previous quarter. This was the second consecutive quarter that consumer spending declined.

Gross fixed capital formation shrank 9.3% in the fourth quarter, following a 4.1% fall in the third quarter, and representing the third consecutive quarter that the fixed capital formation declined. The fall in gross fixed formation was reflected by a 9.7% drop in capital equipment investment along with a 10.9% drop in construction investment.
On the other hand, government spending rose 6.3%, at a faster pace than the 6.1% growth in the third quarter.

Regarding external trade, both exports and imports showed a decline in the fourth quarter. Exports of goods and services fell 7.9% in the fourth quarter, reversing a 1.5% growth in the previous quarter. Imports dropped 13.2% in the fourth quarter, at a much faster pace than the 2% drop in the third quarter.

Sector-wise, value added from the industrial sector fell for the third consecutive quarter, by 4.7% in the fourth quarter, after declining 2.2% in the third and 1.4% in the second quarter. Value added from construction dipped 8% in the fourth quarter compared to a 4.6% fall in the previous quarter. In the primary sector, which includes agriculture and fisheries, value addition slipped 2.7% compared to a 0.5% drop. However, the service sector grew 1.7% in the fourth quarter, slowing from a 2.9% rise in the third quarter.

Meanwhile, the slowing economy reflected a higher reduction in the jobs. The unemployment rate hit 13.9% in the fourth quarter, representing the highest among the European Union countries.

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US Dollar hits near 3-month high against euro

The US dollar gained ground against its major counterparts on Wednesday morning in New York despite some weak economic reports from the region as traders believe President Obama's plan to stem foreclosures could be a near term positive for the markets. The dollar rose to a new multi-month high against the euro and a new multi-week highs against the Japanese yen and the Swiss franc.

President Obama is due to announce a home loan modification plan today afternoon in Arizona. Yesterday, a $787 billion economic rescue plan was signed into law by Obama, who pledged that the stimulus would help heal a severely damaged economy.

In economic news, the U.S. Commerce Department announced import prices fell 1.1% in January. This followed a string of sharper declines in the previous several months, including a revised 5 percent drop in December and a 7.3 percent fall in November.

Meanwhile, a separate Commerce Department report showed housing starts fell 16.8% to an annual rate of 466,000 in January from the revised December estimate of 560,000. Economists had expected starts to fall to 530,000 from the 550,000 originally reported for the previous month.

Also, a Federal Reserve report showed that industrial production fell by 1.8% in January following a revised 2.4% decrease in December. Economists had expected production to decrease by 1.5% compared to the 2.0% decrease originally reported for the previous month.

The greenback rose to 1.2525 against the common currency of Europe by 10:35 am Eastern Time, the highest level since November 21, 2008. The euro-buck pair that was worth 1.2583 at Tuesday's North American close is currently trading at 1.2532. On the upside, the dollar is likely to target near the 1.25 level.

The euro weakened today after the Euro stat report revealed that the Euro zone construction output declined 2.2% month-on-month in December, compared with a revised 1.7% fall in the previous month. Year-on-year, the construction output dropped 10.1% in December, after falling a revised 5.1% in November.

Against the Japanese yen, the dollar jumped to a 6-week high of 93.44 by 10:15 am Eastern Time. The greenback that closed Tuesday's deals at 92.42 versus the yen is presently quoted at 93.4. On the upside, resistance is seen around the 95.8 level.

Traders pondered over a final report from the Economic and Social Research Institute showed that the Japanese leading index stood at 80 in December, revised up from the initial estimate of 79.8. In November, the reading was 81.8. Meanwhile, the coincident index for December was upwardly revised to 92.4 from 92.3. However, the reading was below November's 94.9.

The Bank of Japan began its two-day policy meeting today. Analysts expect the central bank to leave its interest rate unchanged at 0.10% at the end of the meeting tomorrow.

The greenback surged to an 11-week high of 1.1807 against the Swiss franc by 10:35 am Eastern Time. The dollar-franc pair, which closed Tuesday's trading at 1.1697, is currently worth 1.1799. If the dollar moves up further, it is likely to target near the 1.188 level.

The greenback that jumped to a 16-day high of 1.4097 versus the pound in early trading pared gains before the Wall Street opened today. However, it regained momentum in mid-morning and edged slightly higher to 1.4182 by 10:10 am ET. The cable that closed yesterday's deals at 1.4239 is currently trading at 1.4191.

