EURO
The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3070 level and was supported around the US$ 1.2830 level. The common currency has been bid higher from the $1.2660 level earlier in the month and this evidences a nascent sense of optimism in the markets and the return of some demand for risk to the market. European Central Bank President Trichet talked the euro higher today saying “"We shall continue to offer the euro as a unique and irreplaceable anchor of stability and trust. In the present very difficult circumstances it is more important than ever. Europe can rely on us to preserve that anchor.” Data released in the eurozone today saw EMU-16 February consumer price inflation up 0.4% m/m and 1.2% y/y – the first monthly increase since September 2008. The increase in inflation is unlikely to deter the European Central Bank from cutting interest rates at its April Governing Council meeting. Other data saw EMU-15 employment decline for the second consecutive quarter in the October – December period, off 0.3% q/q. G20 central bank and finance ministry officials convened in London this weekend to prepare for the G20 meeting on 2 April. German officials reported more stimuli will not be of any use if trust is not restored. In U.S. news, the March NAHB housing market index was unchanged at +9 and the New York State Empire manufacturing index fell to -38.23, more-than-expected. Additionally, February industrial production fell 1.4% m/m and 11.2% y/y and capacity utilization fell to 70.9%. Moreover, it was reported that January total net TICS capital flows fell US$ 148.9 billion, a sizable decline that evidences how significantly demand for U.S. assets evaporated at the beginning of the year. Euro bids are cited around the US$ 1.2385 level.
JPY / CNY
The yen depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the ¥98.65 level and was supported around the ¥97.55 level. The Cabinet Office released its March monthly economic report and reconfirmed that economic and financial conditions in Japan remain grim with most sectors deteriorating. Vice finance minister Sugimoto spoke today and Tokyo-area February department store sales will be released overnight. Bank of Japan’s monthly economic report will be released on Wednesday along with the coincident and leading indices. The Nikkei 225 stock index gained 0.96% to close at ¥7,704.15. U.S. dollar offers are cited around the ¥104.15 level. The euro moved higher vis-à-vis the yen as the single currency tested offers around the ¥128.70 level and was supported around the ¥125.50 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥140.00 figure while the Swiss franc moved higher vis-à-vis the yen and tested offers around the ¥83.40 level.
