DAILY MARKET COMMENTARY
5 April 2011 – 8:00 GMT
Tuesday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURCHF stalled in front of 1.3205.
EURUSD BULLISH The pair is consolidating below 1.4282; a break here would expose 1.4373. Initial support lies at 1.4062.
USDJPY BULLISH Initial resistance is at 84.73, break above this would pave the way for gains to 85.40. Support lies at 83.13.
GBPUSD BEARISH Break through 1.5972/37 zone would expose 1.5867. Resistance is at 1.6224.
USDCHF NEUTRAL Need a break trough 0.9340/69 to trigger the bull trend. On the other hand, pullback through 0.9127 would expose 0.9096.
AUDUSD BULLISH Breach of resistance at 1.0425 would expose 1.0500, while initial support lies at 1.0269.
USDCAD BEARISH Focus is on initial support at 0.9600 ahead of 0.9584. Resistance is at 0.9707/54 area.
EURCHF BULLISH Stalled in front of 1.3205, break of this level would pave the way for gains to 1.3287. Support is at 1.3011.
EURGBP BULLISH The cross targets initial resistance at 0.8885, move above this would open the way to 0.8942. Initial support is at 0.8776.
EURJPY BULLISH Outlook remains bullish; rise through 122.29/61 would expose 125.00. Near-term support is at 117.68.
SCHEDULE
Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
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Tuesday, April 05, 2011
5th of April 2011 - Fundamental Forex Market Overview
DAILY MARKET COMMENTARY
5 April 2011 – 8:00 GMT
Tuesday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
USD
The US dollar strengthened after Fed Chairman Bernanke said that further commodity price rises could boost US inflation, and that the Fed would have to respond if higher inflation was sustained. Nevertheless, he felt any inflation spikes are likely to be "transitory", which diluted the apparent hawkishness of his remarks. The RBA kept policy unchanged, as expected. EURUSD traded 1.4186-1.4233, USDJPY 83.93-84.49.
Regional Fed Presidents Evans (FOMC voter) and Lockhart (non-voter) did not offer any major new perspectives. Evans said the prescribed $600 bn could be the right number for QE2 given the ongoing improvement in the economy. When the Fed initially launched QE2, Evans memorably suggested that more than $600 bn might ultimately be needed. As such, his latest remarks indicate he has become less dovish, and that he now aligns himself with mainstream Fed thinking. The March 15 FOMC minutes are due and since we have heard most of the FOMC members speak recently, the views expressed should not be too surprising. Some differences of opinion should be expected in the text, especially given that Philadelphia Fed President Plosser said on Friday that "debates about policy have been robust".
JPY
Referring to FX intervention, Finance Minister Noda said he would "seek continued cooperation" from his G7 counterparts at an upcoming meeting. The next scheduled meeting is due to take place on May 26-27.
Economy Minister Yosano pointed to one of the drawbacks of the recent yen weakness, noting that it makes Japan's economy more vulnerable to higher oil prices.
Our analysts raised their 3m USDJPY forecast to 90 (prev. 85), and our end-2011 and end-2012 forecasts are under review. Still accommodative monetary policy from the BoJ, the lurking threat of G7 intervention and a possibly more active overseas investment bias from Japanese investors could keep the yen weaker.
AUD
The RBA opted to leave the policy rate unchanged at 4.75% for the fourth consecutive meeting. The accompanying statement was largely unchanged: monetary policy remains "appropriate", and "the high level of the exchange rate" is still helping to control inflation. The statement did acknowledge though that "the resumption of coal production in flooded mines is taking longer than initially expected". Our Australian economics team sticks to its view that the RBA will wait until August before administering another hike.
Net exports for February fell sharply to -A$0.205 bn (cons. +A$1.2 bn). Extensive flooding was largely to blame, and our economists note the data raise the risk of a negative Q1 GDP print.
NZD
Finance Minister English said he "would be surprised" if another RBNZ rate cut were needed to help stabilise the economy in the wake of February's Christchurch earthquake.
CAD
The BoC's Business Outlook survey showed some concern on future sales growth and higher inflation expectations while the BoC's Senior Loan Officer Survey continued to show improving credit and lending conditions.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
5 April 2011 – 8:00 GMT
Tuesday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
USD
The US dollar strengthened after Fed Chairman Bernanke said that further commodity price rises could boost US inflation, and that the Fed would have to respond if higher inflation was sustained. Nevertheless, he felt any inflation spikes are likely to be "transitory", which diluted the apparent hawkishness of his remarks. The RBA kept policy unchanged, as expected. EURUSD traded 1.4186-1.4233, USDJPY 83.93-84.49.
