Dollar regains some ground in early US session but after all it's still staying in familiar range major currencies. DOW opens mildly lower as markets are keeping an eye on House vote for Obama's $790b economic stimulus plan. In addition, attentions will be paid to the result of G7 meeting in Rome. Several issues will be addressed during the meeting which includes reinforcing the commitment on free trade, expanding the financial stability forum for global reform of financial regulation, discussing ways of dealing with toxic assets in financial institutions, as well as urging flexibility in Chinese yuan. Released in US session, U of Michgan consumer sentiment deteriorated much more than expected to 56.2 in Feb.
Released earlier, the 16-nation Eurozone has recorded a GDP contraction of 1.5% qoq (preliminary) in 4Q08 (consensus: -1.3%, 3Q-0.2%), the biggest decline since record began in 1995, indicating recession deepened and it was partly brought by the ECB's hesitation to cut interest rates. On annual basis, GDP dropped 1.2%, also worse than market expectation of a 1.1% plunge and a 0.6% gain in Q3. Separately in Germany, preliminary reading for 4Q08 GDP also dropped by the most in 20 years by 2.1% qoq and 1.6% yoy. The Eurozone has deepened in recession since 2Q08 as companies are cutting jobs and consumers are constraining expenditure. The deteriorated economic outlook is expected to force the central bank to lower interest rate more aggressively in coming months. In Switzerland, the combined PPI slid 0.8% mom, worse than consensus of -0.1% and -0.7% in December. On yearly basis, the gauge contracted 0.9%, compared with market expectation of -0.2% and +0.4% in the previous month.
Technically speaking, the development in dollar index is still in line with near term bullish view. The index is probably still bounded in triangle consolidation that started at 86.81. While another fall cannot be ruled out, downside should be contained by 84.47 support to complete the consolidation. Break of 86.72 will serve as an alert that rise from 77.69 is finally resuming for 88.46 high. However, note that a break of 84.47 support will seriously dampen the near term bullish view and argue that dollar index has topped in short term. Outlook in individual pairs will be updated in the regular technical outlook sections.