Traders pondered over the release of the minutes of the Bank of England's Monetary Policy Committee meeting, which showed that policymakers were split while deciding on a 50 basis points rate cut.

The meeting was held on February 4 and 5. Eight members of the Committee voted to reduce the Bank Rate by 50 basis points to 1%. The well-known dove of the rate setting body, David Blanchflower preferred a reduction of 100 basis points.

The interest rate now stands at the lowest level since the central bank was established in 1694.

Investors are now likely to focus on the Federal Reserve Chairman Ben Bernanke's speech at the National Press Club in the afternoon.

Additionally, the Federal Reserve is due to release the minutes of the latest Federal Open Market Committee meeting, which could shed some light on steps the Fed plans to take in order to stabilize the financial markets. As expected, the Fed maintained its key fed funds rate target unchanged at 0%-0.25% at its January meeting.

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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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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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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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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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World witnessing unprecedented economic crisis, says ECB's Jurgen Stark

The world is witnessing the deepest economic downturn since World War II, Jurgen Stark, Member of the Executive Board of the ECB said in a speech in Luxembourg, Monday. The current crisis could not be solved by the Central banks alone. "The onus is now on governments, supervisory and regulatory authorities and the financial industry itself, to cooperate to act resolutely to restructure, recapitalize and consolidate the banking system," Jurgen Stark said. To help ease the financial crisis the ECB had cut its policy rates by 275 basis points since October 2008.

The year 2009 will be a very difficult one, he said. It will be the year of adjustments in the balance sheets of banks, firms and private households. The present economic crisis started in 2007, triggered by losses in the U.S. sub-prime mortgage market, according to the ECB member. However, the crisis deteriorated into global economic downturn after the collapse of Lehman Brothers in September 2008. Since then, global trade too had fallen sharply, impacted by the financial crisis.

Advanced economies were witnessing weakening house prices and plummeting financial markets leading to a collapse of business and consumer confidence. The need to restructure was curbing private consumption and investment, the ECB Board member pointed out. "In emerging economies, nose diving global trade and the unwinding of both internal and external imbalances accrued in past years have led to a sharp decline or even negative GDP growth rates," Jurgen Stark said.

World GDP growth would be negative in 2009, according to the IMF. Advanced economies were forecast to shrink 2%, while developing economies were anticipated to grow 3.3%, just half the pace of growth witnessed in 2008. The global economy was expected to recover in 2010, even though the outlook on the downside risks regarding the depth and length of the downturn would depend on the unwinding of the financial crisis, Stark said.

Economic activity in the euro area decreased 1.5% on a sequential basis in the fourth quarter, after declining moderately in the second and third quarters. The euro area economy grew just 0.8% in 2008, the lowest since the early Nineties. All signs pointed to a further sharp decline in 2009, according to the ECB Board member. The year would see further slowdown in investments, private consumption and employment even while the financial markets remained tight. The process of adjusting to these hard conditions would lay the basis for future growth, Jurgen Stark pointed out. However it was not realistic to expect financial markets to function the same way as they were doing prior to the crisis.

Inflation in the euro area had decreased quickly, pulled down by the fall in global commodity prices. Euro area HICP inflation was 1.2% in February 2009, compared to the 4% inflation registered in July 2008. HICP inflation was likely to decline further in the months ahead, leading to a period of disinflation due to 'base year' effects, Stark said. Prices now are low, compared to the very high prices especially commodity prices in the same period of the previous year. Yet, this would mark only a trough in inflation and the very factors that were pulling inflation down in the first half of 2009, would act to push up inflation in the second half.

The ECB had supported the banking sector by extending unlimited funds at maturities of up to six months against an expanded range of eligible collateral. Further, the ECB would do whatever was deemed necessary and appropriate to maintain price stability and contribute to the preservation of financial stability. Central banks can alleviate liquidity risks, but they cannot address the perceived solvency problems that impair the financial system, Jurgen stark pointed out. Further measures could include taking over some of the credit risk on commercial paper held by banks or even by buying corporate debt outright. Again, the ECB would not shy away from cutting rates further if circumstances warranted such a cut.

