DailyFX - FXstreet.com

www.fxcm.com
sales@fxcm.com
US SESSION MAJOR EVENTS
DailyFX
Daily Fundamentals
March 7, 2007
• US Dollar Weakens on Concerns for Sharply Weaker Payrolls on Friday
• ECB Expected to Lift Interest Rates, All Eyes on Trichet’s Comments
• Japanese Yen Resumes its Rally
US Dollar – Since the beginning of the week, we have seen very choppy price action in the currency market. The strong trend that
manifested itself last week has gone into hiding ahead of the ECB rate decision and US non-farm payrolls report Thursday and Friday.
Yesterday’s Daily Fundamentals’ headline was “USD/JPY – Not Out of the Woods” and even though the USD/JPY is lower today, the
weakness is driven far less by the continuation of Yen strength than pure dollar weakness. The ADP Employment survey came in below
expectations with only 57k new jobs added to corporate payrolls. This represents a drop from the 126k reading for the month of January
and the 100k consensus forecast. Recognizing the recent inaccuracy of the ADP survey, the payroll agency revised the calculation
methodology for the latest report. They increased the sample size by 220 percent and will be keeping records on a weekly instead of
monthly basis. These changes are an attempt to make the ADP survey a more reliable indicator for non-farm payrolls, but only time will tell
whether or not this will be true. The deterioration in the economy and the jump in jobless claims suggest that we could see weaker job
growth in February, but the increase in the employment components of the manufacturing and service sector ISM report indicate that even
if we do see deterioration, it could be limited. Supporting this notion is the increase in the Hudson Employment Index. Meanwhile the US
dollar took another beating after the Beige Book report revealed a slight downgrade to the economic outlook. Although the various districts
saw steady growth in retail sales and signs of stabilization in the housing market, there were other districts that saw some slowing in
growth. Without anything of consequence on the US calendar tomorrow, trading should be dictated by the comments from the ECB
President.
Euro – The Euro has strengthened significantly on the back broad dollar weakness. German factory orders fell short of expectations in the
month of January, but Euro traders completely shrugged off the weakness as they look ahead to tomorrow’s interest rate decision. The
European Central Bank is widely expected to raise interest rates to 3.75 percent, but the market’s focus will be on the accompanying press
conference. Given the recent rise in the volatility in the markets and the global slide in equities, the ECB will mostly tone down their degree
of hawkishness. Although they may not signal that there will definitely be further interest rate hikes, at the same time, they will not signal
that the tightening cycle is over. Recent economic data indicates that the Value Added Tax increase may finally be hitting the economy,
especially after Monday’s exceptionally weak Eurozone retail sales report. The upside surprises that we saw in January now seem like a
distant memory. Meanwhile the Swiss unemployment rate improved from 3.3 to 3.2 percent. This was right in line with expectations and
confirms the Swiss National Bank’s intentions to continue raising interest rates.
British Pound – The British Pound is slightly stronger against the US dollar and weaker against the Euro. After the increase in the BRC
retail sales monitor on Tuesday, the Nationwide Building Society reported stronger consumer confidence for the month of February. This
was a welcome surprise since the survey was calling for a drop in confidence. Like the European Central Bank, the Bank of England is
scheduled to deliver a monetary policy announcement tomorrow. Despite the recent firmness in data, the central bank is not expected to lift
interest rates. Although most BoE members are optimistic about growth, their views on inflation have been very mixed. Blanchflower thinks
that inflation will remain low and fall below their target while Sentence expects the exact opposite. According to the BRC, shop prices
eased in the month of February, which supports Blanchflower’s case for the time being.
Japanese Yen – The Japanese Yen crosses have struggled to extend their rebound after yesterday’s impressive rally. Having opened
higher in the Asian and European session, most of the Yen crosses with the exception of CHF/JPY have fallen back into the red. On an
otherwise quiet trading day, the Japanese Yen continued to drive market activity. Take the Canadian dollar for example. A drop in oil
inventories, a slew of stronger Canadian data and a rise in oil prices have failed to rally the currency. Any attempt to rebound was erased
by the selling of the Canadian dollar against the Japanese Yen. The same was seen in the New Zealand dollar, which turned lower despite
a rate hike and hawkish comments from the central bank. The Bank of Japan is still not stepping in to stem the currency’s rise, which is
providing a green light for traders to continue to buy the Yen. To find out whether we think the carry trade liquidation is over, read our
Special Report.
