There is nothing to fear except fear itself… and the market is afraid…There have been no releases from Europe so far. The market did attempt to follow-through on yesterday’s Dollar buying but ahead of Bernanke’s testimony there is limited motivation to push out the boat.
While some have begun to suggest the worst is over in the credit crisis the central banks appear to disagree and the Swiss National Bank’s Jordon is one of those. He believes uncertainties will be around for some while. Furthermore he commented that this event has revealed that central banks do not have the tools to be able to solve all problems, certainly not fundamental problems in the banking system.

The following economic releases are due today:
February
U.K. M4 Money Supply (F) (MoM) +0.3%
U.K. M4 Money Supply (F) (YoY) 12.3%
U.K. M4 Sterling Lending (F) GBP 16.4bn
U.K. Net Consumer Credit (F) GBP 0.9bn
Euro-zone PPI (MoM) +0.6%
Euro-zone PPI (YoY) +5.2%
U.S. Factory Orders (MoM) +0.6%
March
U.K. Construction PMI 52.0
U.S. Challenger Job Cuts (YoY)
U.S. ADP Employment Change (MoM) - 30K
Bernanke is due to testify before a Joint Economic Committee

Suddenly the Dollar, against all odds it seems, is suddenly back in demand. Well, perhaps it isn’t actually in demand but the market has considered it safer not to be short.
U.S. figures have been modestly stable to positive over the past week while Deutsche and UBS along with the less than positive inflation and manufacturing numbers from Europe have not exactly abounded with encouraging vibes.
It has been a timely injection of reality. It doesn’t take much to realize that central bank-speak, including that of the ECB is not expounding confidence. Had the ECB been more confident of the economy they would have hiked rates already.
But they have not and it can only be because they recognize the stakes are high and the integral parts of the jig-saw have a potential to implode through self flagellation caused by fear. However, it is this fear that will likely cause the next crisis as the weaker businesses (LBO’s?) fail to survive.
In terms of economic releases today there is little to price any movement at all. U.S. factory order may cause some movement if a long way from forecasts, but the great chance is for limited reaction.
More of note is the testimony by Bernanke to a joint economic committee. While his views have been quite transparent there is probably more chance of moves being generated from this than economic numbers. Perhaps the greatest attention will be made to any clues as to the size of any cut that the next FOMC will bring.

Thus we could see tight ranges ahead of the testimony.

Note important support and resistance areas:
USDJPY EURUSD USDCHF GBPUSD
Res: 103.57-67 1.5674-00 1.0249-68 1.9919-59
Res: 102.65-90 1.5624-50 1.0167-96 1.9838-72
Spt: 101.26-50 1.5500-25 1.0065-05 1.9693-27
Spt: 100.60-80 1.5454-65 0.9990-35 1.9624-72
See Also