Forex News and Events:
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Yesterday was a choppy day in FX Market. EUR/USD fell sharply following weak PMI data and poor retail sales. Eastern European names were large sellers as the Rouble approached the bottom of the trading band. Later, the pressure intensified as Fitch downgraded Russia to BBB and kept them on negative watch. Sovereign bids kept the pair from falling through the 1.2800 level.
Early in Europe there was a large amount of AUD/JPY sold – AUD 5 billion was mentioned – which saw AUD/USD fall by 150 points.
Early in Europe there was a large amount of AUD/JPY sold – AUD 5 billion was mentioned – which saw AUD/USD fall by 150 points.
US figures provided something of a pleasant surprise yesterday as the ADP and ISM numbers both beat expectations. This sent equities higher in the US while JPY crosses made gains.
However, this risk appetite soon dissipated after doubts began to emerge about President Obama’s banking strategy (Bank of America shares were down 10%) and poor earnings announcements also weighed heavily.
Trading during the Far East hours was lackluster in the extreme. All currency pairs were confined to narrow ranges and there were no real features to speak of.
USD/JPY and JPY crosses held steady despite comments from the BoJ’s Mizuno who warned about the serious problems in the Japanese economy and said that unusual steps may be needed to combat the effects of the down turn.
Traders’ collective attention now switches to the policy decisions from the Bank of England and the European Central Bank later today followed by the US employment report tomorrow.
UK rates are widely forecast to be cut by 50bps to 1.0% from the current 1.5% while the ECB is expected to leave rates unchanged as ECB President Trichet said that the next important meeting in March along with the updated forecasts on the extent of the slide in Eurozone’s economy. As usual the main focus will be on Trichet’s comments in the press conference taking place 45 minutes after the rate decision release.
US' initial jobless probably rose to 590K last week with 4-week average coming at 573 K. The labor market continued to deteriorate and seasonal factors were not an important factor for last week's figure. Preliminary readings for labor cost and productivity in the fourth quarter are anticipated to have risen by 3% and 0.9%, respectively.
