MORNING BRIEFING: Risk appetite fueled by better US jobs data, Yen weaker as demand for higher-yielding currencies increases.

[RTFX-Trading]

MORNING BRIEFING: Risk appetite fueled by better US jobs data, Yen weaker as demand for higher-yielding currencies increases.

What’s new:
China: Days of “special” Yuan policy numbered says Central bank governor Zhou Xiaochuan.
Euro zone: Europe will stand by Greece, says Sarkozy.
Greece: Central bank chief tells German paper that Greece won’t need aid.
United States: Economists predict the Fed will raise interest rates within six months.
United States: US economy lost 36’000 jobs in February, leaving unemployment rate at 9.7%.
IMF: IMF Chief Strauss-Kahn says Greek debt problem is unlikely to spread.
Forex: Yen falls, as higher-yielding currencies gain following better than expected US jobs data.

Today:

Overnight Rates and Indices:
EURUSD: 1.3704 – 1.3625.
USDCHF: 1.0740 – 1.0676.
GBPUSD: 1.5195 – 1.5127.
EURJPY: 123.91 – 123.20.
USDJPY: 90.68 – 90.24.
DowJones: 10’566.20 +1.17%
NASDAQ: 2’326.35 +1.48%
S&P 500: 1’138.70 +1.40%
Nikkei: 10’585.92 +2.09%.
Shanghai: 3’053.23 +073%,
Gold: $1’137.6
Crude Oil: $82.26
 
Comments:

The Yen continued to be under pressure on Monday, following Friday’s better than expected US jobs data which supported optimism about the economic recovery. Non-farm payrolls came in at -36K against an expected -50K, while the US unemployment rate remained unchanged at 9.7%, against expectations for a rise to 9.8%. The report fueled risk appetite as investors are now anticipating further recovery in the next employment report, which encouraged them to see higher-yielding equities. AUDJPY is now trading at 82.50, from 80.78 on Friday prior to the jobs report, while EURJPY is at 123.72 from 121.74.

Speculation that the Bank of Japan will further loosen its monetary policy to address deflationary pressures continued to pile the pressure on the Yen. Meanwhile, from China, Central Bank Governor opened up to eventually letting the Yuan continue its rise at some point. Zhou Xiaochuan said Beijing would “sooner or later” have to drop its “special” Yuan policy. China has been under intense pressure from the US and Europe to drop the exchange rate peg of around 6.83 Yuan per Dollar which they instituted to weather the financial crisis.

From Europe, French President Nicolas Sarkozy stood by Greece on Sunday saying that Euro zone countries would help them overcome their financial problems. Sarkozy also vowed a European crackdown on financial speculators which Athens is blaming for its misfortunes.

Have a good week.

Emman Xuereb
Trading Desk
RTFX Ltd
Risk Disclaimer