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International funds have been dropping their exposure to European financial companies as the combination of spreading credit woes and losses at major banks make managers wary of the sector. The average exposure to the financial sector was 27.39% as of Dec. 31, 2006, according to Morningstar data. A year later it was 23.25% and it stood at 22% at the end of January. The cap-weighted average global financial services stock has fallen 8.55% over the past year through Feb. 20. But one-month returns...

USD to be driven by economic data

Most analysts reckon that the USD has resumed its downward path against the worlds major currencies, after a two month hiatus. The fear is that the mess in the real estate market (via subprime mortgages) will spread to the rest of the economy, with loan defaults and a decline in consumption. In such a case, the Federal Reserve Bank would be forced to cut interest rates dramatically in order to prevent the US from sinking into a full-fledged recession, which would decrease the relative attractiveness of US assets. Traders will be eying a couple pieces of economic data this week for any indication as to the direction of the economy.

The Wall Street Journal reports: This weeks data parade is bracketed by two key releases: Mondays national report on U.S. manufacturing activity in March from the Institute for Supply Management and Friday’s payrolls report.

Read More: http://www.wsj.com