A downside to such robust intervention was that the Eurosystem's consolidated balance sheet had grown from 13% of euro area GDP in 2007 to 20% of GDP today. "At the ECB we have demonstrated a willingness and capacity to react rapidly to exceptional circumstances," the ECB Board member said. "Most importantly, we will remain faithful to our mandate and provide an anchor of confidence and stability in difficult times," Jurgen Stark said.

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German Exports Continue To Fall In January on Weak Demand

German exports dropped for the fourth straight month in January as global demand weakened amidst economic slowdown.

Data released by the Federal Statistical Office showed that calendar and seasonally adjusted shipments fell 4.4% month-on-month in January to EUR 66.6 billion after falling 4% in December. Exports declined quicker than the expected 4% fall. On an annual basis, overseas sales plunged 20.7%, much sharper than a 7.9% drop in December.

In January 2009, Germany dispatched commodities to the value of EUR 43.9 billion to the Member States of the European Union, which marked a decrease of 18.7% over the previous year. Exports to euro area countries dropped 17.4% to EUR 30.3 billion. Commodities to the value of EUR 13.6 billion were dispatched to EU countries not belonging to the euro area, a fall of 21.4%. Exports of commodities to countries outside the European Union decreased 24.5%.

Imports also slid for the fourth consecutive month in January, but the pace of decline moderated. According to the official data, imports dropped 0.8% month-on-month after a relatively quicker decline of 4.8% in January, while the consensus forecast was for a 3.5% drop. On an annual basis, imports plunged 12.9% following a 4.1% contraction in the previous month. Value of imports was EUR 58.1 billion in January.

The foreign trade balance showed a surplus of EUR 8.5 billion in January, up from December's revised surplus of EUR 7.3 billion, but down from EUR 17.3 billion surplus recorded in January 2008. Upon calendar and seasonal adjustment, the foreign trade balance recorded a surplus of EUR 8.3 billion in January, the statistical office said.

Commerzbank analyst Simon Junker said, "The economy is being hugely impacted also in the first quarter of 2009 by the global recession especially though foreign trade."

"Weak foreign trade is one of the decisive factors why Germany's economy has most probably contracted by 1.5% in the first quarter," Junker said.

The largest Eurozone economy experienced the biggest sequential contraction since the reunification in 1990 on plunging exports in the final quarter of 2008. Gross domestic product fell 2.1% in the fourth quarter, after contracting 0.5% each in the second and third quarters of 2008. The International Monetary Fund projects a 2.5% decline in German output this year.

According to provisional results of the Deutsche Bundesbank, the current account of the balance of payments showed a surplus of EUR 4.2 billion in January 2009, which included EUR1.5 billion service deficit, a surplus of EUR 2.8 billion in net income, EUR 4.3 billion shortfall in current transfers and EUR 1.2 billion deficit in supplementary trade items. In January 2008, the German current account showed a surplus of EUR 15.6 billion.

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German Economic Sentiment Rises, Beating Expectations

German economic sentiment improved in March defying economists' expectations, as the European Central Bank resumed interest rate cut and commodity prices decrease, a closely watched survey of financial experts revealed Tuesday.

The Mannheim-based Centre for European Economic Research, or ZEW, said its economic sentiment indicator for Germany rose 2.3 points to minus 3.5 in March, the highest since July 2007. It also marked the fifth consecutive month of increase. Economists had forecast a decline to minus 8 from minus 5.8 recorded in the previous month. However, the indicator is still below its historical average of 26.2.

The ZEW said the indicator's upward movement, which was very dynamic during the last four months, slowed down in March. However, the improvement strengthens the impression that experts are more hopeful with respect to the economic development in Germany on a six months time horizon.

In March, the ECB lowered its key interest rate by half a percent to a record low of 1.5% after keeping the rate on hold at 2% in February. The ECB has now cut its rate by a cumulative 275 basis points since early October 2008.

ZEW President Wolfgang Franz said, "According to the financial market experts, the economic slowdown is gradually phasing out. The bottom of the recession is likely to be reached this summer. The economic situation is extremely bad, but there are first signs of hope. They should not be played down."

According to Simon Junker, an analyst at the Commerzbank, the rise in the economic sentiment suggests that analysts increasingly see an improvement coming in the present disastrous state of the economy in the second half of the year.

Similar to previous months, the current economic situation indicator for Germany dropped to minus 89.4 from minus 86.2, while the consensus forecast was minus 90.

