Archived IMT (2011.04.12)

Asian markets firmly in the red at the expense of risk currencies after Japan raised its assessment of the radioactive fallout at its Fukushima Daiichi nuclear power plant to the highest severity level by international standards—a rating only matched by the Chernobyl accident of 25 yrs ago. AUDUSD drops by a full cent, cable and USDCAD off by over half a cent.

FALLING GBP TURNS to UK CPI for possible support following the IMF downgrade and continuously dismal RICS survey. The Bank of Canada is expected to hold, while Portugal hosts the IMF rescuers. UK MAR CPI seen at 4.4% y/y, a conservative figure considering the recent surge in oil prices. A figure above 4.5% could well increase the odds for a May rate hike. UK Feb trade balance expected to have deteriorated from January’s £7bn to £8bn. Key GBPUSD resistance stand between the recent highs at 1.6430 and the 2010 highs at 1.6460, while against the single currency there appears to be some significant resistance between 0.8850/60. Cable support at 1.6270 could be broken on downside surprise.

A POTENTIAL COUNTERBALANCE to a high inflation number in the UK could well be a strong German ZEW survey of economic sentiment indicator which is expected to drop slightly to 11.3, while Portugal plays host today to delegates from the IMF, ECB and European Union as they discuss a bailout package.

On the other side of the Atlantic the BANK OF CANADA is likely to hold rates at 1% given the proximity of the forthcoming election, as well as the current strength of the currency, due to high oil prices. Keep an eye on the BoC’s latest GDP forecast for any downgrades or upgrades. More on this in upcoming IMT

By KM - AshrafLaidi.com staff