Daily Market Update 25/03/2008

New York Session
Published: March 25, 2008 5:29 PM

The USD stayed under pressure in NY trading after giving up ground earlier in the European session. EUR/USD grinded higher for most of the day, gaining from 1.5570 to as high as 1.5660, as the greenback suffered under more data suggesting the US outlook is far from improving. The January S&P/Case-Shiller index of US home prices in 20 metropolitan areas fell to its lowest level since the series began, with home prices dropping -10.7% from year ago levels. Worse still, US March Conference Board consumer confidence plunged to 64.5 from the February reading of 76.4, far below expectations of a decline to only 73.5 and the lowest level since March 2003. The Conference Board's six-month expectations index also posted a sharp drop, levels last seen during the Watergate scandal and the 1973 oil embargo, suggesting consumers do not see the economy improving anytime soon.

USD/JPY also lost ground, falling from about 100.40 to a low near 99.60 before rebounding to 100.00 on the back of buying of JPY-crosses, like EUR/JPY and AUD/JPY. The JPY-crosses initially dipped lower as USD/JPY lost ground on the weak US data, but later recovered as US stocks shrugged off the data and turned positive. The S&P 500 closed up about 0.25% and the NASDAQ gained just over 0.6%, not a bad result given the data. The optimism emanating from Wall Street over the last several sessions appears to be waning in the face of renewed analyst downgrades to firms' outlooks and the potential for still greater credit market losses ahead.

In other markets, gold rebounded sharply, gaining $23 to $938.50/oz, as the USD turned back to the weak side. Oil prices traded in a relatively narrow range and closed higher by about $0.60 at $101.50/bbl.

Upcoming Economic Data Releases (Asia-Pacific Session) prior forecast
3/25 23:50 JN Merchandise Trade Balance Total FEB -¥79.3B ¥1155.4B
3/25 23:50 JN Adjusted Merchandise Trade Bal. FEB ¥861.9B ¥769.2B
3/25 23:50 JN Corp Service Price (YoY) FEB 0.80% 0.80%
3/26 1:00 NZ Finance Minister Cullen Speaks on Economy