"After past week's miserable figures on order intake and production in the manufacturing sector, the decline of the assessment component is not surprising. Instead - as is usual in recessions - it is approaching the lower," Junker said.

Last week, Germany's Federal Ministry of Economics and Technology had said that industrial production in January declined the most since the reunification of Germany in 1990 and new orders tumbled on a seasonally adjusted annual basis.

The Commerzbank analyst stated, "GDP, will contract sharply in the current quarter and a decline is also likely in the second quarter. The economy is only set to grow again towards the end of the year, although probably by not enough to stop the rise in unemployment."

In the fourth quarter, the largest Eurozone economy experienced the biggest sequential contraction since the reunification in 1990 on plunging exports. The economy shrank 2.1% sequentially in the fourth quarter, after contracting 0.5% in the third quarter.

Further, the ZEW said its economic expectation indicator for Eurozone increased by 2.2 points to minus 6.5. The indicator for the current economic situation in Eurozone rose 0.3 points to minus 90.7.

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Europe Roundup - British Manufacturers' Output Expectations Weakest Since 1980

Thursday, the scene remained relatively calm in the Eurozone. Outside the euro region, survey data showed that UK manufacturers' output expectations weakened to a level last seen in September 1980. Elsewhere, the Central Bank of Iceland lowered its policy rate for the first time since the crisis-hit country agreed a US$10 billion financial aid with the International Monetary Fund.

Eurozone

There remains room for the European Central Bank to make further interest rate cuts, Governing Council Member Guy Quaden said in an interview with Belgium's Trends-Tendances magazine. "Unlike other central banks we have not completely exhausted our margin for maneuver on interest rates," the policymaker said.

Italy's statistical office ISTAT announced that the total trade deficit stood at EUR 3.59 billion in January, widening from EUR 0.41 billion deficit in the previous month. Economists had predicted a deficit of EUR 2.48 billion.

The Netherlands Central Bureau of Statistics announced that the consumer confidence stood at minus 34 in March, down from minus 30 in February. Economists had predicted the index to decline to minus 32. The office also reported that the jobless rate stood at 4.1% in the December to February period, up from 3.9% recorded in the November to January period. Economists had expected the jobless rate to rise to 4%.

Ireland's Central Statistical Office said that the manufacturing price index rose 3.9% year-over-year in February, larger than the 3.2% rise recorded in the previous month.

The National Statistical Service of Greece said the jobless rate stood at 7.9% in the fourth quarter, up from 7.2% rise seen in the previous quarter. A year ago, the jobless rate was 8.1%.

The Statistical Service of the Republic of Cyprus said the country's gross domestic product or GDP in real terms rose at a pace of 3.7% in 2008, slower than a 4.4% increase in 2007. The agency also announced that the industrial turnover index rose 8.7% year-on-year in December, faster than a 3.2% rise seen in the previous month.

The Statistical Office of the Republic of Slovenia said the seasonally adjusted consumer confidence indicator rose one percentage point in March from February. This was mainly due to an increase in consumer's assessment about the possibility of saving in the next 12 months.

The National Bank of Belgium said in a report that the consumer confidence indicator stood at minus 24 in March, at the same level seen in the previous month. A year ago, the index was minus 3.

Rest of Europe

The latest monthly Industrial Trends survey of the Confederation of British Industry found that only 8% of UK firms expect their production volume to increase in coming three months, while 56% said they would fall. Thus, a resulting balance of minus 48% expects output volume to decline over the coming three months, slightly weaker than minus 44% recorded in the previous month. The survey revealed that around 51% of firms reported below normal export order book levels, which was the lowest since 1998. Nearly 10% of manufacturers intend to reduce domestic prices in the coming three months.

UK's gross mortgage lending declined 15% month-on-month to an estimated GBP 9.9 billion in February, the Council of Mortgage Lenders said. Compared to the previous year, it was a fall of 60% and the value was the lowest monthly lending since February 2001.

In the UK, the public sector net cash requirement was GBP 4.4 billion in February, higher than the net cash requirement of GBP 1.6 billion in the previous year, a report by the Office for National Statistics said. Economists expected a net cash requirement of GBP 4.5 billion.

