Asia Sidelined As Its Waits For Europe To Provide Movement

European Morning Update

Releases from Japan:

	Forecast	Actual
Japan - January	1.5430-72	1.0255-83
Machine Orders (MoM)	+2.6%	19.6%
Machine Orders (YoY)	- 4.5%	11.4%
Japan - February
Money Supply M2+CD (YoY)	+2.1%	+2.3%
Broad Liquidity (YoY)	+3.5%	+3.5%
Eco Watcher's Survey: Current	31.8 (prior)	33.6
Eco Watcher's Survey: Outlook	35.8 (prior)	39.5

Japan's machinery orders surged over January by a whopping 19.6% MoM and +11.4% YoY to swamp forecasts of a mere +2.6% and - 4.5% respectively. It is a very volatile series but the sheer size of the bounce is quite marked as the figure is often used as a leading indicator of corporate capital investment, which accounts for about 15% of Japan's gross domestic product. It will certainly raise some hopes that Q1 will still manage to provide a positive GDP. ....more

Dollar Finds Temporary Boost From Modest Housing Data

Daily Forex Fundamentals | Written by DailyFX | Feb 26 08 02:12 GMT |

A drop in housing sales boosted the US dollar temporarily in the Tuesday morning session with the report's details revealing a far more impressive reading than the headline print would suggest. However, before the US data was in play there were a number of other international reports moving the majors. The yen was loosing ground against the greenback in the morning hours as the government's economic outlook was downgraded for the first time in 15 minutes thanks to the cooling in US demand. Elsewhere, the pound regained ground after a BBA reading reported the first rebound in mortgage filings in months and in doing so diverging with the US's housing market slump. The euro remained range bound against its American counterpart as the market overlooked comments from officials to look ahead to Tuesday's data spread. Finally, rising commodity prices revived demand for the New Zealand, Australian, and Canadian dollars; with the New Zealand dollar notably scaling a 22-year high against the battered greenback. From the US's own docket, the National Association of Realtors' Existing Home sales indicator reported the sixth consecutive monthly decline in sales, adding pressure to the market's growing fears of an impending recession. According to the group's statistics, sales fell 0.4 percent; though the annual pace of sales actually held unchanged at 4.89M units. In fact, the monthly change was actually the product of an upward revision to December's sales numbers, suggesting the housing recession may be finding a temporary bottom. What's more, the median home price fell to $201,100 from $210,900, suggesting demand may be responding to attractive pricing in the market. On the other hand, this data will not likely be taken as means for the Fed to abandon its rate cuts just yet. As other major sectors around the US begin to falter (like employment, the financial market and business investment), the central bank now has more than just the housing market to contend with when making its monetary policy decision. The securities market picked up today as Standard & Poor's announced that they will continue to honor MBIA and Ambac's AAA rating, and spurred investor's willingness to take on increased risk. The DJIA rose an impressive 189.20 points to reach 12,570.22, with Acola and IBM leading the advancers, while Citigroup came out as the only loser of the Blue Chips. Among the broader indices, the S&P 500 picked up 18.69 points to leave the index standing at 1,371.80 points, led by Getty Images and Synthetic Fixed-income Securities Inc., while Cott Corp and Omnova Solutions posted the biggest decline. US Treasury prices tumbled today as spirits were lifted after the statement by S&P, and led many investors to step away from the safe haven of risk free bonds. The 10-Year yield rose to 3.89 percent, while the 2-Year yield surged to 2.11 percent. We expect to see an overall increase in volatility as tomorrow is filled with eventful releases like the German GDP and Business Climate index due out during the early morning, followed by the US Producer Price and the S&P/Case-Shiller Home Price index later in the afternoon.