Regional Fed Presidents Evans (FOMC voter) and Lockhart (non-voter) did not offer any major new perspectives. Evans said the prescribed $600 bn could be the right number for QE2 given the ongoing improvement in the economy. When the Fed initially launched QE2, Evans memorably suggested that more than $600 bn might ultimately be needed. As such, his latest remarks indicate he has become less dovish, and that he now aligns himself with mainstream Fed thinking. The March 15 FOMC minutes are due and since we have heard most of the FOMC members speak recently, the views expressed should not be too surprising. Some differences of opinion should be expected in the text, especially given that Philadelphia Fed President Plosser said on Friday that "debates about policy have been robust".
JPY
Referring to FX intervention, Finance Minister Noda said he would "seek continued cooperation" from his G7 counterparts at an upcoming meeting. The next scheduled meeting is due to take place on May 26-27.
Economy Minister Yosano pointed to one of the drawbacks of the recent yen weakness, noting that it makes Japan's economy more vulnerable to higher oil prices.
Our analysts raised their 3m USDJPY forecast to 90 (prev. 85), and our end-2011 and end-2012 forecasts are under review. Still accommodative monetary policy from the BoJ, the lurking threat of G7 intervention and a possibly more active overseas investment bias from Japanese investors could keep the yen weaker.
AUD
The RBA opted to leave the policy rate unchanged at 4.75% for the fourth consecutive meeting. The accompanying statement was largely unchanged: monetary policy remains "appropriate", and "the high level of the exchange rate" is still helping to control inflation. The statement did acknowledge though that "the resumption of coal production in flooded mines is taking longer than initially expected". Our Australian economics team sticks to its view that the RBA will wait until August before administering another hike.
Net exports for February fell sharply to -A$0.205 bn (cons. +A$1.2 bn). Extensive flooding was largely to blame, and our economists note the data raise the risk of a negative Q1 GDP print.
NZD
Finance Minister English said he "would be surprised" if another RBNZ rate cut were needed to help stabilise the economy in the wake of February's Christchurch earthquake.
CAD
The BoC's Business Outlook survey showed some concern on future sales growth and higher inflation expectations while the BoC's Senior Loan Officer Survey continued to show improving credit and lending conditions.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
Monday, April 04, 2011
4th of April 2011 - Fundamental Forex Market Overview
DAILY MARKET COMMENTARY
4 April 2011 – 8:00 GMT
Monday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
USD
Commodity currencies made fresh gains against the US dollar during the Asia session despite the general lack of news flow. AUDUSD broke 1.0400, and USDCAD also traded heavily on the back of M&A reports. EURUSD traded 1.4217-1.4268, and USDJPY 84.05-84.38. Events on Friday have potentially created the conditions for further commodity currency gains: a stronger-than-expected payrolls report confirmed that the US recovery seems to be accelerating, while dovish remarks by New York Fed President Dudley suggest the Fed's liquidity taps will stay open for some time to come.
Dudley's comments specifically suggested the balance of opinion on the FOMC has not shifted decisively in favour of early tightening and, predictably, the dollar fell sharply on his remarks. Clearly, investors should be wary about over-interpreting last week's hawkish rhetoric from several regional Fed presidents. Dudley said he sees no reason for an early pullback in monetary stimulus and warned not to 'overstate' how far the recovery had come. Nevertheless, the payrolls report did show signs of improvement, rising by +216k (cons. +190k) in March. Also, there were modest upward revisions to January's and February's numbers. The unemployment rate unexpectedly dipped to 8.8% (cons. 8.9%). But Dudley was not overly impressed by any of this - he said the creation of 200k jobs per month is "less than I would like", and noted the unemployment rate is still "much too high". He warned that the current strength of the recovery "looks to be better" than six months ago, but is "not as good" as it was last month.
EUR
A German newspaper claimed senior IMF officials are now privately recommending to European governments that Greek debt should be restructured. An IMF spokesperson denied the reports, and instead restated the IMF's support for the Greek government's "determination to fully service its debt obligations". Greek Finance Minister Papaconstantinou said there is "absolutely no chance" that Greek debt will be restructured, pointing out that "the costs could much outweigh the benefits".