The Bank of England said in a report that the money supply increased 18.8% year-over-year in February, larger than the 17.4% rise recorded in the previous month. On a monthly basis, money supply rose 1.4% in February, slower than the 2.4% rise in the preceding month. The money supply growth came in line with economists' expectation.

The Icelandic central bank cut its key interest rate by 100 basis points to 17% from a record high of 18%, where it had remained since October 2008. The Sedlabanki also announced that more steps would be put in place over the next few months for the restructuring of the country's crushed financial system.

Switzerland's economic expectations improved slightly in March from the previous month, results of the latest financial market test carried out by the Centre for European Economic Research, or ZEW, in cooperation with Credit Suisse revealed. The ZEW said its economic sentiment indicator marked a slight increase of 0.6 points to the minus 57.1 mark in March. The measure for current economic situation in Switzerland continued to worsen in March. The respective indicator shed 11.8 points to reach minus 57.1 mark.

The Federal Administration of Customs said the Swiss trade surplus in February declined to CHF 731 million from CHF 1.98 billion in January. Exports dropped 3.7% month-on-month in real terms, taking the annual fall to 16.3% in February. Switzerland's watch exports continued to drop for the fourth straight month in February as demand slows, the Federation of the Swiss Watch Industry FH said. The value of watch exports plunged 22.4% year-on-year in February to CHF 1.0 billion. This is the second consecutive fall of this magnitude and the fourth consecutive month of decline.

Statistics Sweden said the jobless rate increased by 1.9 percentage points to 8% in February from last year. Economists expected the rate to come in at 7.4%.

Hungary's Central Statistical Office announced that the average gross earnings increased 5.2% year-over-year in January, larger than the 4.6% rise recorded in the previous month. The average gross earnings growth came in line with economists' expectation.

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Swedish krona drops from new multi-week high against dollar

After rising to near a 7-week high, the Swedish currency edged down against its U.S. counterpart in early trading on Tuesday. The Swedish krona that rose to 7.9176 against the buck by 2:45 am Eastern Time, reversed direction thereafter and dropped as low as 8.0737 before leveling off towards the mid-morning. The greenback-krona pair that was worth 7.9733 at Monday's North American close is currently trading near 8.042.

The Swedish currency lost ground after the Statistics Sweden announced that the producer price index or PPI rose 3.4% year-over-year in February, slower than the 3.9% increase in the previous month. The February inflation came in line with economists' expectation. Month-on-month, producer prices dropped 0.2% in February, in contrast to a 0.9% rise in the previous month.

Export price index rose 5.5% year-on-year in February, compared with a 5.8% rise in the previous month. At the same time, import prices rose 0.1% versus 1.1% rise in January.

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Greenback Stable Versus Other Majors Wednesday Morning

The dollar was in a holding pattern versus other major currencies Wednesday morning in New York, pausing from a recent downtrend against its European counterparts.

Wall Street was set for a lackluster open Wednesday after President Barack Obama said last night in a televised press conference that he saw "signs of progress" on the economic front.

"We will recover from this recession," Obama said. "But it will take time, it will take patience."

Trading on Wednesday could be impacted by the release of reports on durable goods orders and new home sales. Fuel supplies figures are also due out. Traders are also likely to keep an eye on speeches from Fed Presidents Janet Yellen and Sandra Pianalto.

A day after taking heat from Congress about the AIG bailout fiasco, Treasury Secretary Tim Geithner will talk about the economic and financial crises at the Council on Foreign Relations in New York.

The dollar was slightly firmer versus the euro Wednesday morning, rising a penny to 1.3500. With the modest advance the dollar continued to stabilize following last week's big losses.

Wednesday, a monthly survey from the Munich-based Ifo Institute for Economic Research showed that German business confidence deteriorated to 82.1 in March from 82.6 in February. This was the lowest reading since the survey began in 1991. The expected level for March was 82.2.

The dollar consolidated its efforts to steady versus the resurgent sterling Wednesday morning, holding near 1.4580 as preparations for next week's G20 meeting in London were underway.

Against the yen, the dollar was stable at 97.70, still unable to break up the elusive 100 mark. The Bank of Japan is placing its policy priority on securing market stability and facilitating corporate financing, given the current uncertain economic situations, the central bank's Deputy Governor Hirohide Yamaguchi said Wednesday.

