• US weekly jobless claims fall 6,000 to 462,000
• US January trade deficit $37.3 bln; lower than expected
• SNB holds rates steady; says will continue to counteract CHF strength
• Dutch PM: Greece should consider going to the IMF
• S&P says dollar still the global reserve currency
• Obama: China currency adjustment would help global trade; wants even playing field for US workers
• ECB’s Tumpel-Gurgerel: Greek promises impressive; wants to see implementation
• S&P 500 matches January highs at 1150
• US yields rise on short-end of curve: 2-year yield up 4 bp to 0.95%; 10-yr flat at 3.72%

EUR/USD spent the US session in a range. A choppy range at first, followed by a glacial afternoon rise.

We fell from 1.3688 shortly after the US economic data to a low of 1.3626 in about 10 minutes, then spent the balance of the day recouping that lost ground. Comments from the Dutch PM suggesting that Greece could go to the IMF helped knock EUR/USD from its highs. Traders took the comments as an admission that the EU may not be up to the task of looking after its weakest link(s) on its own. Heavy sales from a Swiss private bank helped weigh on the EUR around the same time. Strong buying from US custody banks helped lift EUR/USD back into the 1.3650s after which improving US equity markets helped carry the ball the rest of the way to 1.3681 afternoon highs.

Cable dipped briefly below the 1.5000 level as EUR/USD slipped back but US custody buying in that pair helped the pound recover to 1.5060/65 late in the day.

USD/JPY was limited on the topside by heavy offers at the 123.90 level in EUR/JPY once again. Traders fear a sell off i the cross if the Rubicon is not crossed soon.

AUD/USD slipped to the 0.91-teens on risk aversion with losses in stocks and commodities seen early in the US session but it rebounded along with the European currencies in the afternoon and ends the day around the 0.9150 level.

• Strong Chinese data suggest rate rise is imminent
• Chinese CPI +2.7% YoY, retail sales +22% YoY, industrial production +12.8%
• Japanese GDP +0.9% in Q4
• AUD dipped initially on employment data, which was weaker than expected
• News that NY state may have to borrow to bridge deficits has thrown the market focus back onto the parlous state of US national and state financing
• South Korea keeps base rate unchanged
• RBNZ in no hurry to raise rates
• Regional bourses mixed, Nikkei +0.5%, HK and Shanghai -0.5%
• Japanese corporate repatriations still apparent

Early focus was on the AUD and the NZD. The NZD fell significantly after the RBNZ statement and this weighed on the AUD also, although AUD/NZD did make decent gains back above 1.3000. The AUD/USD fell from .9140 to .9120 after the employment data, bounced back to 40 and then re-tested the session lows. Dealers report option-related buying mixed in with corporate demand close to the lows. Range: .9114/56

USD/JPY and the JPY crosses drifted lower for the entire morning session amid the corporate repatriations, although volumes were relatively small. The Chinese data also ushered in some selling of the risk trades as the prospect of a Chinese rate hike seemed to increase. USD/JPY range 90.22/55, EUR/JPY 123.04/65

EUR and GBP have been very quiet in tight ranges, 1.3630/61 and 1.4950/87 respectively.

Markets: Nikkei +0.5%, HK -0.4%, Shanghai -0.6%, Kospi -0.1%. Gold steady at $1107/oz.

• S&P 500 holds below 1150 resistance once again
• US wholesale inventories fall 0.3%; weaker than expected
• UK NIESR says growth in the 3 months to February slowed to +0.3%
• Greece’s Papandreou: EU may intervene to lower Greek borrowing costs
• Merkel: EMF a good idea as last resort; supports G20 talk on imbalances
• Trichet slightly more receptive to EMF idea than German colleagues
• US sells $21 bln 10-yr notes at 3.735%; bid-to-cover 3.45: Very strong demand
• US February deficit $221 bln;17th straight monthly deficit
• RBNZ holds OCR steady at 2.5%; hints at mid-year hike
• S&P 500 rises to 1146, up 0.5%
• US 2-year not yields rise 4 bp to 0.91%; 10-yr note rises 5 bp to 3.72%
• Gold falls on rumored central bank sales

EUR/USD rallied strongly late in London, reaching the 1.3680 area. Waning Greek concerns, trimming of stale short positions and slightly improved risk appetites helped underpin EUR/USD, EUR/JPY and AUD/USD today. The failure of the benchmark S&P average to overcome the 1150 technical hurdle helped trim risk sentiment during quiet afternoon trade.

