EURO
The euro appreciated vis-à-vis the U.S. dollar today as the single currency tested offers around the US$ 1.3735 level and was supported around the US$ 1.3415 level. The Federal Open Market Committee yesterday reiterated its grim economic synopsis and reported it will purchase US$ 300 billion in long-term U.S. Treasuries and double its purchases of mortgage-related debt. Collectively, the Fed’s activities could mean up to US$ 1.15 trillion in additional new liquidity is created and injected this year, expanding the Fed’s balance sheet even more. The common currency rocketed higher after traders reassessed the Fed’s dovish statement. Typical safe-haven plays such as gold, oil, and U.S. Treasuries have responded well to the Fed’s announcement of a massive de facto quantitative easing. The Fed will now attempt to manage the yield curve and it is clear the Fed is trying to steer corporate yields lower to narrow the premium that corporate debt yields have over equity dividend yields now. Data released in the U.S. today saw weekly initial jobless claims fal 12,000 to 646,000 while continuing jobless claims climbed 185,000 to 5.473 million. Also, the Philadelphia Fed’s manufacturing index contracted in March with a print of -35 and the February leading index was off 0.4%. 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 ¥94.65 level and was supported around the ¥94.45 level. Technically, today’s intraday low was right around the 50% retracement of the move from ¥87.10 to ¥99.65. Liberal Democratic Party Chief Hosada reported the government needs to prevent bankruptcies, noting “Should a big company go bankrupt, 10,000 people could lose their jobs. Preventing that is our top priority.” Many traders expect the Japanese government may propose new measures to shore up balance sheets before the conclusion of the current fiscal year at the end of the month. Some Japan-watchers believe there could be widespread corporate failures if liquidity is not injected into these balance sheets. Bank of Japan reported that it may provide up to ¥1 trillion in subordinated loans to shore up balance sheets by the end of the month. The Nikkei 225 stock index lost 0.33% to close at ¥7,945.96. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥128.15 level and was capped around the ¥130.30 level. The British pound moved lower vis-à-vis the yen as sterling tested bids around the ¥135.25 figure while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥83.25 level.
