Seasonally adjusted, Japan’s unemployment rate rose from 4.4% in February to 4.8% in March, a four year high. This was higher than the median forecast of 4.6%.

Jobs to applicants ratio fell to 0.52. Forecast was for a reading of 0.55.

Number of new job offers fell 22.3% in March from a year earlier. This comes after a 30.1% drop in February from a year earlier.

USDJPY continues higher towards 99.00.

Japan’s household spending fell 0.4% in March from a year ago, s/adj, much less than the median forecast of -2.5%.

Core annual prices fell 0.1% in March, the first fall in over 18 months and puts Japan in its second round of deflation in less than two years. Forecast was for a fall of 0.2%.

USDJPY jumps 15 pips.

According to Treasury forecasts, the recession will throw one million people into unemployment in Australia.

The first two hours of the day havent given us much insight to the direction for the day. EURJPY has held ground above 130.00 with early buying in EURJPY dribbling thru. My feel is for EURJPY to drift a little higher.

Euro i still think we can hold above 1.3150 on the day to form a base. EURJPY buying sees EURUSD bid for now.

AUDUSD drifting aimlessly and will follow Yen cross activity. The spike higher last night, only to finish lower, can be seen as a bearish indicator if we close back under the 200 day MA at 7196.

• 2330 GMT Australian April PMI. Previous reading 31.7
• 2330 GMT Japan March Household spending. Expectations -2.5%, previous -3.5%.
• 2330 GMT Japan March Jobless data. Forecast +4.6%.
• 2330 GMT Japan March CPI. Forecast -0.2%, previous 0%.
• 0100 GMT China April CFLP PMI.

Commodities finished mostly higher in NY except for Hog and Pork Belly futures which were sold off again despite the WHO renaming the swine flu. The June Hog futures traded down 3.3% to finish at 64.50 cents per lb, down 10% since last Friday.

Copper rose in London and NY on the back better US labour data and fresh declines in copper stock piles. It finished up 2.1% at $2.0475 a lb on Comex.

Nymex crude rose 15c to settle at $51.12 on the front contract despite US oil demand in February falling to its lowest level in 11 years!

The CRB Index settled up 0.6%. After bouncing off 200 in early March, it now finds itself trading between 215 – 230.

Reuters:

• Chrysler’s largest creditors include US Treasury with $4.55 Bio, JP Morgan $1.61 Bio, Chase Lincoln Host Bk $1.03 Bio, Morgan Stanley $979.5 Mio and Citibank with $918.6 Mio.
• Proposed sale transaction will create sixth largest global automaker by volume unit.
• Chrysler lists total assets of $39.336 Bio as of Dec 31 2008.
• Chrysler lists liabilities $55.233 Bio as of Dec 31 2008
• Net cash loss in 30 days after filing is estimated at $2.12 Bio

Market may have got ahead of itself yesterday with a bit of a clean out of longs positions in NY. However many Asian traders did take profit on their longs into the overnight rally. EURUSD failed just shy of the 1.3400 level, with a break there signalling a move to the previous highs. I expect 1.3150-70 zone to hold in Asia this morning, with good bids there. There are stops under 1.3130 and more under 1.3100.

AUDUSD saw a good move to 7380 but really needed to hold above 7325 for a push to our 7475 target. Now back here, we are hoping bids at 7200-20 will stop any further falls. Traders that i spoke with this morning are pretty much square. Many were long yesterday at 7250 but took profit either above 7325 or squared up back down thru 7300. Today traders will be a little more cautious taking on long positions here at 7250, i get the feeling they want to see how strong the bids are at 7200-20.

EURJPY still holding well, supported by a stronger USDJPY. Look for traders to step in and buy around 129.70 on the day with good bids lower at 129.00. Topside sellers in place at 131.50 will cap it.

• US weekly jobless claims fall 14,000 to 631,000; 4 week moving avg falls for third week in row
• Chicago PMI rebounds to 40.1 from 31.4
• US personal income and spending dip
• US savings rate 4.2% in March from 4.0% in February
• US employment cost index rises 0.3% in Q1
• Canadian GDP falls 0.1% in February; rate of decline eases
• Chrysler forced into bankruptcy as small number of bondholders balk; Obama labels them “speculators”
• American Express downgraded by S&P
• S&P sheds gains, ends nearly unchanged at 872.70

The markets were dominated early in the day bt jockeying for position ahead month-end fixings. The dollar-negative flows were well-advertised and it looks as though the market took the flows into account (and then some…) getting too long of EUR/USD, AUD/USD and other pairs, prompting a big washout to the downside. Also contributing was the move by Chrysler to declare bankruptcy. Obama took the recalcitrant creditors to task, the latest ant-Wall Street rhetoric, helping undermine what had been a strong equity rally despite the Chrysler fears.

Now that month-end and the Chrysler uncertainty is behind the market, the hope is that equities can move through the important 872/875 level on the S&P on a closing basis. This should support the reflation trade we’ve written about so extensively in recent months. The move could have significant legs as it is being driven by continued signs of stability in the US and not just on hopes for a Chinese-stimulus-driven rebound.

Short-term traders have turned themselves inside-out several times this week. It got short EUR/USD on Swine flu on Monday and long on glimmers of economic hope Wednesday and Thursday, only to see prices fall pretty significantly. We may need to wait until Tuesday of next week when the market is (mostly) back to full strength after holidays for a firm trend to re-establish itself.

One important anecdote today: The BIS was spotted buying EUR/USD at least three times today (alas at ever-lower levels) at 1.3300.,1.3250 and 1.3200.

Keep positions small and stops wide amid thin markets, if you must have a position over the next few days.

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