USD/JPY ramped higher on very strong buying from a US money center bank during the NY morning. A high of 90.83 was seen. Exporter offers were absorbed above 90.50 but more toward 91.00 helped cool the rally. Similar offers at 124.00 slowed the cross.

Cable recouped much of the ground lost in London but was unable to retake the 1.5000 level. Heavy cable sales from a UK clearing bank was seen again today; the same name that bought the 1.44 puts earlier in the week. A buy recommendation from a US bank’s tech analysts made the rounds this morning. They see a rally to 1.57 with a stop below 1.4775.

AUD/USD extended its rally to 0.9193 this morning and spent the rest of the session retrenching. Traders are quiet long of this pair, sources say.

• Greek report to EU says implementation of deficit plan ahead of schedule
• Spain’s Economy Minister: 2009 deficit could be lower than previous forecast of 11.4% of GDP
• ECB’s Gonzalez Paramo: Measures taken by Greece convince ECB, IMF, European Commission. Responsibility for Greece’s future lies with euro zone countries
• German January trade surplus s.a 8.7 bln euros vs 16.6 bln in December, much worse than median forecast 16.0 bln. Exports -6.3% m/m, imports +6.0% m/m
• French January industry output +1.6% m/m, much better than median forecast +0.2%
• SNB report to parliament:  Swiss GDP to grow by around 1% in 2010
• UK  PM Brown: UK recovery still in early stages and remains fragile. Believes Britian will maintain AAA credit rating
• Italy January industry output +2.6% m/m, much stronger than median forecast +0.6%
• UK January industrial output -0.4% m/m, much worse than median forecast +0.3%. Manufacturing output -0.9% m/m, much worse than median forecast +0.3% m/m. Both m/m falls biggest since August 2009
• Italy final Q4 GDP revised downward to -0.3% q/q, -3.0% y/y from previous -0.2%, -2.8% respectively – ISTAT

Euro has had an Ok morning after shaky start.  EUR/USD  is up at 1.3620 from an early 1.3595, receiving a late morning boost from news that Greece has told EU implementation of deficit plan is ahead of schedule.  EUR/JPY is up at 123.10 from early 122.40, while EUR/GBP is up at .9120 from early .9085.

It wasn’t all a bed of roses though.  EUR/USD initially came under pretty heavy pressure, the euro underminned by demonstrably weaker than expected German trade data (see above.) We got as low as 1.3546 before recovery, a major French bank having apparently backed up the truck and bought aggressively around the lows.  I’m sure they’ll be reports of sovereign buying down around lows but didn’t  hear them myself.

Cable started around 1.4965 and came under heavy pressure right from the get go.  Reports had a UK clearer and hedge funds selling aggressively. The clearer was said to have been the same one seen buying 6 month 1.4400 cable puts recently.

We got below 1.4900 buy strong buying emerged just ahead of technical support at 1.4880 (76.4% retracement of 1.4781/1.5197).  This lifted cable higher and reports of sovereign purchases helped cable get back to around 1.4950 just ahead of the 09:30 GMT release of truly horrible UK industrial/manufacturing output data. Cable swooned and eventually got as low as 1.4874. We’ve seen some recovery, presently back up at 1.4920.

Reports SNB intervened in EUR/CHF lifted the cross from 1.4612 session low. But there has been no followthrough (session high 1.4630) and we’re presently at 1.4620, effectively unchanged on the day.

USD/JPY sits up at 90.40 from early 90.05 amid speculation BOJ could ease monetary policy further at their March 16/17 meeting.  Stops tipped through 90.65.

