Daily FX MArket Outlook by AceTrader 10-3-2011

Market Review – 09/03/2011 20:41 GMT

Euro little change after successful Portugal bond auction

The single currency was little changed as the successful Portugal bond auction eased the ongoing concerns about eurozone debt woes on Wednesday. Earlier, although euro traded narrowly in Asian n price dropped briefly below Tuesday’s low of 1.3862 to 1.3855, lack of strong follow through selling prompted investors to close their euro short positions n the single currency then rose swiftly to an intra-day high of 1.3942 on talks that ECB stepped in to buy Greek and Portuguese bonds b4 retreating again in NY mid-day.

  
  
Portugal’s Treasury Secretary Carlos Pina said Portugal sold 1 bln euros in bonds in an auction at a rate of record high at 5.993%.  
  
News fm Reuters quoting French gov’t source, reporting that EU Leaders will discuss situation in Portugal on Friday but not preparing any EU intervention. EU leaders will hold a summit at 24-25 March.   
  
Cable rose on Wednesday after report showed that Britain’s trade deficits narrowed as exports rose to a record. Although sterling traded sideways in Asian morning after resumption of recent decline fm 13-month high of 1.6344 to 1.6125 on the previous session, the British pound rebounded fm 1.6142 on talk of buying fm Middle East names n cable then strengthened to as high as 1.6244 after the release of narrower-than-expected trade deficit which came in at -4.17 bln pounds, the smallest deficit since April 2010, versus the economists’ forecast of -5.10 bln pounds. Later, price retreated in NY morning in tandem with the single currency.  
  
The Swiss franc rallied against the greenback n euro on Wednesday as a report showed Swiss CPI accelerated last month, fueling speculation that the Swiss National Bank would raise interest in the coming months to curb inflation. In addition, concerns over that the continued turmoil in North Africa n the Middle East especially in Libya also underpinned the Swiss franc as a safe-haven asset. The usd/chf tumbled fm 0.9370 to 0.9269 while eur/chf tanked fm 1.3015 to 1.2895. Swiss consumer price index rose by 0.4% m/m n 0.5% y/y in Feb. versus economists’ forecast of 0.3% m/m n 0.4% y/y respectively.  
  
Reserve Bank of New Zealand reduced official cash rate by 0.5% to 2.5%. RBNZ governor Alan Bollard said that ‘rate move was to reduce the quake impact; stimulatory policies not right during reconstruction.’ He added ‘current policy will be removed when rebuilding starts but will take some time.’ Regarding the future policy, he said it depends on data. Nzd/usd tumbled to as low as 0.7332 after the rate decision, however, price then staged a strong rebound to around 0.7375/80 b4 trading sideways.  
  
Data will be released on Thursday include:  
  
Australian unemployment rate, Japanese GDP n domestic CGPI, German Import/Export, WPI n current account, U.K. industrial production, manufacturing production, rate decision n asset purchase target, Canadian trade balance n import/export, U.S. jobless claims, trade balance n Fed budget.

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