Cable has slipped back a little during Asian overnight session, presently at 1.5220 from North American close Tuesday up around 1.5255.

UK data due today:

09:30 GMT: Latest Bank of England minutes

09:30 GMT: UK jobs report for February;  jobless claims change expected 6k, claimant count rate expected unchanged at 5%, ILO unemployment (3m Jan) expected 7.9% from 7.8%

The past two European sessions have seen decent UK clearer selling interest almost from the get go, at more elevated levels.  Will be interesting to see whether the pattern continues.

EUROPE: At 0815GMT, ECB Governing Council member Mario Draghi is due to
speak at a European Parliament Committee on Economic and Monetary
Affairs, in Brussels, while at 0900GMT, ECB Governing Council member
Axel Weber appears on a panel discussion on “The Aftermath of the
Crisis. A Newly Structured World?”, in Cologne.

EUR/USD sits at 1,3780, hardly changed from North American close Tuesday around 1.3770, Asian trade confined to uninspired 1.3764-1.3788 range.  So far protection of barrier option interest up at 1.3800 is capping recent rally. 

Euro zone data today is thin on the ground:

10:00 GMT: Euro zone labour costs Q4 expected 2.7% y/y

10:00 GMT: Euro zone construction output for January

10:05 GMT: Italian current account for January

Nothing there to really whet the appetite.

Article by AEP in The Telegraph will have been noted. Entitled “The proposed EU Greek bail-out cannot simply bypass German law.”

Above aforementioned 1.3800, sovereign sell interest tipped up at 1.3825/50.

US PRESS: Fed up with the tight supply of credit, state and local
governments across the U.S. are starting to punish big banks, the WSJ
reports. State lawmakers in Maryland, Massachusetts, Minnesota and New
Mexico have introduced legislation that would funnel more money into
small financial institutions, which generally have avoided the brunt of
criticism over the industry’s reluctance to lend, the paper says.

• Not unexpectedy, the BoJ keeps rates at 0.1% and boosts it’s credit program to JPY20 trillion
• USD/JPY dipped after the anouncement in a case of buy the rumour, sell the fact
• RBA assistant governor says rates to rise further
• Way forward for Greece remains unclear as Germany would possibly be unable to ratify any bail-out package of any sort
• Regional stockmarkets gain over 1% on average

It was another brutally boring morning session in Asia with the EUR/USD trading for almost 6 hours in a 10 pip range. The BoJ announcement brought a few fresh flows into the market and this encouraged some small movements.

USD/JPY fell from 90.40 to 90.03 immediately after the announcement in what was a case of buy the rumour, sell the fact. But with 2-year JGB yields now at 4 year lows, USD/JPY and the JPY crosses found some willing dip buyers and USD/JPY has jumped to a new session high at 90.62. Unusually, this pair has been the most volatile during the local session.

AUD/USD jumped above .9200 in early trade as stop-loss buying in NZD/USD led the way but when AUD/NZD sellimng also materialised, the AUD/USD drifted back to its NY closing level. Range: .9174/.9209.

Cable and EUR were both relatively quiet although the GBP has given back some of its overnight gains on the cross. Sovereign sellers are expected in the EUR/USD at 1.3825/50 and this dissuaded local traders from being overly bullish. Ranges: EUR/USD 1.3763/86;  Cable  1.5220/60.

Markets: Nikkei +0.75%, HK +1.3%, Kospi +1.1%. Gold +5 to $1128/oz.

JAPAN: Comments from Japan Banking Minister Kamei, saying the govy must
take stimulus steps.

SOUTH KOREA: South Korean Feb S/adj unemployment at 4.4%, with
employment up 125,000 on year.

JAPAN: Comments from ADB President and former MOF official Kuroda,
saying further efforts needed by BOJ to fight deflation.

I’m hearing from the interbank market that there are a few stops building below 89.75 which may attract dealers attention in early European trade.

CHINA: The World Bank raised its forecast for Chinese growth this year
and called for a stronger yuan exchange rate as part of a tighter
monetary policy stance to contain inflation expectation and a potential
housing bubble. It said that the economy will grow by 9.5% in 2010 — up
from January’s 9.0% forecast — as net exports begin contributing again
to growth. Private sector investment, particularly in the real estate
industry, will also compensate for decelerating levels of the
government-directed investment that was prompted by the global financial
crisis in 2008. The pick-up in investment-driven growth in housing and
resurgent price pressures will require a shift away from the loose
policy stance which underpinned growth in 2009, it said.

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