EUR

The euro continued to remain well supported against both the
pound and the US dollar despite inflationary data disappointing with the rate
falling to its lowest ever level of 0.7% in February from 0.8% in January.

It appears that although inflation is falling, markets are
probably being more attentive to what members of the ECB stated last week that fears
of deflation are subsiding and a cut in interest rates would not be beneficial
to the single bloc area.

EUR

The euro continued to remain well supported against both the
pound and the US dollar despite inflationary data disappointing with the rate
falling to its lowest ever level of 0.7% in February from 0.8% in January.

It appears that although inflation is falling, markets are
probably being more attentive to what members of the ECB stated last week that fears
of deflation are subsiding and a cut in interest rates would not be beneficial
to the single bloc area.

USD

The US dollar experienced very minimal movement yesterday
following mixed data.

Manufacturing output measured by the NY Empire State Index
rose in March to 5.61 from 4.48 in February, but failed to live up to an expected
rise to 6.50. Motor vehicle output rose by 4.8% and there were also notable
gains in machinery and fabricated metal products.

On the plus side for the US dollar, industrial production rose
by 0.6% beyond an expected increase of 0.2%.

Today

Euro strength could well be undermined today with economic
sentiment figures set to be released following the recent ZEW survey. Sentiment
is set to fall from 55.7 to 53 in Germany and from 68.5 to 67.3 in the Eurozone
as a whole.

Trade balance data from the Eurozone is set to show the
€13.9bn surplus in December has decreased to now show a deficit of -€2.5bn.

Later in the afternoon, data is set to reveal that US rate
of inflation is set to have fallen from 1.6% to 1.2% in February. This could well
put the US dollar under further pressure, given that the pound has found
support again following its fall since March 7^th.

Key Announcements:

10.00am – EUR – Trade Balance (Jan): Expected to show a
deficit of €2.5bn.

10.00am – EUR – German ZEW Survey on Economic Sentiment
(Mar): Expected to drop to 53.

10.00am – EUR – Eurozone ZEW Survey on Economic Sentiment
(Mar): Expected to drop to 67.3.

12.30pm – USD – Building Permits (Feb): Expected to have
increased to 960,000.

12.30pm – USD – Consumer Price Index (Feb): Expected to have
fallen to 1.2%.

12.30pm – USD – Housing Starts (Feb): Expected to increase
to 910,000.