China's central banker chief Zhou Xiaochuan on Tuesday repeated his call for a new global reserve currency managed by the International Monetary Fund.

Pointing out the dangers of relying on the one national currency without explicitly mentioning the dollar, Zhou insisted that an international reserve currency disconnected from individual nations would be able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies.

"The acceptance of credit-based national currencies as major international reserve currencies, as is the case in the current system, is a rare special case in history," said Zhou in a statement released on the People's Bank of China website.

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Dollar Mixed Versus Majors Amid Increased Risk Aversion

The dollar was mixed Monday morning in New York after the White House rejected the General Motors' and Chrysler's turnaround plans, raising fears that two of the auto industry's biggest players are headed for bankruptcy.

US stocks futures dropped like a stone Monday morning, and markets in Asia and Europe were a sea of red arrows, fueling increased risk aversion. This gave the dollar a bit of lift versus the euro and sterling, but the buck weakened against the yen as economic data signaled some light on the horizon for the Japanese economy.

While there are no major economic reports due to be released on Monday, there are several key reports that will be released over the course of the week, including the Labor Department's closely watched monthly employment report on Friday.

The dollar fell sharply against the yen Monday morning, once again failing to crack the elusive 100 mark. The dollar dropped to 96 yen, down from Friday's level above 98. Earlier in the month, the down hit a 4-month peak of 99.70.

Industrial output in Japan plummeted by 9.4 percent in February compared to the previous month, the Ministry of Economy, Trade and Industry said on Monday, falling for the fifth straight month and marking the third-largest fall on record.

However, Japanese companies' forecast for industrial output is up 2.9 percent in March and up 3.1 percent in April.

The dollar was able to grind out gains versus the euro Monday morning, rising to a week and a half high of 1.3160. Against the sterling, the dollar rose to 1.4110, having improved from a multi-week low of 1.4777 over the past few sessions.

Eurozone economic sentiment declined further in March, but more slowly than in the first two months of 2009, a monthly survey carried out by European Commission showed Monday.

The economic sentiment index declined to 64.6 in March from 65.3 in February. Economists were expecting a reading of 65.8. The indicator stood at its lowest levels since the series began in January 1985.

Meanwhile, the average price for a home in England and Wales plummeted by a record 10.3 percent on year in March, property industry group Hometrack said on Monday, following a 10.0 percent fall in February.

The average selling price was 156,100 pounds in March, marking the largest decline since the group started tracking home prices in 2000.

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Europe Roundup - Eurozone Inflation At Record Low; German Unemployment Rises

Eurozone annual inflation slowed more than expected in March, adding to concerns of possible deflation and giving room for the central bank to cut rates further. German unemployment increased in March on declining economic activity. Forecasts issued by the Organization for Economic Co-operation and Development, or OECD, and the World Bank revealed a bleak picture of the global economy in 2009, reflecting the rapid deterioration of global financial and economic conditions.

In its interim economic outlook, the OECD forecast the world economy to contract 2.7% in 2009. At the same time, the World Bank lowered its projection to 1.7% decline from just 0.9% contraction predicted initially.

Eurozone

According to a flash estimate from the Eurostat, Eurozone annual inflation halved to 0.6% in March from 1.2% in February. Inflation has slowed to its lowest level since the launch of euro ten years ago. Economists had expected annual inflation to ease to 0.7% in March.

A report from the Federal Labor Agency showed that seasonally adjusted unemployed persons in the largest Eurozone economy rose 69,000 in March, bigger than 50,000 increase in February. Economists had expected a relatively small increase of 52,000.

Meanwhile, the adjusted jobless rate rose to 8.1%, while economists had forecast the rate to remain at February's revised 8%. On an unadjusted basis, the unemployment rate came in at 8.6%, slightly bigger than 8.5% seen in February.

A report from the Centre for Economic Policy Research, or CEPR, showed that the Eurozone fell into recession since the beginning of 2008.

Germany's Federal Statistical Office said in a report that the ILO jobless rate stood at 7.4% in February, up from 7.3% in January. The agency also reported that wholesale trade turnover in real terms dropped 12.2% year-over-year in February, after falling 11.1% in the previous month. Official data showed that French housing starts dropped 22.1% year-on-year in the three months to February. This comes after a 20.2% fall in the three months to January.

