Non-conventional measures announced by ECB push the Euro; US employment report at 14:30 CET

[RTFX-Trading]

Non-conventional measures announced by ECB push the Euro; US employment report at 14:30 CET

What’s new ?
ECB: Unconventional measures to boost the economy
ECB: Cut its main interest rates by 25 basis points to 1.00%, a record low
BoE: Rate unchanged at 0.50%
Germany: March Industrial orders up 3.30%
Stress Test: U.S. banks ordered to fill $75 billion capital hole

Today:
07h45 Switzerland: Unemployment Rate (APR), exp 3.50%, previous 3.50%
10h30 UK: Producer Price index Core (APR), exp 0.10%, previous 0.20%
10h30 UK: Producer Price index Input (APR), exp 0.70%, previous 1.00%
10h30 UK: Producer Price index Output (APR), exp 0.20%, previous 0.10%
13h00 Canada: Net change in Employment (APR), exp -50’000, previous -61’300
13h00 Canada: Unemployment Rate, exp 8.30%, previous 8.00%.
14h30 US: Change of Non-Farm Payrolls, exp -590'000, previous -663’000
14h30 US: Unemployment Rate (APR), exp 8.90%, previous 8.50%.
14h30 US: Average Hourly Earnings (APR), exp 0.20%, previous 0.20%.
14h30 US: Average Weekly Hours (APR), exp 33.2 hours, previous 33.2 hours.
16h00 US: Wholesale Inventories, exp -1.00%, previous -1.50%.

Overnight Rates & Indices:
EURUSD: 1.3405 – 1.3342.
USDCHF: 1.1337 – 1.1285.
GBPUSD: 1.5053 – 1.4967.
EURJPY: 133.05 – 132.16.
USDJPY: 99.41 – 98.94.
DowJones: 8'410 -1.20%.
NASDAQ: 1’390 -2.39%.
S&P 500: 907 -1.32%.
Nikkei: 9’431 +0.48%.
Gold: $914.40.

Comments:

The Euro rose to a one month high against the Dollar at $1.3469, the highest since 6th April. The positive data from Germany and announcements by the ECB encouraged a sense that the economic slump is bottoming out. The Pound fell to 1.5 against the Dollar and 89.20 against the single currency, after the Bank of England decided to leave rates unchanged at 0.50% and announced increased asset purchases by £50B. “Carry trades” were the biggest winners on Thursday as the Australian and New Zealand Dollar increased by about 2%, while the Dollar and the Yen were under pressure.
    
The unprecedented stress tests found that 10 banks needed additional capital, a total of $74.6 billion to withstand heavier losses that are likely if the recession worsened. Bank of America had the largest need at $33.9B, Wells Fargo needed $ 13.7B, GMAC (credit card company car) $11.5B and Citigroup $5.5B. The Obama Administration hopes the banks will meet its capital requirements through private funds, however Fed chairman Ben Bernanke said the government is ready to provide any additional capital. Overall, the "stress test" is considered positive by the market, which should support the "carry trades".

The employment report, which is due to be published at 14:30 CET, is highly anticipated. As earlier this week, market expectations were of 620'000 job cuts in the non-agricultural sector, however following better than expected results released Thursday by the National Employment Report ADP, the market has revised its estimates for job cuts to 590'000. The unemployment rate is expected to increase to 8.90% from 8.50% the previous month. We therefore await a better figure, which should give another push to "carry trades".

Emman Xuereb
RTFX Ltd
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