Commodity Currencies (CAD, AUD, NZD) – The Canadian and New Zealand dollars fell victim to Yen strength, leaving the Australian
dollar as the only commodity currency that did not see its weakness against the Yen filter into weakness against the dollar. Although there
was no Canadian data release, oil inventories dropped, sending crude prices up over $1 to $61.79. Canada has enjoyed stronger data
over the past few days which should have been positive for the Loonie. The same was true in New Zealand. Not only did the Reserve
Bank raise interest rates from 7.25 to 7.50 percent, they also signaled that more rate hikes will probably be needed. They felt that inflation
risks were considerable thanks to a reacceleration in the housing market and strong overall growth. Bear in mind, New Zealand is one of
the few central banks still considering raising rates. Meanwhile Australia also reported stronger data last night even though the Reserve
Bank of Australia left interest rates unchanged. Fourth quarter GDP jumped by 1.0 percent on a quarterly basis and 2.8 percent on an
annualized basis. The quarterly improvement was double expectations. There is no further Australian data tonight, but New Zealand will
be reporting its Q4 terms of trade and Canada will be releasing its housing starts and new housing price reports.
FXCM, L.L.C.® NEW YORK 1.212.897.7660 TOKYO 81.3.3556.5541
LONDON 44.(0)20.7464.8408 HONG KONG 852.2119.0116
Daily FX Research
Kathy Lien
klien@dailyfx.com
Chief Strategist
1.212.897.7660
1.888.50.FOREX (36739)

ECONOMIC RELEASES
Next 24 Hours
Daily Effects
March 7, 2007
Currency GMT Release EST Previous Comments
JPY 23:50 Money Supply M2+CD (YoY ) (FEB) 1.1% 1.0%
JPY 23:50 Broad Liquidity (YoY) (FEB) 2.7% 2.6%
JPY 23:50 Bank Lending (YoY) (FEB) 2.0% 1.7%
JPY 23:50 Bank Lending Banks (YoY) (FEB) -- 1.8%
JPY 23:50 Bank Lending Banks Adjusted (YoY) (FEB) -- 2.8%
JPY 6:00 Machine Tool Orders (YoY) (FEB P) -- 6.0%
CHF 6:45 Consumer Price Index (MoM) (FEB) 0.3% -0.7%
CHF 6:45 Consumer Price Index (YoY) (FEB) 0.1% 0.1%
JPY 7:00 Eco Watcher's Survey - Current (FEB) -- 47.2
JPY 7:00 Eco Watchers Survey - Outlook (FEB) -- 50.9
EUR 7:45 French Central Government Balance (euros) (JAN) -- -36.2B
GBP 10:30 BRC Shop Price Index (MoM) (FEB) -- -0.6%
GBP 10:30 BRC Shop Price Index (YoY) (FEB) -- 1.8%
EUR 11:00 German Industrial Production sa (MoM) (JAN) 0.3% -0.5%
EUR 11:00 German Industrial Production nsa, w.d.a (JAN) (YoY) 6.1% 5.2%
GBP 12:00 Bank of England Announces Rate Decision 5.25% 5.25%
EUR 12:45 European Central Bank Announces Rate Decision 3.75% 3.50%
CAD 13:15 Housing Starts (FEB) 220.0K 249.3K
CAD 13:30 New Housing Price Index (MoM) (JAN) 0.2% 5.0%
USD 13:30 Initial Jobless Claims (MAR 3) 333K 338K
USD 13:30 Continuing Claims (FEB 24) -- 2640K
NZD GMT Upcoming Events & Speeches
USD 3:30 Treasury's Paulson Speaks on Financial Markets
EUR 13:30
Trichet Speaks at European Central Bank News
Conference
CAD 19:35 BoC Governor Dodge Speaks on the Need for Flexibility
Demand for funds is expected to
pick up pace as gradual economic
recovery is slowly taking effect with
easing consumer doubts on the
economy.
