- The Chinese government widened the USD/CNY trading band from 0.5% to 1.0%
- Traders fear an increase in volatility and this led to some general risk-off sentiment
- Nevertheless, many commentators see the band widening as a vote of confidence in the Chinese economy
- Sarkozy calls for more ECB involvement, putting himself on collision course with Merkel
- Japan FinMin Azumi: IMF contributions not yet fixed
- South Korean import prices ease in March
- BOK adjusts growth and inflation forecasts slightly lower
- New Zealand food price index -1.0% MoM
- UK economy: House prices still seen rising
- Nikkei -1.5%; Kospi -1%; other regional Bourses -0.5% on average
- Gold $1654/oz; Oil $102/bbl; Platinum -2%
EUR/USD and AUD/USD pushed higher in very early interbank trade as some took the Chinese band widening to be a positive for growth prospects but this is more of a medium term effect and the stronger short-term effect is that market volatility is likely to increase and this saw general positional adjustment and risk-off sentiment take hold.
EUR/USD closed in NY on Friday at 1.3070 and traded to 1.3100 in very early interbank trade but risk-off sentiment soon saw some heavy EUR/JPY selling which eventually filled solid EUR/USD bids above 1.3050 before triggering stops below technical support at 1.3030. The DNT barrier at 1.3000 is still in place and heavy buying ahead of that guaranteed a base, but bounces have been quite anaemic. Ranges: 1.3007/90
AUD/USD followed a similar line to the EUR, dominated by risk sentiment and AUD/JPY flows. Solid bids at 1.0310 have provided an intraday base. Ranges: 1.0309/85
USD/JPY has been unable to move, with talk of semi-official bids at 80.50 providing the support but rallies being capped by JPY cross related selling. Ranges: 80.82/99
Cable 1.5820/57 with plenty of interest also shown in EUR/GBP, which is trading very close to a weekly low at .8220. EUR/CHF 1.2018/28
