USDJPY rebounds from 3-mth lows amid talk BOJ is on the cusp of further QE measures
Market activity on hold ahead of tonight’s non-farm payroll numbers
MAJOR HEADLINES – PREVIOUS SESSION
* US Q4 Non-farm Productivity out at 6.9% vs. 6.3% expected and 6.2% prior
* US Weekly Initial Jobless Claims out at 469k vs. 470k expected and revised 498k prior
* US Weekly Continuing Claims out at 4500k vs. 4600k expected and revised 4634k prior
* US Jan. Factory Orders out at 1.7% vs. 1.8% expected and revised 1.5% prior
* US Jan. Pending Home Sales out at -7.6% m/m vs. 1.0% expected and revised 0.8% prior
* AU Feb. AiG Performance of Construction Index out at 52.8 vs. 57.7 prior
THEMES TO WATCH – UPCOMING SESSION
(All times GMT)
* Sweden Budget Balance (0830)
* Norway Industrial Production (0900)
* UK PPI Input/Output (0930)
* GE Factory Orders (1100)
* US Change in Non-farm Payrolls (1330)
* US Unemployment Rate (1330)
* US Avg. Hourly Earnings (1330)
Market Comments:
The USD rebounded overnight ahead of tonight’s non-farm payroll release with the biggest gains recorded against the JPY. US data was a mixed bag with jobless claims and non-farm productivity beating forecasts but pending home sales extremely weak and factory orders below forecast.
Both the Bank of England and the ECB left rates unchanged (no statement from the BOE but ECB outlined more normalization and withdrawal of emergency liquidity measures, which were widely expected). The gist of the news conference was more to reassure markets about the Greek situation, vowing to keep 1-mth refinancing operations open for as long as is needed, but nevertheless Greek debt spreads widened a tad. This helped stall the EUR’s rally above 1.37 while comments in the German press by an IFO economist that Greece probably cannot stay in the EUR added pressure while market chatter that a US GSE was cutting limits to a number of EU banks contributed also. Late on, Moody’s downgraded Deutsche bank’s rating which gave the single-bloc currency final confirmation of the push below 1.36.
USDJPY rebounded strongly from a near 3-month low as US yields firmed and the JPY LIBOR was fixed below the US one for the first time since August 2009. In addition, news that Japan’s MOF had been given a deeper war chest for intervention raised that spectre again and a piece from Nikkei News that suggested the Bank of Japan would weigh up further quantitative easing measures heading into April.
In his keynote address at the National People’s Congress, Chinese Premier Wen reaffirmed that China would follow a proactive fiscal policy and an appropriately easy monetary one. Sticking closely to a familiar script he added that the Yuan would be kept basically stable at an appropriate, balanced level. For GDP, the Premier targeted 8% growth in 2010 with 3% inflation tagging along. Muted reaction overall in markets during the Asian session, though China shares were given a moderate lift at the open as a result of the steady policy theme.
The main focus for today will be the release of US non-farm payrolls. European data releases are limited to Sweden’s budget balance, Danish and Norwegian industrial production, UK PPI and German factory orders. Apart from the non-farms we have the unemployment rate, hourly earnings and consumer credit scheduled. Consensus suggests a worse figure than last month is likely, though the distortions due to the bad weather during the reporting period would mean this number has less relevance this month. A better reflection of the employment position is likely to be garnered from the unemployment report where a slight deterioration to 9.8% from 9.7% is expected.
Have a great weekend
Market activity on hold ahead of tonight’s non-farm payroll numbers
MAJOR HEADLINES – PREVIOUS SESSION
* US Q4 Non-farm Productivity out at 6.9% vs. 6.3% expected and 6.2% prior
* US Weekly Initial Jobless Claims out at 469k vs. 470k expected and revised 498k prior
* US Weekly Continuing Claims out at 4500k vs. 4600k expected and revised 4634k prior
* US Jan. Factory Orders out at 1.7% vs. 1.8% expected and revised 1.5% prior
* US Jan. Pending Home Sales out at -7.6% m/m vs. 1.0% expected and revised 0.8% prior
* AU Feb. AiG Performance of Construction Index out at 52.8 vs. 57.7 prior
THEMES TO WATCH – UPCOMING SESSION
(All times GMT)
* Sweden Budget Balance (0830)
* Norway Industrial Production (0900)
* UK PPI Input/Output (0930)
* GE Factory Orders (1100)
* US Change in Non-farm Payrolls (1330)
* US Unemployment Rate (1330)
* US Avg. Hourly Earnings (1330)
Market Comments:
The USD rebounded overnight ahead of tonight’s non-farm payroll release with the biggest gains recorded against the JPY. US data was a mixed bag with jobless claims and non-farm productivity beating forecasts but pending home sales extremely weak and factory orders below forecast.
Both the Bank of England and the ECB left rates unchanged (no statement from the BOE but ECB outlined more normalization and withdrawal of emergency liquidity measures, which were widely expected). The gist of the news conference was more to reassure markets about the Greek situation, vowing to keep 1-mth refinancing operations open for as long as is needed, but nevertheless Greek debt spreads widened a tad. This helped stall the EUR’s rally above 1.37 while comments in the German press by an IFO economist that Greece probably cannot stay in the EUR added pressure while market chatter that a US GSE was cutting limits to a number of EU banks contributed also. Late on, Moody’s downgraded Deutsche bank’s rating which gave the single-bloc currency final confirmation of the push below 1.36.
USDJPY rebounded strongly from a near 3-month low as US yields firmed and the JPY LIBOR was fixed below the US one for the first time since August 2009. In addition, news that Japan’s MOF had been given a deeper war chest for intervention raised that spectre again and a piece from Nikkei News that suggested the Bank of Japan would weigh up further quantitative easing measures heading into April.
In his keynote address at the National People’s Congress, Chinese Premier Wen reaffirmed that China would follow a proactive fiscal policy and an appropriately easy monetary one. Sticking closely to a familiar script he added that the Yuan would be kept basically stable at an appropriate, balanced level. For GDP, the Premier targeted 8% growth in 2010 with 3% inflation tagging along. Muted reaction overall in markets during the Asian session, though China shares were given a moderate lift at the open as a result of the steady policy theme.
The main focus for today will be the release of US non-farm payrolls. European data releases are limited to Sweden’s budget balance, Danish and Norwegian industrial production, UK PPI and German factory orders. Apart from the non-farms we have the unemployment rate, hourly earnings and consumer credit scheduled. Consensus suggests a worse figure than last month is likely, though the distortions due to the bad weather during the reporting period would mean this number has less relevance this month. A better reflection of the employment position is likely to be garnered from the unemployment report where a slight deterioration to 9.8% from 9.7% is expected.
Have a great weekend
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