With investors fixated on the upcoming ECB policy meeting, the euro was largely indifferent to Friday's batch of sovereign rating actions. Fitch downgraded Portugal by three notches to BBB-, and kept the country on watch negative. This brings Fitch into line with S&P after the latter downgraded Portugal by a total of five notches in the past 2 weeks. Moody's continues to rate the sovereign at A3. Elsewhere, S&P cut Ireland's rating by a single notch to BBB+, outlook stable, while Fitch put Ireland's rating on watch negative.
Portugal sold €1.645 bn worth of June 2012 bonds. Although this was more than the €1.5 bn indicative offer, average yields were much higher than those seen previously, and the bid-to-cover ratio dropped sharply to 1.4 (prev. 2.3). The auction should help ease any lingering market concern over a €4.3 bn bond, which matures on April 15.
JPY
The question of how Japan will fund the post-earthquake reconstruction effort remains unresolved. Local press previously suggested the BoJ could be asked to underwrite any additional bond issuance. Were this to happen, we would see it as highly yen-negative. Newspapers have since backed away from such claims, after government officials such as Finance Minister Noda and Economy Minister Yosano both denied there are any plans to go down that road. Our JGB strategist also sees such a move as highly unlikely. On Friday, BoJ Board member Shirai warned of the dangers of using the BoJ to underwrite JGB issuance, predicting it would damage confidence in the yen, and would ultimately raise government borrowing costs.
CHF
The desire to prevent further CHF strength continues to influence monetary policy at the SNB. Governing Board member Danthine conceded that although rates are "clearly too low" for the real-estate sector, the strong CHF justifies a continuation of a very cautious policy setting. He added that whether the SNB will hike depends on the actions of other central banks, clearly implying that the SNB is very unlikely to tighten unless the ECB leads the way.
Swiss retail sales were firm at +1.5% y/y, but the PMI fell to 59.3 − a sharp decline from February's print and well below market expectations of 62.5.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
4 April 2011 – 8:00 GMT
Monday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
USD
Commodity currencies made fresh gains against the US dollar during the Asia session despite the general lack of news flow. AUDUSD broke 1.0400, and USDCAD also traded heavily on the back of M&A reports. EURUSD traded 1.4217-1.4268, and USDJPY 84.05-84.38. Events on Friday have potentially created the conditions for further commodity currency gains: a stronger-than-expected payrolls report confirmed that the US recovery seems to be accelerating, while dovish remarks by New York Fed President Dudley suggest the Fed's liquidity taps will stay open for some time to come.
Dudley's comments specifically suggested the balance of opinion on the FOMC has not shifted decisively in favour of early tightening and, predictably, the dollar fell sharply on his remarks. Clearly, investors should be wary about over-interpreting last week's hawkish rhetoric from several regional Fed presidents. Dudley said he sees no reason for an early pullback in monetary stimulus and warned not to 'overstate' how far the recovery had come. Nevertheless, the payrolls report did show signs of improvement, rising by +216k (cons. +190k) in March. Also, there were modest upward revisions to January's and February's numbers. The unemployment rate unexpectedly dipped to 8.8% (cons. 8.9%). But Dudley was not overly impressed by any of this - he said the creation of 200k jobs per month is "less than I would like", and noted the unemployment rate is still "much too high". He warned that the current strength of the recovery "looks to be better" than six months ago, but is "not as good" as it was last month.
EUR
A German newspaper claimed senior IMF officials are now privately recommending to European governments that Greek debt should be restructured. An IMF spokesperson denied the reports, and instead restated the IMF's support for the Greek government's "determination to fully service its debt obligations". Greek Finance Minister Papaconstantinou said there is "absolutely no chance" that Greek debt will be restructured, pointing out that "the costs could much outweigh the benefits".
With investors fixated on the upcoming ECB policy meeting, the euro was largely indifferent to Friday's batch of sovereign rating actions. Fitch downgraded Portugal by three notches to BBB-, and kept the country on watch negative. This brings Fitch into line with S&P after the latter downgraded Portugal by a total of five notches in the past 2 weeks. Moody's continues to rate the sovereign at A3. Elsewhere, S&P cut Ireland's rating by a single notch to BBB+, outlook stable, while Fitch put Ireland's rating on watch negative.
Portugal sold €1.645 bn worth of June 2012 bonds. Although this was more than the €1.5 bn indicative offer, average yields were much higher than those seen previously, and the bid-to-cover ratio dropped sharply to 1.4 (prev. 2.3). The auction should help ease any lingering market concern over a €4.3 bn bond, which matures on April 15.
