MORNING BRIEFING: The Euro is still under pressure.

[RTFX-Trading]

MORNING BRIEFING: The Euro is still under pressure.

What’s new:
USA: Increase in applications for unemployment benefits
Canada: G7 meeting today and Saturday
Asia: Rumors of an intervention from the SNB (Swiss National Bank) knocked down Swiss franc
Europe: Mr. Trichet press conference did not calm the markets
Stock exchange: Global trend is bearish
France: 2009 budget deficit below the Budget Act

Today:


Overnight Rates and Indices:
EURUSD: 1.3989-1.3946.
USDCHF: 1.0568-1.0537.
EURUSD: 1.6046 - 1.5964.
EURJPY: 126.53 - 125.97.
USDJPY: 90.55 - 90.30.
Dow Jones -2.61% 10'002.
NASDAQ: 2'125 -2.99%.
S & P 500: 1,063 -3.11%.
Nikkei: -2.89% 10'057.
Shanghai: 2,933 -2.07%.
Gold: $ 1'065 .90.
Crude oil: $ 72.20

Comments:

The weekly jobless claims released yesterday afternoon, were worse than expected, surprising the market. Is this a taste of what’s to come from the unemployment numbers that will be published in the United States this afternoon?

Finance ministers and central bankers from the G7 do not seem to fear the cold, since they meet near the Arctic Circle in Canada today and Saturday! This choice may be more than symbolic, freezing the G7 meetings to give way to the G20, which, with the increasing weight of emerging countries like China, India and Brazil, is becoming the group where most important international economic decisions are taken. No official statement is expected, and indeed the markets do not expect major decisions from this meeting.

This morning in Asia, rumors of an intervention by the Swiss National Bank has sent the EUR-CHF on its lowest levels in 15 months. The Swiss franc also weakened against all currencies. It seems that the area of 1.46 in EUR-CHF is the acceptable limit for the SNB, but it has obviously denied the rumors of intervention!

The Euro Zone economy is growing moderately, inflation remained at a low level, but the recovery will come in waves; during his press conference at the end of the European Central Bank meeting, Mr. Trichet addressed questions on the current problems of Europe only when forced by journalists, and without really reassuring markets. Now with Spain and Portugal following in Greece’s footsteps, the US Dollar regained all of its safe haven status.
 
Asian stock markets have followed the U.S. stock markets, which have experienced a sharp decline yesterday. European markets should follow the same path today, as seeking safety seems to be the primary concern for investors.

The fiscal deficit figures of the French state in 2009 were published this morning at 138 billion Euros, which is lower than the Finance Act, confirming France on its path to reach its goal deficit of 3% of GDP in 2013. This only further underscores the differences between members of the euro zone, highlighting the current weakness of its currency.

Good day
Pascal Bovay
RTFX Ltd
Trading desk
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