The French public debt increased EUR 42.9 billion to EUR 1327.1 billion in the fourth quarter, a report from the statistical office INSEE showed. A year ago, general government debt according to the Maastricht definition was EUR 1208.8 billion.

Retail sales in Spain dropped 11.7% year-on-year in February, faster than a 6.2% fall in January, the statistical office INE said. Economists expected a decline of 6.5%.

The Bank of Spain said in a report that the current account deficit decreased to EUR 6.58 billion in January from EUR 12.03 billion in the same month last year.

The Italian statistical office ISTAT said retail sales rose 0.7% year-on-year in January, while economists anticipated 2% fall. The office also reported that consumer price index including tobacco rose 1.2% year-over-year in March, slower than the 1.6% increase in the previous month. The March inflation came in line with economists' expectations.

The Statistical Office of the Republic of Slovenia announced that the consumer price index or CPI rose 1.8% year-over-year in March, slower than the 2.1% rise recorded in the previous month.

Statistics Portugal announced that the retail trade turnover at constant prices dropped 4.8% year-over-year in February, compared with a 0.1% fall in the previous month. Industrial production dropped 13.7% year-over-year in February, after falling 16.6% in January.

Rest of Europe

UK's service sector output fell 1.3% in the three months to January following a fall of 0.8% in the three months to December, the Office for National Statistics said. This is the seventh consecutive three months on previous three months decrease.

Consumer confidence was higher for the second consecutive month in Great Britain, data consolidator GfK NOP said, suggesting that measures to end the recession are starting to take hold. The consumer confidence index came in at minus 30 versus analyst expectations for a score of minus 37 following the minus 35 reading in February.

The Swiss UBS consumption indicator dropped to 0.89 in February from 0.92 last month, the UBS said. The indicator thus continued its downward trend and remained below its long-term average of 1.5 for the fifth consecutive month.

Switzerland's current account surplus totaled CHF12 billion in the fourth quarter, down from a surplus of CHF16.7 billion in the third quarter, a report by the Swiss National Bank said.

Industrial production in Estonia plunged a working day adjusted 30.3% year-on-year in February, compared to a 26.8% drop in the previous month, a report by Statistics Estonia said. The agency also reported that retail sales at constant prices fell a record 18% in February compared with the previous year. The latest decline dwarfed the 10% fall witnessed in the previous month. Further, Estonia's general government budget's deficit stood at 3% of GDP in 2008.

The Estonian economy is expected to contract 8.5% this year, the Finance Ministry reported Tuesday. This was much weaker than the 3.5% decline estimated earlier.

Statistics Denmark revealed in a latest report that the nation's Gross Domestic Product or GDP fell a seasonally and price adjusted 1.9% sequentially in the fourth quarter, revised from a 2% fall reported initially. Economists were looking for a decline of 2%. In the third quarter, the GDP was down 0.4%.

Turkish GDP at constant prices fell 6.2% year-on-year in the fourth quarter, reversing from a revised 1.2% rise in the third quarter. Economists expected GDP to fall 5.4% in the fourth quarter.

The Swedish economy will decline 3.9% this year, which would be followed by a meager 0.9% growth in 2010, the National Institute of Economic Research or NIER said. Further stimulus to demand with both monetary and fiscal policy is required to dampen the effects of the severe economic contraction, the think tank noted.

The NIER also said the consumer confidence indicator dropped to minus 16.5 in March from minus 14.6 in the previous month. Economists expected the indicator to come in at minus 13.8.

Statistics Norway showed that the twelve-month growth in the C2 credit indicator slowed to 9.4% at the end of February from 9.9% at the end of January. The C2 indicator's growth in February was in line with economists' expectations.

Hungary's current account showed a deficit of EUR2.5 billion in the fourth quarter, narrowing from a deficit of EUR2.6 billion in the third quarter, a report by the Magyar Nemzeti Bank said.

The Czech National Bank announced that the M2 money supply grew 8.5% year-on-year in February, slower than an 8.6% rise in the previous month.

Statistics Iceland said that the trade surplus stood at ISK 6.29 billion in the January to February period, compared to a deficit of ISK 35.96 billion in the corresponding period of the previous year.

Georgia's GDP at market prices declined 2.5% year-on-year in the fourth quarter, compared to a 3.9% fall in the previous quarter, a report by Statistics Georgia said.

