Good Morning,
- Dollar bounce, as got a boost from encouraging U.S. jobless claims and service sector data yesterday.
- Asian stocks were mixed on Fridays trading.
- The euro zone credit cycle is a whisker away from turning positive but don’t expect a rapid recovery. Bank lending to the private sector fell 0.1 percent in February, data from the European Central Bank showed yesterday, dashing expectations for an increase but inching ever closer to positive growth after nearly three years of contraction.
- Bundesbank's Weidmann says Greek government has lost a lot of trust.
- RBS on EUR/USD: EUR has tried on a few occasions in the last week to gain a foot hold above 1.100 and appears to be failing, notes RBS. "US economic reports have been mixed to firmer this week, and Fed comments suggest a rate hike is still likely around Q3 this year. Meanwhile EUR rates continue to drift lower. On multiple fronts it is costly to hold EUR balances and even if you invest in EUR assets, you can enhance the yield by funding this in another currency," RBS adds. "As such, we should continue to see a down-trend in the EUR for some time, driving it deep into extreme historically cheap levels. The recent rebound in EUR on the back of a more dovish Fed should be viewed only as a correction in the down-trend," RBS projects.
- UK house prices edged up by 0.1% in March though the annual pace of growth slowed for the seventh month in a row to 5.1% from 5.7 % in February. UK house prices are currently around 2% above their pre - crisis levels. “ Economic conditions have remained supportive, with labour market conditions continuing to improve and mortgage interest rates close to all - time lows .
- FED’s Yellen is scheduled to speak on monetary policy and her comments will be closely analyzed after the Fed's dovish outlook last week bruised the dollar.
- Current low levels of U.S. inflation are likely temporary and the risks of keeping U.S. policy rates at zero for too long “may be substantial,” Fed’’s, James Bullard, said Thursday, signaling that the U.S. central bank should get on with raising rates soon.
- Federal Reserve officials, fresh from the latest round of tests designed to ensure the safety of the biggest banks, are now peering into the darker corners of the financial system as they assess the risks of another crisis. One source of concern: tighter regulation of banks is prompting more borrowers to seek funding through the $25 trillion shadow banking system -- money-market mutual funds, hedge funds, brokerages and other entities that face fewer restrictions.
- The unemployment rate in Japan came in at a seasonally adjusted 3.5 percent in February. That was in line with expectations and down from 3.6 percent in January.
- Japan's core consumer price index was flat in February compared with a year ago. It was the first time it has not risen in nearly two years, and will be disappointing for a government that is seeking to end a long phase of deflation.
- Crude oil prices trade lower due to the dollar's bounce and as investors reassessed the potential impact of the escalating conflict in Yemen, where Saudi Arabia and allies carried out air strikes on Iranian-backed Houthi rebels on Thursday. Goldman Sachs said in an overnight note that the strikes in Yemen would have little effect on oil supplies as the country was only a small crude exporter and tankers could avoid passing its waters to reach their ports of destination.
- Watch today: Central bankers speak, US GDP, US consumer sentiment.
Have a nice Weekend !
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