- US personal income up 0.3%; spending up 0.7%; core PCE rises 0.9% y/y
- US pending home sales index rises rises 2.1% in Feb from -2.8% in January
- Dallas Fed mfg index falls to 11.5 in March from 17.5 in Feb
- Trichet: Inflation “durably” above ECB target
- Plutonium found in soil near Fukushima nuclear plant; suggests major damage in reactor 3
- Israel latest emerging market to raise rates; moves to 3% from 2.5%
- US 10 year note yield rises 1 bp to 3.45%
- S&P 500 falls 0.25% to 1310
- Oil falls $1.67 to $103.72
EUR/USD slipped in early US trade, spurred higher by the combination of hopes the US could halt the QE2 program before completion after comments over the weekend by the Fed’s Bullard and on Merkel’s poor showing in German regional elections over the weekend (not to mention the usual and on-going sovereign debt concerns.
Sovereign buying on dips to the 1.4025/30 area helped EUR/USD to build a base in intraday trade while hawkish comments from Monsieur Trichet helped spark a sharp recovery that triggered stops above 1.4060, sending EUR/USD as high as 1.4116 before it slipped back into a consolidation. Trichet comments about inflation being “durably” above the ECB’s target has the market factoring-in a series of hikes from the ECB in the months ahead and perhaps a 50 bp hike to start the cycle.
Cable recovered a cent from its intraday lows as GBP/AUD sales during the London morning dried up. We reached 1.6035 but slipped back below 1.6000 at the close.
USD/JPY was supported by higher yields for much of the US session, Early in the day, US 2-year notes rose as much as 6 bp before closing the day up 2.5 bp. Since the early days after the Japanese earthquake, that yield has risen 25 bp from lows of 0.505 to today’s close at 0.76%, a major support for the greenback.
AUD/USD slipped late in the session. presumably on risk aversion as stocks and commodities fell back toward the close. AUD ends at 1.0245, the lows for the US session. AUD never traded above 1.0300 during New York hours.