• RBA’s Lowe: Australian economy to continue to expand over next few years
• Australia’s March consumer confidence +0.2%
• Australia’s home loans fall unexpectedly
• Japan’s core machinery orders -3.7%, MoM
• NZD makes steady recovery ahead of tomorrow’s RBNZ meeting
• USD/JPY and EUR/JPY still influenced by talk of repatriations

Another brutally boring Asian session which was only notable for the GBP making new multi-decade lows against the AUD. The majors traded in 25 pip ranges with the exception of the GBP which fell against all other major currencies.

EUR/USD traded in a 1.3588/1.3613 range. Sell orders at 1.3620 and bids at 1.3570 are corralling the market but stops are building both sides, above 1.3630 and below 1.3525 and a bigger move is surely imminent. EUR/JPY was tired after some big moves yesterday and saw only a 122.16/59 range.

Cable fell from 1.5010 to 1.4960 when a GBP/JPY flow hit the market in early Tokyo trade and it has been unable to recover since. Sovereign bids are seen starting at 1.4930 through 1.4875. Stops are said to be building now above 1.5040. Range: 1.4959/1.5016

The AUD/USD jumped early in the session after more bullish comments from the RBA. AUD/NZD selling ahead of tomorrow’s RBNZ meeting helped temper gains. Stops are noted close by above .9180. Range: .9133/63.

USD/JPY traded in a tight 89.85/90.08 range.

Markets: Nikkei, HK and Kospi were all basically flat on the session. Gold added $2.50 to $1125.50/oz.

• Buba’s Weber: Rescue fund idea counter productive
• CEA’s Romer: Labor market will be slow to recover; must tackle unemployment before tightening fiscal policy
• Chicago Fed’s Evans: Labor market weaker than it appears; rates appropriate
• Greek debt manager: Not looking to issue debt soon
• Greek FinMin: Borrowing costs too high
• Greek PM: Obama agrees curbs on speculation must be a priority at G20
• WSJ: Barclays in the hunt for US acquisitions
• S&P 500 edges up 0.2%, closes 10 points below 2010 high
• US 2-year notes slip 3 bp to 0.87%, 10-yr notes fall 3 bp to 3.69%

EUR/USD opened on the defensive and fell to ession lows early in the day. The hang-over from critical comments from Fitch on UK, Spanish and French debt set the tone early. EUR/USD fell to 1.3537 but bounced from just ahead of the post-payrolls low from Friday at 1.3530. Prices rallied to 1.3617 in early afternoon trade as disappointed shorts covered and US share prices rallied. EUR/USD dipped back below 1.3600 late in the afternoon as the US stock rally faded. We end at 1.3601 with stocks up modestly on the day.

Cable was sold heavily on the comments from Fitch suggesting UK budget cuts were too slow in coming. We probed 1.4940 several times but bounced back amid the usual talk of central bank demand on dips. Rebounds reached 1.5015 and we end at 1.5000.

USD/JPY was boosted by US buying on dips. Selling of JPY was particularly heavy against the AUD today, with US custodial banks the most prevalent buyers of the cross. Risk aversion eased during the session, helping USD/JPY recover toward the 90.00 area where we end the day from 89.70 lows.

AUD was the standout during the US ssession. It bounced sharply from a test of the 100-day moving average at 90.60 before stalling just shy of the 76.4% retracement of the 0.9330/0.8576 decline, which comes in at 0.9152. We topped at 0.9147.

Tonight’s Chinese data dump for February will be closely eyed but traders are concerned about the distortions from the long lunar new year holiday. Best of luck!