Statistics Lithuania revised the fall in the gross domestic product for the fourth quarter to 2.2% year-on-year from 2% reported initially. In the third quarter, the GDP rose 2.9%.

The Statistical Office of the Republic of Serbia announced that the GDP rose 5.4% annually in 2008, revised from 6.1% reported initially. The agency also said that the retail price index increased 9.9% year-over-year in March, slower than the 10.7% increase in the previous month. Further, industrial production dropped 19.7% year-over-year in February, after falling 17.1% in January.

Croatia's Central Bureau of Statistics announced that the industrial production declined 7.5% year-over-year in February, after falling 6.8% in January.

Romania's central bank kept its key interest rate unchanged at 10% per annum. The decision was in line with economists' expectations.

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Asia Roundup: Japanese Govt. Planning Further Stimulus Measures

Monday, Japan's Finance Minister Kaoru Yosano told reporters after meeting with Prime Minister Taro Aso that the government intends to compile a new stimulus package worth 2% or more of gross domestic product. Accordingly, new fiscal spending would exceed 10 trillion yen. Details of the third package are likely to be finalized by April 10.

Elsewhere, a report from Japan's Economic and Social Research Institute showed that the leading index decreased to 75.2 in February from 77.2 in the previous month. Economists expected the indicator to come in at 75.3. At the same time, the coincident index declined to 86.8 from 89.5 in January.

Taiwan's consumer price index, or CPI, declined for the second consecutive month in March with a 0.15% year-on-year fall, the Directorate General of Budget, Accounting and Statistics said. Economists had expected a 0.6% fall for March following a revised 1.33% decline in February.

On a monthly basis, the CPI climbed 0.11% in March, while the core CPI rose 0.81% year-on-year. For the first quarter, consumer prices fell 0.01% annually.

Further, the wholesale price index, or WPI, fell 0.12% month-on-month and 9.20% annually in March. In the first quarter, the WPI dropped 9.77% compared with the same period of the previous year, of which the import and export price index declined 11.64% and 6.64%, respectively.

Producer prices in the Philippines rose 2.7% year-on-year in February, slowing from a revised 3.3% increase in the previous month, the National Statistics Office said. Month-on-month, producer prices fell 0.1% in February, compared to a revised 2.5% decline in January, mainly due to prices falling in seven of the major sectors.

In other news, the Reserve Bank of India governor Duvvuri Subbarao said in a business conference that the country's fiscal year 2010 current account deficit is expected to widen.

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Dollar Gains On European Majors Tuesday Morning

The dollar rallied verus the euro and sterling Tuesday morning in New York as risk averse traders expressed concerns about the start of earnings season, which kicks off today with quarterly results from Alcoa.

Traders considered results showing that sconomic contraction in the euro area in the fourth quarter was more than initially estimated.

Final data from the Eurostat showed that gross domestic product, or GDP, contracted 1.6% quarter-on-quarter in the final three months of 2008. The pace of decline was slightly up from the previously estimated fall of 1.5%. GDP fell 0.3% each in the third and second quarters.

Here in the US, the economic calendar is light again on Tuesday, The consumer credit report from the Federal Reserve is due out this afternoon. Borrowing costs are expected to have fallen by 1.5% in February.

Looking at currencies, the dollar rose to 1.3252 in early action Tuesday. The pair has been moving between 1.3000 and and 1.3800 for the past few weeks.

The dollar also gained a bit of ground against the sterling, rising to 1.4650. Overall, the pair has seen choppy trading over the past few months, with the dollar leveling off since hitting a 23-year hoigh of 1.3501 earlier in the year.

Tuesday, a quarterly Economic Survey from the British Chambers of Commerce confirmed that the UK recession is still very serious and expects it to continue for some time. The business lobby said there is a clear need for corrective action and urged the government to act forcefully to ease the recession.

The dollar eased slightly versus the yen, but remained above the 100 mark, which was cracked on Friday for the first time since last fall. The dollar was at 100.18 yen as of 8 am ET.

Tuesday, the Bank of Japan retained its key interest rate, but it decided to expand the range of eligible collateral in order to make funds easily available.

The Policy Board of the central bank unanimously voted to hold the uncollateralized overnight call rate at 0.1%. The decision came in line with economists' expectations. The previous change in interest rates was a 20 basis point cut implemented in December 2008.

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