Month and quarter-end flows continued to move markets into the London session and thus far the appetite has been for more risk.
European bourses have added 1.7% thus far while stock futures in the US are pointing to a 1.0% open. Gold is up a modest $3 near 918/919 and ostensibly continues to be supported by G-20 talk of potentially adding the precious metal to the IMF's SDR basket. The move to more risk and dollar selling for the month and quarter-end fix drove FX markets overall.

Economic data looks to have been mostly ignored but continued to print weak across the pond. The highlight was the eurozone CPI estimate and it was lower at 0.6% from 1.2% and the lowest run-rate on record. This will make more hawkish ECB members hard-pressed to use inflation as the argument to keep rates unchanged and makes it increasingly likely that the bank will cut -50 basis points to 1.00% this Thursday. The UK index of services sank -1.3% in January from -0.8% prior. Meanwhile, the German unemployment rate was higher than expected at 8.1% from 8.0% previously.

EUR/USD jumped about 90 pips into the 1.3310/20 zone on the back of a nice rally in the prior session. The pair found good resistance into 1.3340 and if the USD selling on the month and quarter-end flows is already done, this should continue to provide a good short-term barrier here. Weakness should accelerate below 1.3240 which is both trendline and 55hr SMA support. The yen crosses continued to extend gains as the Japanese yearend flows ended.
USD/JPY was up a modest 20 points towards 98.40/50 while EUR/JPY added a robust 110 pips to the 131.15/20 zone. Now that the market can focus on weak Japanese fundamentals, the bias for the yen crosses remains higher over the medium term.

Upcoming Economic Data Releases (NY Session) prior expected

  • 3/31 12:30 GMT CA Gross Domestic Product MoM JAN -1.00% -0.70%

  • 3/31 12:30 GMT CA Raw Materials Price Index MoM FEB 1.40% 1.00%

  • 3/31 12:30 GMT CA Industrial Product Price MoM FEB -0.10% 0.40%

  • 3/31 13:00 GMT US S&P/CaseShiller Home Price Ind JAN 150.66 - -

  • 3/31 13:00 GMT US S&P/CS Composite-20 YoY JAN -18.55% -18.50%

  • 3/31 13:00 GMT GE Merkel, Medvedev Meet in Berlin to Prepare G-20

  • 3/31 13:00 GMT US Fed's Stern Speaks in Washington on Too Big to Fail

  • 3/31 13:45 GMT US Chicago Purchasing Manager MAR 34.2 34.7

  • 3/31 14:00 GMT US Consumer Confidence MAR 25 27

  • 3/31 14:00 GMT US NAPM-Milwaukee MAR 29 - -

  • 3/31 17:00 GMT US Fed's Plosser Speaks on Regulatory Reform