Forex Report with FMCI Update by Forex Metrics - Feb.28/2008

Forex Report with FMCI Update by Forex Metrics - Feb.28/2008

FMCI is down by 54 pips to 1.2210 level with 4 out of 10 currencies up.

Today, after the US economic data release, FMCI dropped substantially due to the fear of recession gripping the global economy. Although Euro was high against USD and Pound, the overall global trend shows sign of economic slowdown.

FMCI reflects the current trend of global economies as a whole, from the value of major global currencies. Fall in FMCI indicates a global slowdown.

Economic data released on Feb/27 was negative for US.

* US Durable Goods Orders m/m fell -5.3% confirming reduction in consumer durable goods buying power.
Core Durable Goods Orders fell -1.6% m/m.
New Home Sales dropped to 588K, again showing no sign of recovery.
USD Crude Oil Inventories dropped to 3.2M and oil prices shot above $100 a barrel pushing inflationary pressure upward.

Finally, Bernanke acknowledged inflation risks but said “it is important to recognize that downside risks to growth remain.”
All these factors accelerate dollar its Record Breaking Declines. Also, Fed clearly indicates substantial interest rate cut which will increase interest rate gap between major economies.

* Germany figures were consistent with expectation, which made EU outlook positive and gave a boost to EURO to an all time high against USD.

* The UK GDP rose 0.6% q/q and 2.9% y/y in Q4 of 2007, which is considered positive, but not strong enough. Value of pound is at a level where exports may remain stable.

US recession fear is for real and interest rate cut at measured pace will only support growth, as any substantial cut will not help the economy. It appears that fed is under panic situation and more concerned about depression than recession.

Whereas Euro is not acknowledging the global slow down, which may be affecting EU in other half of 2008.

Trading with caution is recommended, as the only factor that is consistent globally today is, Change.

Major currencies were overall trending upwards with exception of USD.