falling 13.1% in December, while imports rose 0.8% from the previous month, which raised the trade surplus to 2.03 billion Swiss Francs during the month. Meanwhile, the ZEW investor confidence rose to -57.7 from -66.7 in January, marking its fourth consecutive increase as the policy makers continued to step up their effort to stave-off a severe downturn in the economy. Despite weak data, the Euro continued its uptrend on the last trading day of the week. On Friday, Markit Economics reported that Europe's manufacturing and service industries unexpectedly contracted at a record pace in February.

Outlook:

The Euro on Friday showed some recovery as the

World Bank asked the euro-zone to take coordinated action to support the economies of East and Central Europe. The deterioration of European government finances and the widening intra-government spreads continued to weigh on the single currency. The Euro remains a pointer of global risk aversion. Negative headlines on the development of the global crisis often had a negative impact on the Euro. The Euro may fail to capitalise on the Friday gains and could trade sideways. This week's current account data and new industrial orders of the euro-zone and Germany's GDP are expected to show a negative bias, which could cap the Euro's recovery.

Technical Recommendation:

Euro has first resistance at 1.30

and second resistance at 1.32 while first support is at 1.27 and
second at 1.24.

British Pound v Dollar

It was a good week for the Pound Sterling as it rose by 78 cents
and closed at US$144.34. Due to negative news flow, the pound
also traded weak for the first three trading days of the week.
Lower growth forecast for 2009 by the Confederation of British

Industry and slower-than-expected easing of inflation pressures in January dragged the pound to trade lower during the initial days of the week. The Confederation of British Industry has lowered its growth forecast for 2009 to -3.3%, which would be the biggest contraction in almost 30 years. On Thursday, the British pound gained some ground versus the Dollar despite what the Office for National Statistics said; U.K public finances were in worse shape than expected, with the public sector repaying just 3.3 billion pounds in public borrowing compared to forecasts for a repayment of around 7 billion pounds. On Friday, better than expected retail sales numbers boosted the pound to trade higher. Retail spending in U.K unexpectedly increased 0.7% in January, which was much stronger than the 0.1% contraction forecast by economists. It marked two consecutive months of positive gains despite the deteriorating labor market, which saw unemployment rise to a 9 year high of 3.8%.

Outlook:

The British pound is expected to extend its losses

as the worsening economic conditions continue to exert downward on the currency. The implications for the British Pound going forward could be dire as the Bank of England turns to unconventional measures to battle the downturn. Having cut borrowing costs by a whopping 500 basis points since October to an all time low of 1%, there is reluctance to take rates lower, the minutes of the Bank's last policy meeting fearing that further easing would hurt bank profitability. This week, GDP data and consumer confidence data will be closely watched which can pressure the pound further.

Technical Recommendation:

Pound has first resistance at

1.50 and second crucial resistance at 1.53 while it can find first
support at 1. 41 and second support at 1.38.

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