• S.Korea fx authorities buying dollars to curb won’s strength – traders
• Russia central bank shifts lower bondary of rouble band to 34.55 vs basket after buying $700 mln – traders. Shifts bondary second time during morning to 34.50
• French January trade balance -3.681 bln euros, slightly better than median forecast of -4.0 bln – customs office
• Swiss February CPI +0.1% m/m, +0.9% y/y, slightly weaker than median forecasts +0.2%, +1.0% respectively
• UAE FinMin: Expects Dubai debt issues to be resolved soon
• French EconMin Lagarde: Idea of European Monetary Fund is interesting, but not short-term priority. Still working on technical proposals on CDS market
• Fitch: UK sovereign credit profile has deteriorated.  UK needs stronger fiscal adjustment. Among larger AAA sovereigns, urgency greatest for UK, Spain and France
• Fitch: UK still within tolerance of AAA rating, but uncomfortable with fiscal adjustment path set out by UK authorities
• Fitch: Portugal’s gradual approach to fiscal consolidation to 2013 is a concern.  Short-term outlook for Greece probably OK, longer-term outlook more open to question. Possible to have a sovereign default in the euro zone
• Fitch: United States vulnerable to interest rate shocks
• UK January global trade balance -7.987 bln, worse than median forecast -7.0 bln, biggest shortfall since August 2008

Risk aversion has picked up this morning, European stocks lower, oil off over a buck and gold lower. Fitch’s various prognostications (see above) hardly helped matters.  USD and especially JPY the beneficiaries.  JPY also aided by ongoing reports of fiscal year end repatriation flows.

EUR/USD started around 1.3615. Dipped early, briefly below 1.3600 before bouncing with reports circulating that Russia and BIS had been notable buyers.  The recovery didn’t last long and sell orders tipped at 1.3640/50 never came into play.  We were soon back below 1.3600, downbeat comments from Fitch Rating (see above) pressuring the pairing.  We’ve been as low as 1.3562 so far, presently at 1.3570.

EUR/JPY is down at 121.75 from early 122.50.

Cable has had a bad day.  Started around 1.5010 and was under pressure fairly quickly. Poor RICS housing data out overnight, Times poll showing Labour and Conservatives running neck and neck in key marginal seats and Moody’s warning of possible downgrades to UK banks/lenders among factors weighing. 

The sell-off accelerated as comments from Fitch Rating hit the wires (see above) and as data came out showing UK’s trade picture worse than expected (see above) We’ve been as low as 1.4940 so far, talk of sovereign buying below 1.4950 lending some very tenuous support.  We’re presently at 1.4952.

USD/JPY has seen a more active morning, down at 89.80 from early 90.30 amid heightened risk aversion and ongoing reports of fiscal year end repatriation flows.  A US investment bank seen notable seller this morning.  We’ve been as low as 89.63 so far, just above tipped buy orders at 89.50/60.

• China’s FX reserve chief says reserves being managed appropriately
• JPY managed gains across the board amid corporate repatriation as financial year-end approaches
• GBP again falls heaviest as latest polls suggest a hung parliament
• Australian job ads show very strong growth again
• Asian central banks buy USD/Asia, transfers USD into EUR, GBP and AUD
• Regional stockmarkets little changed

Another quiet session in Asia which has only been notable for repatriation flows by Japanese corporates out of Europe and the US. EUR/JPY opened at 123.15 and fell almost 90 pips before steadying. USD/JPY opened at 90.25 and fell to 89.90. Ranges: USD/JPY 89.89/90.33. EUR/JPY 122.34/123.14.

EUR/USD drifted lower on EUR/JPY selling but the market is well aware that Asian Sovereign names are buying between 1.3570/85 and it didn’t try for much lower. Very tight 1.3609/35 range.

Cable fell hardest of the majors amid some heavyish GBP/JPY selling. EUR/GBP also managed some decent gains. Talk of Sovereign bids at 1.4950 in cable. Ranges: Cable 1.4995/1.5067, EUR/GBP .9047/75, GBP/JPY 134.80/136.10.

The AUD did not react to the strong job ads data and has lacked momentum for much of the day. Liquidation of long AUD/NZD positions and AUD/JPY selling weighed on the pair. Ranges: .9075/.9103.

Markets: Nikkei -0.2%, HK +0.2%, Kospi -0.1%. Gold -0.2% at $1022/oz.

