EURO
The euro depreciated vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3165 level and was capped around the US$ 1.3285 level. Traders were surprised that U.S. March ISM manufacturing index rallied to 36.3 from 35.8 in February. Albeit this represented the fourteenth consecutive month of declining activity, some economists believe the sector may have bottomed out. Other data saw February construction spending decline 0.9%, the fifth consecutive monthly downturn. Additionally, March pending home sales rose 2.1% from -7.7%. Additionally, ADP reported private sector jobs contracted a major 742,000 in March and February’s total was upwardly revised to -697,000 from -706,000. Many economists believe Friday’s non-farm payrolls total could be around -675,000. Notably, it was reported last month that some 651,000 non-farm jobs were lost in February. Traders will also pay close attention to downward revisions to January’s and February’s non-farm payroll tallies. In eurozone news, many dealers believe the European Central Bank will reduce its main refinancing rate by 50bps tomorrow to 1.0%. Others believe the ECB may also announce some form of quantitative easing measures, possibly including the purchase of commercial paper, corporate debt, or the issuance of medium-term loans. All eyes are on London as the Group of Twenty meets to discuss the global financial crisis. European leaders are said to be pressing for increased international regulation while U.S. officials are said to be pressing for more fiscal stimulus from the eurozone. German Chancellor Merkel reminded her colleagues that Germany passed a €50 billion stimulus in February. Data released in the eurozone today saw the February EMU-16 unemployment rate climb to 8.5% from 8.3% in January. Also, the EMU-16 manufacturing PMI reading improved to 33.9 from 33.5 in February. Moreover, German February retail ales were off 0.2% m/m and 5.3% y/y. Euro bids are cited around the US$ 1.3245 level.
JPY / CNY
The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥98.20 level and was capped around the ¥99.45 level. Bank of Japan’s quarterly tankan survey was released overnight and worsened to record lows with large manufacturers’ main diffusion index at -58 from -24 in December – the largest decline ever. Similarly, the consumer sentiment diffusion index worsened to -88.9 in March, a new low. Today’s data elevate the likelihood that Bank of Japan will enact more quantitative easing measures to reduce credit strains, possibly through the purchase of additional asset-backed securities. The Nikkei 225 stock index climbed 2.99% to close at ¥8,351.91. 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 ¥129.85 level and was capped around the ¥131.90 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥142.80 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥140.55 level. In Chinese news, it was announced that President Obama will visit China in H2 2009. The White House reported President Hu “emphasized China's commitment to strengthen and improve macroeconomic control and expand domestic demand, particularly consumer demand, to ensure sustainable growth, and ensure steady and relatively fast economic development.”
