Good News For The Snb

MORNING BRIEFING: Negative outlook in EU sends EUR/USD to new 2012 lows What’s new: Asia: Japanese CPI in line with expectations. Risk mixed overnight. EUR/JPY consolidates below 100. United States: Soft core durables send GDP forecasts down. USD gaining against most peers Europe: Decent indices, but Euro selling off. Still focus on Greece and the lack of progress. Rates in Asia and Indices: EUR/USD 1.2519 1.2561 0.21 % USD/CHF 0.9567 0.9606 0.16 % GBP/USD 1.5648 1.5676 -0.00 % USD/JPY 79.54 79.82 -0.06 % EUR/CHF 1.2012 1.20375 -0.03 % EUR/JPY 99.73 100.06 -0.25 % Dow Jones 12419.63 12539.59 0.26 % Nasdaq 2512.35 2554.2 ...

Fitch cuts Japan's sovereign rating two notches Economic Data (JP) Japan Apr Supermarket Sales Y/Y: --1.9% v -2.4% prior (FI) Finland Apr Unemployment Rate: 8.4% v 8.4%e (DK) Denmark May Consumer Confidence Indicator: 0.4 v 0.6 prior (ZA) South Africa Mar Leading Indicator: 134.5 v 134.4 prior (NL) Netherlands May Consumer Confidence: -38 v -32 prior (NO) Norway Q1 GDP Q/Q: 1.4% v 0.9%e; GDP Mainland Norway Q/Q: 1.1% v 0.9%e (UK) Mar ONS UK House Prices Y/Y: -0.4% v +1.0% prior (UK) Apr Public Finances (PSNCR): -£23.2B v -£6.0Be; Public Sector Net Borrowing: -£18.8B v -£22.8Be; PSNB ex Interventions: -£16.5B v -£20.0Be (UK) Apr CPI M/M: 0.6% v 0.6%e; Y/Y: 3.0% v 3.1%e; Core CPI Y/Y: 2.1% v 2.0%e (UK) Apr RPI M/M: 0.7% v 0.6%e; Y/Y: 3.5% v 3.4%e; Core RPI- Ex Mortgages Y/Y: 3.5% ...

The Week Ahead Highlights US employment data in focus Bank of Japan underwhelms RBA likely to cut The SNB talks tough on the Swissie Is the UK economy really that weak? The Eurozone's growth pact US employment data in focus Earlier this week, the Federal Open Market Committee (FOMC) held its 2-day policy meeting. The bank kept policy on hold and upgraded the economic assessment, however comments from Ben Bernanke - which did not provide any new insight in our view - kept Treasury yields low, equity markets supported, and the dollar soft with QE3 speculation back into focus. Fed projections showed upwards revision to real GDP growth with forecasts of 2.4%-2.9% for 2012 up from the prior 2.2%-2.7% estimate and the unemployment rate forecast was lowered to 7.8%-8% ...

Fundamental Analysis EUR "There’s a bit of risk back on after some positive company numbers helped stocks and improved the tone of the markets" - Eric Wand, a fixed-income strategist at Lloyds Banking Group Plc Demand for Spanish and Italian debt rose, pushing Spanish and Italian bonds higher, as investors turned to higher-yielding assets after companies from Apple to Swedbank reported better than forecast earnings. USD "The committee expects economic growth to remain moderate over coming quarters and then to pick up gradually" - Federal Open Market Committee U.S. durable goods orders tumbled below forecast in March, a sign the manufacturing sector may be losing momentum. Bookings for long lasting goods dropped 4.2 percent, said the Commerce Department on Wednesday. GBP " could be ...

The UK Defies the Odds The big mover of the day was the pound after some better than expected labour market data and a surprise change in stance from one of the Bank of England's most noted doves. Adam Posen's shift towards the majority (i.e., the fence) from voting for more stimuli at the March meeting seemed to have the most impact on the market as it dramatically reduces the prospect of more QE in the near-term. It wasn't that long ago that the UK was expected to get more QE next month, those plans seem to have been shelved for now. The tone of the minutes was fairly upbeat compared to previous months. The Bank noted that funding conditions for the financial sector picked up strongly, and banks in the UK could issue healthy levels of debt in the public markets, suggesting they were ...

Fundamental Analysis EUR Euro Area officials are going to Washington this week in order to demand larger war chest from overseas partners to prevent debt crisis as Spanish government struggles with surging borrowing costs. US though insists Europe can tackle crisis by its own financial firewall while Euro Zone representatives claim they already have done enough and deserve global help. USD Temasek Holdings is preparing to buy a part of Goldman Sachs Group's stake of Industrial & Commercial Bank of China (ICBC). Goldman Sachs is going to sell 3.55 billion of ICBC shares valued at USD 2.5 billion or about 4% of total amount traded in Hong Kong. ICBC shares lost 0.8% in Hong Kong on the news. Temasek has been raising holdings in China Construction Bank and Bank of China. GBP UK managed ...

Forex News and Events: We are clearly in a holiday trading mode, with the last stop being tomorrows NFP. We suspect FX will be range bound as trade wait. Yesterday in the US, the ADP survey indicated that private sector payroll employment increased by 209k vs. 206k exp. in March. This number is consistent without the recent improvements in the labor market and suggests a NFP read above 200k. On the other hand, the ISM non manufacturing index came in below forecasts at 56.0 vs. 57.3 exp. The slight downtick shouldn't be of real concern since the drop only revised abnormally large increases in the past few months. Still supporting the good Friday NFP was the underlying employment index, which rose to 56.7 from 55.7. While the USD continues to benefit from relative growth expectations, we ...

Forex News and Events: The SNB's Quarterly Bulletin release didn't really provide any surprises. The key take-aways were that the SNB will stay true to its price stability mandate (while balancing policies with economic developments) through the enforcement of the “minimum exchange rate of EURCHF 1.2000” as “target range for the three month Libor will remain unchanged at 0.0–0.25%”. In addition, the bank will continue to “maintain liquidity on the money market at an exceptionally high level.” We would like to note, there is a slightly optimistic tone in the report. As risks have remained marginally unchanged, the bulletin notes improvements in the financial markets and mixed developments on the global growth front. While the SNB still views the overvalued CHF as a “challenge to the ...

Fundamental Analysis EUR "Figures clearly show that the recession in the euro zone is far from over" - Peter Vanden Houte, an economist at ING Group Euro area services and manufacturing output fell by more than expected this month, a sign the economy has slipped into recession. USD "Decline in unemployment claims is another indication that the labor market is healing. That's good news for the March payroll report" - Gus Faucher, a senior economist at PNC Financial Services The number of Americans claiming for unemployment benefits fell to 348 thousand in the week ended March 17 from the week before, said the Department of Labor on Thursday. GBP "The data puts a real dent in hopes that the consumer may be perking up appreciably" - Howard Archer, an economist at IHS Global Insight U.K. ...