MORNING BRIEFING: Strong Chinese data reinforces the case for a stronger Yuan.

[RTFX-Trading]

MORNING BRIEFING: Strong Chinese data reinforces the case for a stronger Yuan.

What’s new:
China: Strong import/export numbers in February.
Japan: BOJ to stick with loose monetary policy.
Euro zone: Fitch rating agency says it still has negative outlook for Portugal.
Greece: PM says G20 will review financial speculation.
Australia: RBA official says Australia must expand supply to avoid inflation.

Today:


Overnight Rates and Indices:
EURUSD: 1.3613 – 1.3544.
USDCHF: 1.0795 – 1.0741.
GBPUSD: 1.5017 – 1.4886.
EURJPY: 122.60 – 121.88.
USDJPY: 90.19 – 89.84.
DowJones: 10’564 +0.11%
NASDAQ: 2’340 +0.36%
S&P 500: 1’140 +0.17%
Nikkei: 10’564 -0.04%.
Shanghai: 3’049 -0.66%,
Gold: $1’124
Crude Oil: $81.24
 
Comments:

Chinese exports and imports were better than expected in February, highlighting the momentum behind the world's third-largest economy and supporting the case for a rise in the Yuan. Exports rose 45.7% in February from a year earlier, while imports jumped 44.7% after record growth of 85.5% in January. This positive data will likely translate into more pressure on Beijing to for an exchange rate reform. Investors believe that Beijing will regain enough confidence in the Chinese economy to let the Yuan resume its rise after being pegged at 6.83 Yuan per US Dollar since July 2008 to help weather the global financial crisis. 

The Japanese Yen was supported by talks of a pickup in repatriation flows before the end of the financial year. Traders said Japanese exporters sold the Euro and Dollar this week ahead of the fiscal year-end on March 31st. However Yen gains are expected to remain limited as talks that the Bank of Japan may take additional steps to ease monetary policy intensify. The BOJ is likely to discuss easing its ultra-loose monetary policy again at its board meeting on March 16-17, after introducing new measures in December due to government pressure as the Yen climbed against the Dollar.

The Euro and the Pound edged lower early on Wednesday following fresh worries on Europe’s fiscal health. The European currency came under pressure as the Fitch ratings agency said it still has a negative outlook on Portugal’s credit rating, while the Pound suffered following weak data, and renewed fears surrounding the UK’s sovereign rating together with bank’s credit ratings.

Good Day.

Emman Xuereb
Trading Desk
RTFX Ltd
Risk Disclaimer