• NY Fed announces new liquidity draining contingency; expands reverse repo counterparties
• Greek PM Papandreou: Crisis could spread unless speculators reined in
• ECB’s Stark: European Monetary fund would break EMU rules
• Merkel endorses EMF but says would require treaty amendment
• German regulator: No signs of excessive speculation in Greek debt
• Conference Board’s US employment trends survey edges higher
• BOE’s Barker: UK in recovery but outlook bumpy
• S&P 500 closes unch at 1138
• US 2-year notes dip 1 bp to 0.89%; 10yr note up 1 bp at 3.71%
• Gold ends lower at $1122; oil ends off highs but $0.25 higher at $81.73

EUR/USD edged up on healthy risk appetites early in the session, reaching 1.3692 in morning trade but it was soon punched lower as ECB economist Stark all but ruled out the idea of a European Monetary Fund, saying it would violate the terms of EMU. Also hurting the EUR was a dose of scare-mongering by Greek PM Papandreou during his Washington trip, saying a broader crisis is likely if borrowing costs are not lowered fro Greece. EUR/USD slipped as low as 1.3605 before stabilizing. It traded quietly in the 1.3630s for the bulk of the US afternoon.

Cable slumped a few minutes before EUR/USD began its fall with now clear catalyst for the drop. The extent of the drop suggested it may have been a tranche of M&A selling, but that is a guess on my part. 1.5168 to 1.5030 was seen in about 90 minutes. Bounces were limited to the 1.5090 area.

USD/JPY ran into selling on strength from the BIS around the 90.40 area and later around 90.50 from exporters. Dips were shallow, however, with 90.22 the New York low.

AUD/USD fell on profit-taking around midday as the early “risk on”attitude proved to be short-lived.  AUD/USD saw its 0.9033 highs shortly after the open on Wall Street and slipped as low as 0.9077. Ranges were lethargic during the afternoon 0.9090/0.9105 contained the bulk of the afternoon dealings.

• Swiss unadj jobless rate 4.4% in February.  Seasonally adjusted rate 4.1%. As expected
• Swiss retail sales +4.4% y/y in January vs downwardly revised 4.4% in December (previously 4.7%). Much better than median forecast of +2.3% y/y
• Portugal to cut budget deficit to 2.8%/GDP in 2013 from 8.3% in 2010 – Draft austerity plan
• Moody’s: Portugal’s  weakening sovereign fundamentals challenge bank’s debts/deposit ratings
• EU Commission: Ready to propose European Monetary Fund
• German Govt spokesman: Germany, France, Eurogroup working on proposal on tackling speculation
• China has succeeded in curbing property speculation in some cities with fast rising prices.  Property prices have stabilised – Housing Ministry
• China yuan is not necessarily undervalued if resource and labour costs raised to international levels. Recent loan curbs aimed to ensure even loans throughout the year, not serious tightening. China can contain inflation and asset bubbles if M2 and yuan lending targets are achieved this year - CBank’s Wu
• Dubai World said to ask banks to delay repayment in $28 bln debt talks
• Shanghai share index ends up 0.7%
• Bank of France industry business sentiment index falls to 102 in February from 104 in January, weaker than median forecast of unchanged 104
• Bank of France cuts Q1 GDP forecast to +0.4% from previous +0.5%
• Euro zone sentix index -7.5 in March vs -8.2 in February, better than median forecast of -8.0
• German January industrial production +0.6% m/m, weaker than median forecast of +1.0%

Maybe it’s me, but that session seemed deadly boring. Oh well.

EUR/USD opened firmer around 1.3685 and tried to extend the rally in early trade, briefly popping over 1.3700 posting session high 1.3704.  Talk had sell orders layered from 1.3700 upto 1.3750, so it was no huge surprise when the pairing turned lower.  Hedge funds were seen selling and we’re presently back down at 1.3645.

Cable opened firmer around 1.5165 and also tried rallying early.  Sell orders were well noted up at 1.5190/00 and we duly topped out at 1.5195.  We’re presently back down at 1.5120.

USD/JPY sits at 90.35, little changed after morning of very narrow range trade.  Sources now report Japanese names up on the offer at 90.50. More offers seen 90.60/70 with stops through 90.75.

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