EUROPEAN HIGHLIGHTS - 10th March
News Highlights:
Upbeat comments from RBA Assistant Gov Lowe: says main challenge will be to expand supply without generating inflation. Sees positive growth ahead.
Asia News & FX:
WSJ Fed Watchers: Fed debates how to signal next rate move. Central-bank officials are intensifying discussions about how to communicate that when the time comes.
Greek PM Papandreou says Issue of speculation on the next G20 agenda. Not asking anyone for financial help. If Greece cannot borrow from markets, it may have to go to IMF.
Sens Merkley and Levin will introduce bill on Prop Trading. NYT: Calls growing for a crack-down on speculative trading.
MoF Kan: cautious of idea of having formal policy accord with BoJ. Share common goal to defeat deflation. PM Hatoyama expects BoJ to take steps to defeat deflation.
PBoC Guo: will make monetary policy more flexible.
EUR at 1.36, 2-way interest: offers 1.3650, while Asian sovereigns, Swiss supranational bids on dips to 1.3530-50, stops blw 1.3530. GBP heavy, offers 1.5000, with GBP/AUD hitting fresh 25-yr 1.6335-40 as AUD helped by China trade data; hawkish RBA Lowe. EUR/AUD low 1.4845, while AUD hit 6-wk high 0.9164. AUD/NZD dips blw 1.30. USD/JPY locked in 2-way flows, toushin/investors vs repatriation/ exporters - 89.50-90.50 range. USD INDEX 80.594, eye 9-m high 81.342.
Europe FX and News:
Some early selling of EUR led by large US name saw model traders adding further weight to just below 1.3450. Cable was also sold as European trade began, pushing the rate down to 1.4885. This was reversed ahead of man prod numbers, helped by some o/s demands for gilts, but the data was poor (-0.9%m/m, +0.2%y/y v exp +0.2%m/m, +1.4%y/y), and cable came straight back to 1.4880 again. EUR/GBP climbed to 0.9125/30. Elsewhere USD/JPY climbed to the top of recent 89.50-90.50 range, dragging EUR/JPY up from below 122.00 to the 122.85 area. AUD remains firm though relatively rangebound versus USD at 0.9130/70. New lows versus the EUR at 1.4807. NZD took advantage and hit a 3 wk high at 0.7073.
UK budget to be at 12:30gmt March 24.
Equities and Bonds:
Nikkei -0.04% at 10,563.92. European indices marginally positive, US futures flat. Core Eurozone fixed income is modestly in positive territory, but outpaced by renewed interest in peripheral product - led by Greece (5yr GGB-OBL spd -8bps) - amidst ongoing positive commentary out of Germany on the creation of an EMF. Cross-mkt performance is mixed - better buyers versus USTs while lagging GBP product, with the latter buoyed by weather-impacted production data. Short dated gilts retain their early week bid as offshore 'official' demand continues to feature. Money seen moving shorter again on GBP curve.