Likely to benefit in the relative low
cost of borrowing environment.
Slowing consumer spending might
relieve some inflation pressure.
Consumer outlook will remain at the
focal point in the future of economic
progress.
Deficit is likely to be trimmed as
increasing effort to cut government
spending.
Pricing pressure might cool off as
consumers became more
pessimistic about the country's
economic outlook,;
Booming exports is expected to
drive industrial activity higher.
Lower than expected on consumer
sentiment might relieve some
inflation pressure.
Surging exports and growing
consumer appetite will put higher
pressure on pricing.
Low mortgage rates, solid
employment and income growth
may continue to support residential
construction, while new home prices
are expected to be unchanged.
Cutting payrolls and lower
employment growth will likely give
rise on jobless claims.
The information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXCM, L.L.C.® assumes no responsibility for errors, inaccuracies or
omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FXCM, L.L.C.® does not warrant the accuracy or completeness of the information, text,
graphics, links or other items contained within these materials. FXCM, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues,
or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.

ECONOMIC RELEASES
Last 24 Hours
Daily Effects
March 7, 2007
Currency GMT Release Actual Previous Comments
AUD 22:30
AiG Performance of Construction Index
(FEB)
51.7 48.4 Moved higher on employment and spending.
AUD 22:30 Reserve Bank of Australia Rate Decision 6.25% 6.25%
Rates unchanged on lack of present
inflationary concern.
JPY 23:50 Official Reserve Assets (FEB) $905.0B $895.4B New record, second-largest to China.
AUD CashCard Retail Index (MoM) (FEB) -0.6% 0.9% Signs of lower credit card borrowing.
GBP 0:01 Nationwide Consumer Confidence (FEB) 85 84 Britons expected economy to stay strong.
AUD 0:30 Gross Domestic Product (QoQ) (4Q) 1.0% 0.3% Quarterly growth doubled estimates on
AUD 0:30 Gross Domestic Product (YoY) (4Q) 2.8% 2.2% capital expenditure and consumption.
NZD 2:00 ANZ Commodity Price Index (FEB) 1.6% 1.3% Raw material prices inched higher.
JPY 5:00 Coincident Index (JAN P) 55.6% 75.0% Lower leading indicator suggested growth
JPY 5:00 Leading Economic Index (JAN P) 35.0% 31.8% will slow from previously torrid pace.
AUD 5:30 Foreign Reserves (Australian dollars) (FEB) $68B 76.8B Fall on foreign exchange holdings.
CHF 6:45 Unemployment Rate (FEB) 3.2% 3.3% Reached fresh 4-year lows, supported solid
CHF 6:45 Unemployment Rate sa (FED) 3.0% 3.0% spending and economic growth.
EUR 11:00 German Factory Orders sa (MoM) (JAN) -1.0% -0.2% Results were mixed as prior month adjusted
EUR 11:00 German Factory Orders nsa (YoY) (JAN) 7.8% 1.7% higher.
USD 12:00 MBA Mortgage Applications (MAR 2) 7.3% 3.2%
Rose as lower borrowing costs boosted
home purchases and refinancing.
USD 13:15 ADP Employment Change (FEB) 57K 126K Levels drop on seasonal employment shifts.
USD 15:30 EIA Crude Oil Stocks -- 1.4M
Stocks fell on short crude demands during
the summer.
USD 20:00 Consumer Credit (JAN) $6.4B $6.0B
Price concessions on goods boosted
spending.
NZD 20:00 Reserve Bank of New Zealand Rate Decision 7.50% 7.25% Rate hike was introduced to fight inflation.
NZD 21:45 Terms of Trade Index (QoQ) (4Q) 2.4% -1.9%
Falling import prices has helped drive terms
of trade higher from previous quarter.
