Profit-taking was the name of the game in NY trading on Monday, as stock market gains faltered on news a major tech sector merger might not happen. There was also an inescapable sense that recent gains were overdone in light of the global downturn, and traders reverted to more cautious footing.  As stocks dipped, JPY-crosses started to lose ground in what quickly developed into a sharp sell-off as everyone headed for the exits at once.  EUR/JPY fell nearly three yen to about 134.40 from its overnight high around 137.40 before recovering to close around 135.50.  EUR/USD suffered the brunt of the selling, dropping from its high near 1.3580 to a low near 1.3350 before stabilizing at 1.3410.  USD/JPY fared a little bit, pulling back from highs just below 101.50 to a low near 100.50 before moving higher to close around 101.05, as stocks recovered much of the day's losses to close down around 0.8%.

A noted banking sector analyst issued a cautionary report on the US banking outlook, calling into question much of the euphoria seen in recent weeks.  The US Treasury announced that it was extending the deadline for investors to participate in the PPIP (Public-private Investment Partnership to buy toxic banking assets) along with a broadening of criteria over which firms can participate.  The Treasury's move raised concerns that investor interest is not materializing to the extent needed to make the program work, potentially re-igniting fears over bank insolvencies and nationalizations.

No US data was released today, but there were a pair of disappointing Canadian reports.  Feb. Canadian building permits fell -15.9% MoM, much worse than the -4.0% market forecast, and the prior Jan. reading was revised lower to -6.0%.  A gauge of Canadian business sentiment, the Ivey Purchasing Managers Index, also fell more than expected in March, slumping to 43.2 from the prior 45.2 when expectations were for an improvement to 47.0.  Key events ahead in the Asia/Pacific session include the Reserve Bank of Australia's (RBA) interest rate decision, which is expected to see rates held steady at 3.25% when the decision is announced at 0430 GMT.

Upcoming data and events:

  • 4/6/2009  22:00  NZ  NZIER Business Opinion Survey  1Q  -64  - -
  • 4/6/2009  23:50  JN  Official Reserve Assets  MAR  $1009.4B  - -
  • 4/7/2009   JN  BOJ Target Rate  7-Apr  0.10%  0.10%
  • 4/7/2009  4:30  AU  RBA CASH TARGET  7-Apr  3.25%  3.25%