Fundamental Analysis 10 November 08

November 10th 2008, Consolidated Ranges Amidst Weak Data USD The USD faced cautious trading leading up to the release of the unemployment data on Friday. The numbers in the reports were negative, the Non Farm Employment Change result showed a minus -240K, below the expected figure of minus -200K. The Unemployment Rate provided no relief either coming in at 6.5%, worse than the estimated 6.2%. Upon release of the above data, the USD became volatile but eventually finished off the day basically where it started – not losing much ground. Perhaps the reason for this type of trading was that negative unemployment news had been largely discounted into the USD already. Investors have known for some time that the unemployment picture in the U.S. has been bleak and it would have taken a near miracle to produce a good number. There will not be any major U.S. economic releases today or tomorrow. The U.S economic picture remains gloomy and faces a possible recession, although the Federal Reserve and U.S. Treasury have taken strong measures including interest rate cuts and stimulus packages in order to kick start the economy and protect the financial sector. It will be a relatively quiet week for U.S. data, tomorrow is the Veterans Day Observance and banks will be closed. Not until Thursday will investors get more U.S. economic data, this with its weekly Unemployment Claims numbers and on Friday the release of Retail Sales figures. Importantly a speech is scheduled by Fed Chairman Bernanke on Friday from Europe. Investors may look to the equity markets for insight into the currency looking glass the next few days, also news reported from the political front involving the upcoming change in the U.S administration may factor into sentiment. This weekend President-elect Obama called on Congress to pass a fiscal stimulus package for American consumers. There has also been further debate for the Treasury Department to get involved in the troubled automobile

industry. USD investors will have a broad spectrum of information to monitor this week. The USD is certain to test it recent range today as traders come back from their weekend. EUR The EUR experienced a rather choppy trading session on Friday and ended the day basically unchanged. The EUR received unpromising data from the German Industrial Production number coming in with a minus -3.6% outcome, compared to the forecasted minus -1.9%. Also the French Trade Balance release showed a number of minus -6.3 billion, below the estimate of minus – 5.0 billion. Today the French Industrial Production number is due and it is projected to be minus -0.6% and the broad European Sentix Investor Confidence figures are expected to have a reading of minus -34.0. Tomorrow the German ZEW Economic Sentiment data is scheduled. All of these releases will put the onus squarely back on fundamentals as investors judge the scope of the weakening European economy. The European Central Bank and President Trichet will be in the spotlight this Friday as they hold their 5th ECB Central Banking Conference. Having faced a consolidated range of trading the past few sessions, the EUR today is likely to face cautious sentiment again . GBP The Sterling remained a focal point for investors on Friday after the bold interest rate cut made by the BoE the day before. The change in monetary policy from the Bank of England now puts the focus on U.K. economic data. Today the PPI input number is due and it is forecasted to be minus -2.6%, which would be below its previous result of minus -1.2%. Tomorrow the U.K. will release its Trade Balance data. Wednesday looks to be an important day for the GBP because the Bank of England will release its Inflation Report. Due to the poor circumstances of the U.K. economy and the fear it has slipped into recession, investors will watch the data closely this week in order to gauge the possibilities of yet another interest rate cut in December. Investors also should pay attention to the growing dispute via Halifax Bank of Scotland as they seem to be intent on walking away from the planned merger with Lloyds TSB. The aggressive action from the BoE last week put the Sterling in the spotlight and today investors will continue to grapple with the questions surrounding the GBP.

JPY The JPY lost a bit of ground Friday as global equities markets provided a strong finish to the day. Importantly for the JPY, the Chinese government announced this weekend that they are going to initiate a stimulus package of nearly 600 billion dollars in order to help its own economy. This could have a positive affect on the Japanese economy and other Asian economies as well, because it is perceived that a portion of this money would create export demand from China. Strong Asian equity markets today could cause JPY carry traders to enter the market and thus the JPY to lose ground.

Written by: Robert Petrucci Bforex Chief Commodity Expert and Forex Analyst [email protected] Please contact Robert Petrucci directly with any questions or comments you may have about the analysis. Market Analysis Disclaimer: The information and opinions expressed in these analyses are solely for general information use and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. Opinions and information contained herein are subject to change without notice. These analyses reports have been prepared without regard to the specific investment objectives, financial situation, and needs of any specific recipient. Bforex does not guarantee the accuracy or completeness of the information contained herein, even though it was obtained from sources believed to be reliable and trustworthy. Furthermore, Bforex does not assume any liability for any direct, indirect, or consequential loss as a result of any person(s) reliance on information or opinions expressed herein.