JPY
The question of how Japan will fund the post-earthquake reconstruction effort remains unresolved. Local press previously suggested the BoJ could be asked to underwrite any additional bond issuance. Were this to happen, we would see it as highly yen-negative. Newspapers have since backed away from such claims, after government officials such as Finance Minister Noda and Economy Minister Yosano both denied there are any plans to go down that road. Our JGB strategist also sees such a move as highly unlikely. On Friday, BoJ Board member Shirai warned of the dangers of using the BoJ to underwrite JGB issuance, predicting it would damage confidence in the yen, and would ultimately raise government borrowing costs.
CHF
The desire to prevent further CHF strength continues to influence monetary policy at the SNB. Governing Board member Danthine conceded that although rates are "clearly too low" for the real-estate sector, the strong CHF justifies a continuation of a very cautious policy setting. He added that whether the SNB will hike depends on the actions of other central banks, clearly implying that the SNB is very unlikely to tighten unless the ECB leads the way.
Swiss retail sales were firm at +1.5% y/y, but the PMI fell to 59.3 − a sharp decline from February's print and well below market expectations of 62.5.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
4th of April 2011 - Technical Forex Market Overview
DAILY MARKET COMMENTARY
4 April 2011 – 8:00 GMT
Monday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD clears 1.4249.
EURUSD BULLISH Break of 1.4249 has exposed 1.4282 ahead of 1.4373. Support lies at 1.4062.
USDJPY BULLISH Focus is on 85.00/40 resistance area. Initial support is at 83.13.
GBPUSD BEARISH Initial support is at 1.5972; break here would expose 1.5937. Resistance lies at 1.6224.
USDCHF NEUTRAL Move above 0.9369 would open the way to 0.9423. Near-term support is at 0.9127.
AUDUSD BULLISH Uptrend is intact; focus is on 1.0425 resistance ahead of 1.0500. Support lies at 1.0310.
USDCAD BEARISH Outlook remains bearish; focus is on initial support at 0.9584. Initial resistance is at 0.9707.
EURCHF BULLISH Pressure on key level 1.3205, break here would expose 1.3287. Support is at 1.3011.
EURGBP BULLISH Focus on initial resistance 0.8885; move above this would expose 0.8942. Initial support is at 0.8776.
EURJPY BULLISH While support at 117.68 holds, look for gains towards 122.08/61 area.
SCHEDULE
Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
4 April 2011 – 8:00 GMT
Monday
_____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
TECHNICAL DATA
EURUSD clears 1.4249.
EURUSD BULLISH Break of 1.4249 has exposed 1.4282 ahead of 1.4373. Support lies at 1.4062.
USDJPY BULLISH Focus is on 85.00/40 resistance area. Initial support is at 83.13.
GBPUSD BEARISH Initial support is at 1.5972; break here would expose 1.5937. Resistance lies at 1.6224.
USDCHF NEUTRAL Move above 0.9369 would open the way to 0.9423. Near-term support is at 0.9127.
AUDUSD BULLISH Uptrend is intact; focus is on 1.0425 resistance ahead of 1.0500. Support lies at 1.0310.
USDCAD BEARISH Outlook remains bearish; focus is on initial support at 0.9584. Initial resistance is at 0.9707.
EURCHF BULLISH Pressure on key level 1.3205, break here would expose 1.3287. Support is at 1.3011.
EURGBP BULLISH Focus on initial resistance 0.8885; move above this would expose 0.8942. Initial support is at 0.8776.
EURJPY BULLISH While support at 117.68 holds, look for gains towards 122.08/61 area.
SCHEDULE
Please visit Fibosignals.com’s Economic Calendar for a schedule of market news and events.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
Friday, April 01, 2011
1st of April 2011 - Fundamental Forex Market Overview
DAILY MARKET COMMENTARY
1 April 2011 – 8:00 GMT
Friday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
USD
The dollar gained sharply on a hawkish headline attributed to Minneapolis Fed President Kocherlakota. Newswires claimed he signaled the possible need for up to 75bp worth of hikes before year-end. EURUSD traded 1.4154-1.4206, USDJPY 82.82-83.74. His actual comments were far less direct, and in fact he warned against deploying the Taylor rule too rigidly to arrive at such a policy prescription. Nevertheless, Kocherlakota did sound concerned at the likely future path of core CPI, and said QE2 had boosted inflation expectations more than he anticipated.
