MORNING BRIEFING: Solidarity in European way!

[RTFX-Trading]

MORNING BRIEFING: Solidarity in European way!

What’s new :
United States: Waiting for the Fed meeting today
United States: Proposals before the Senate for control of financial risks
Great Britain: Dissenting opinion with the European Commission
Euro area: The Countries of Euro zone will be present if necessary, says Junker
France: figures of inflation on the rise
France: Renault in luxury!
Switzerland: SECO forecast more optimistic
Japan: rumors of rate cut this week
Oil: OPEC Meeting Wednesday

Today:


Rates in Asia and Indices:
EURUSD: 1.3701 - 1.3659.
USDCHF: 1.0627 - 1.0593.
EURUSD: 1.5072 - 1.5041.
EURJPY: 123.80 - 123.23.
USDJPY: 90.49 - 89.98.
DowJones: 10'642 .15 + 0.16%
NASDAQ: 2'362 .21 -0.23%
S & P 500: 1'150 .51 +0.05%
Nikkei: -0.28% 10'721 .71
Shanghai: 2'972 .10 -0.16%
Gold: $ 1'112 .30
Crude Oil: $ 77.62
 
Comments:
In the United States today, the market will be looking to the Fed meeting, on which no change on its interest rates policy is expected before the 3rd quarter. But all eyes will focus particularly on the dissension among board members; an increase of the supporters for a policy rate more stringent can provide support to the USD. A statement should be issued at 19.15 CET at the end of the meeting.

Mr. Dodd, chairman of the US Senate Banking Committee, yesterday presented the new draft law of financial reform. It should grant the Fed (U.S. central bank) new powers through the creation of a board of systemic risk, the Financial Stability Oversight Council (FSOC), which would be able to recommend the dismantling of too big financial players considered 'at risk' during Financial crises.

Following the advice of the European Commission to reduce its budget deficit, the British government retorted that it would be a wrong move, and that such action would be detrimental to United Kingdom economy. This morning, a new poll for the next elections in Britain showed that the Conservatives should win it and take the government to Labor. But the feeling remains that a weak government might emerge from the polls, pleading for a pound lower.

At the end of the meeting of finance ministers of 16 countries of the Euro zone, Mr. Junker said that the countries of the Euro zone would be present to provide assistance to Greece, if it should need this support. The Committee has also developed the necessary arrangements, including bilateral loan, but up to now amounts and interest rates have not been disclosed. Without more details, the EUR should remain under pressure.

Published this morning, the inflation figures for January in France with 0.6% showed an increase higher than expected by markets (0.3%). In an article published this morning by the Financial Times, there is talk of a merger of Daimler with Renault, which would give Renault access to the segment of luxury cars.

SECO (State Secretariat for Economic Affairs) has raised its forecast for 2010, assuming GDP growth of 1.4% (against 0.7% expected in December), and expecting to see growth reaching 2% in 2011. In terms of employment, SECO also anticipates an improvement, providing a drop in unemployment to 4.3% in 2010 and 4.2% in 2011 against its previous forecast of 4.9%.

In a classic move of 'buy the rumors buy sell the facts', according to rumors in recent weeks over a further reduction of rates by the BoJ (Bank of Japan Central) and before the Wednesday meeting thereof, the markets covered part of their short positions in yen, the Japanese currency regaining ground against all major currencies.

Also on Wednesday there will be a meeting of OPEC, the organization of oil producing countries. With the current high level of oil reserves in the United States, this meeting should not lead to changes in production quotas, the majority of producing countries quite happy with the current level of oil prices.

Good day

Pascal Bovay

RTFX Ltd
Trading desk
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