MORNING BRIEFING: FED officials confirm commitment to keeping low rates for an “extended period”

[RTFX-Trading]

MORNING BRIEFING: FED officials confirm commitment to keeping low rates for an “extended period”

[B][I][U]What’s new:[/U][/I][/B]
Forex: Yen retreats after talks on possible rise of Yuan.
Forex: Euro rises as stops above 1.3375 triggered. Meeting between Japan’s PM and BOJ governor weighs on Yen.
China: Reports suggest that China may be closer to a change in Yuan policy.
Euro-zone: ECB extends looser collateral rules.
United States: FED’s Donald Kohn says interest rates to remain very low for an “extended period”.

[B][I][U]Today:[/U][/I][/B]
[IMG]http://www.rtfx.com/images/news/CAL090410.gif[/IMG]

[B][I][U]Overnight Rates and Indices: [/U][/I][/B]
EURUSD: 1.3400 – 1.3341.
USDCHF: 1.0742 – 1.0699.
GBPUSD: 1.5333 – 1.5268.
EURJPY: 125.50 – 124.69.
USDJPY: 93.73 – 93.34.
DowJones: 10’927 +0.27%
NASDAQ: 2’437 +0.23%
S&P 500: 1’186 +0.34%
Nikkei: 11’204 +0.32%.
Shanghai: 3’145 +0.85%,
Gold: $1’156.0
Crude Oil: $86.07

[B][I][U]Comments: [/U][/I][/B]

FED vice chairman Donald Kohn on Thursday said a gradual US economic recovery marked by high unemployment and tame inflation will require interest rates to remain very low for an "extended period". Kohn, speaking at a luncheon sponsored by the FED of San Francisco, said, for now, conditions do appear to warrant the central bank's highly accommodative stance, undertaken as a response to the worst financial crisis since the Great Depression. Kohn focused on the labor market, which he characterized as "extremely weak." He also believes inflation will not become a problem any time soon. He said the high jobless rate, which came in at 9.7 percent in March, suggested the economy was not operating anywhere near its maximum productive capacity.

Meanwhile other FED officials reiterated this position. Governor Daniel Tarullo said on Thursday that US monetary policy will probably need to stay unusually loose for some time because of a sluggish recovery marked by high unemployment and subdued inflation.

The New York Times talked of an imminent policy shift in Beijing to let the Yuan rise late on Thursday. The report coincided with a quick visit by US Treasury Secretary Geithner to Beijing to meet Chinese Vice President Wang.

The Yen retreated on Friday as short-term players trimmed their long positions on talk that the near-term Yuan revaluation was overdone. A meeting held on Friday by Japanese Prime Minister Yukio Hatoyama and BOJ Governor Masaaki Shirakawa, also weighed on the Yen.

The Euro rose earlier as investors trimmed record-high short positions. European Central Bank President Jean-Claude Trichet assured markets that a Greece default is unlikely, prompting buying from some sovereign names which supported the Euro in the New York session.

Have a good weekend.

Emman Xuereb
Trading Desk
RTFX Ltd
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