Richmond Fed President Lacker also said he was getting less comfortable with how consumer inflation expectations were developing, and said he had not yet made up his mind on whether QE2 should be cut short prematurely. These latest comments will help reinforce the notion that the Fed is gradually turning more hawkish, and clearly support our bullish dollar stance. Today, our analysts expect +205k on nonfarm payrolls (cons. +190k), +225k on private payrolls (cons. +210k) and a dip to 8.8% in the unemployment rate (cons. 8.9%). The dollar is likely to benefit if the report comes in stronger than the consensus expects.
EUR
The results of the Irish bank stress tests were not a key driver of the euro, as the capital needs announced were roughly in line with expectations at EUR24 bn. However, the euro did weaken temporarily when headlines suggested that there was internal disagreement on the ECB Governing Council about how to support the Irish banking system over the medium term.
The ECB announced it would no longer apply a minimum credit rating threshold to Irish sovereign bonds or government-guaranteed bonds when presented as collateral at ECB tenders. The new regulations will remain in force until further notice. This procedural change means such bonds will continue to be eligible for ECB tenders no matter how many further downgrades are imposed by ratings agencies. Similar arrangements have been in place for Greek bonds since May 2010.
Portuguese officials said everything is being done to avoid external aid. President Cavaco called a general election for June 5.
Eurozone flash CPI for March came in firmer than expected at +2.6% y/y (cons. +2.4%), further supporting expectations that the ECB will indeed start hiking rates at the April 7 meeting.
JPY
Finance Minister Noda and Economy Minister Yosano both denied there are any plans to ask the BoJ to underwrite government debt to help pay for the post-earthquake reconstruction effort.
The Q1 Tankan showed a further improvement in industrial confidence, and was in line with expectations. However, 72% of the replies to the quarterly survey were received before the earthquake struck.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
1 April 2011 – 8:00 GMT
Friday
____________________________________________________________________
Market Analysis Desk
Foreign Exchange Research: www.fibosignals.com/5585/resources.html
_____________________________________________________________________
FUNDAMENTAL ANALYSIS at 0800 GMT
USD
The dollar gained sharply on a hawkish headline attributed to Minneapolis Fed President Kocherlakota. Newswires claimed he signaled the possible need for up to 75bp worth of hikes before year-end. EURUSD traded 1.4154-1.4206, USDJPY 82.82-83.74. His actual comments were far less direct, and in fact he warned against deploying the Taylor rule too rigidly to arrive at such a policy prescription. Nevertheless, Kocherlakota did sound concerned at the likely future path of core CPI, and said QE2 had boosted inflation expectations more than he anticipated.
Richmond Fed President Lacker also said he was getting less comfortable with how consumer inflation expectations were developing, and said he had not yet made up his mind on whether QE2 should be cut short prematurely. These latest comments will help reinforce the notion that the Fed is gradually turning more hawkish, and clearly support our bullish dollar stance. Today, our analysts expect +205k on nonfarm payrolls (cons. +190k), +225k on private payrolls (cons. +210k) and a dip to 8.8% in the unemployment rate (cons. 8.9%). The dollar is likely to benefit if the report comes in stronger than the consensus expects.
EUR
The results of the Irish bank stress tests were not a key driver of the euro, as the capital needs announced were roughly in line with expectations at EUR24 bn. However, the euro did weaken temporarily when headlines suggested that there was internal disagreement on the ECB Governing Council about how to support the Irish banking system over the medium term.
The ECB announced it would no longer apply a minimum credit rating threshold to Irish sovereign bonds or government-guaranteed bonds when presented as collateral at ECB tenders. The new regulations will remain in force until further notice. This procedural change means such bonds will continue to be eligible for ECB tenders no matter how many further downgrades are imposed by ratings agencies. Similar arrangements have been in place for Greek bonds since May 2010.
Portuguese officials said everything is being done to avoid external aid. President Cavaco called a general election for June 5.
Eurozone flash CPI for March came in firmer than expected at +2.6% y/y (cons. +2.4%), further supporting expectations that the ECB will indeed start hiking rates at the April 7 meeting.
JPY
Finance Minister Noda and Economy Minister Yosano both denied there are any plans to ask the BoJ to underwrite government debt to help pay for the post-earthquake reconstruction effort.
The Q1 Tankan showed a further improvement in industrial confidence, and was in line with expectations. However, 72% of the replies to the quarterly survey were received before the earthquake struck.
A. White
Analyst at Fibosignals.com
DISCLAIMER: Fibosignals.com’s Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. Fibosignals.com assumes no responsibility or liability from gains or losses incurred by the information herein contained. Opinions, conclusions and other information expressed in this message are not given or endorsed by Fibosignals.com unless otherwise indicated by an authorized representative.
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