GLOBAL MARKETS
Markets Close Change Comments
Dow 12192.45 -15.14 Market fell as the nation's second-largest homebuilder darkened the outlook on
S&P 500 1391.97 -3.44 housing.
Nikkei 16764.62 -79.88 Japanese stocks fell, led by weaker earnings growth on Canon and Sony.
FTSE 6156.50 +18.00
DAX 6617.75 +22.75
European stocks advanced for a second day as investors bet takeovers will increase
retail and gaming industries.
Gold 649.10 +2.60 Rises on expectations rebounding equity markets will lead to demand for risky metal.
Crude Oil (WTI) 61.79 +1.10 Energy complex receives a boost on depleted inventory numbers
USD Index 83.75 -0.29 Extends decline as Beige Book shows weak expansion in several sectors.
US 10-Year (Yld) 4.487 -4bp Treasury advanced as investors seek refuge from falling stocks.
Bund - 10 Year
(Yld)
Gilt - 10 Year (Yld)
3.912
4.76
+0bp
+0bp
European bonds drop for a third day on the speculation that raising interest rates is
likely.
JGB - 10 Year (Yld) 1.610 +0bp Japanese bond futures gained as stock slump revives debt demand.
The information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXCM, L.L.C.® assumes no responsibility for errors, inaccuracies or
omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FXCM, L.L.C.® does not warrant the accuracy or completeness of the information, text,
graphics, links or other items contained within these materials. FXCM, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues,
or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.

KEY TECHNICAL LEVELS FOR ASIAN SESSION
CLASSIC SUPPORT AND RESISTANCE 22:00 GMT
Daily Effects
March 7, 2007
Currency EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD NZD/USD
Resistance 2 1.3262 1.9418 118.40 1.2438 1.1978 0.7840 0.6915
Resistance 1 1.3215 1.9361 117.63 1.2264 1.1879 0.7812 0.6878
Spot 1.3176 1.9322 116.09 1.2170 1.1777 0.7770 0.6790
Support 1 1.3072 1.9183 115.15 1.2109 1.1731 0.7680 0.6720
Support 2 1.2911 1.9040 114.44 1.2030 1.1672 0.7631 0.6670
INTRA-DAY PIVOT POINTS 22:00 GMT
Currency EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD NZD/USD
Resistance 2 1.3233 1.9413 117.22 1.2275 1.1826 0.7825 0.6891
Resistance 1 1.3205 1.9368 116.66 1.2223 1.1801 0.7798 0.6841
Pivot 1.3157 1.9314 116.32 1.2195 1.1774 0.7769 0.6809
Support 1 1.3129 1.9269 115.76 1.2143 1.1749 0.7742 0.6759
Support 2 1.3081 1.9215 115.42 1.2115 1.1722 0.7713 0.6727
INTRA-DAY PROBABILITY BANDS 22:00 GMT
Currency EUR/USD GBP/USD USD/JPY USD/CHF USD/CAD AUD/USD NZD/USD
Resistance 3 1.3260 1.9451 117.09 1.2258 1.1851 0.7826 0.6863
Resistance 2 1.3239 1.9419 116.84 1.2236 1.1832 0.7812 0.6844
Resistance 1 1.3218 1.9387 116.59 1.2214 1.1814 0.7798 0.6826
Spot 1.3176 1.9322 116.09 1.2170 1.1777 0.7770 0.6790
Support 1 1.3134 1.9257 115.59 1.2126 1.1740 0.7742 0.6754
Support 2 1.3113 1.9225 115.34 1.2104 1.1722 0.7728 0.6736
Support 3 1.3092 1.9193 115.09 1.2082 1.1703 0.7714 0.6717
The information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXCM, L.L.C.® assumes no responsibility for errors, inaccuracies or
omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FXCM, L.L.C.® does not warrant the accuracy or completeness of the information, text,
graphics, links or other items contained within these materials. FXCM, L.L.C.® shall not be liable for any special, indirect, incidental, or consequential damages, including without limitation losses, lost revenues,
or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.