MORNING BRIEFING: ECB & BOE meetings scheduled today.

[RTFX-Trading]

MORNING BRIEFING: ECB & BOE meetings scheduled today.

What’s new:
Forex: Yen gains against Euro and Dollar. Euro stuck towards March lows.
China: Geithner to hold talks in Hong Kong before heading to China.
Australia: Solid jobs report; Employment change in March up to 19’600 from 400 in February
Euro-zone: Greece does not expect spreads to drop soon says Greek Finance Minister.
United States: FED officials warn on bubbles but Bernanke cautious.

Today:


Overnight Rates and Indices:
EURUSD: 1.3348 – 1.3289.
USDCHF: 1.0782 – 1.0733.
GBPUSD: 1.5248 – 1.5148.
EURJPY: 124.60 – 123.78.
USDJPY: 93.44 – 93.06.
DowJones: 10’898 -0.66%  
NASDAQ: 2’431 -0.23%
S&P 500: 1’182 -0.59%
Nikkei: 11’168 -1.10%.
Shanghai: 3’119 -0.94%,
Gold: $1’147.8
Crude Oil: $85.76

Comments:

The US Dollar continues to advance against the Euro, despite dovish comments from Fed Chairman Bernanke yesterday. The driving force behind Dollar strength yesterday was the greenback’s other primary driver: Risk appetite. The Yen climbed throughout yesterday’s session and continues to register gains today, while equity markets fell, with the Dow Jones registered its sharpest loss in 6 weeks and the Nikkei also stumbled over 1%.

The Fed Chairman continued on the dovish tone displayed in the FOMC meeting minutes earlier this week. He suggested that unemployment and home foreclosures posed a significant challenge to an economic recovery. He went on to say the bank lending was “restrained” and inflation “appears to be well controlled.” However, offering some level of hope for the hawks, Bernanke said growth will likely run at such a pace that the jobless rate will start to contract. Meanwhile, assessing the point of view of a more hawkish member of the Fed, Hoenig, he said that he expects job growth to continue and saw consumer spending growing at a “solid pace.” He continued by saying that rates could be raised even if data was “mixed” and even a benchmark at 1.00 percent would be considered “highly accommodative.”

The Euro is hovering close to March lows as the situation in Greece continues to deteriorate at a rapid pace. The EU-IMF bailout does not seem to have had the desired effect and is viewed as disappointing compared to the assumptions of many investors that the EU would protect one of its own.

The ECB meets today. While the interest rates are expected to remain on hold at 1%, the news conference at 14:30 CET by ECB President Trichet is expected to provide the excitement. The market is waiting for new collateral rules that will extend easier lending terms into 2011. While these rules are not specifically designed for Greece, they are expected to remove some of the threats hanging over the country.

Have a nice day.

Emman Xuereb
Trading Desk
RTFX Ltd
Risk Disclaimer