Forex Morning Report - March 2

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Bobbys Corner-Open Market-March.2.2010

Good Morning:

The UK’s political situation is adding to the decline of the GBP.  The markets are concerned that the UK will not be able to elect a government with a strong majority.  A majority will be needed to get any true economic and deficit controls in place.
The Euro continues to be under pressure as Greek civil servants have orchestrated a new nationwide 24 hour strike on March 16, 2010.  Concerns that Greece’s current austerity plan is not enough, is causing the EU to look for new measures by the Greek government to control the deficit.

World equity markets are higher-and US Futures are pointing to a higher opening this morning.

Oil:$79.31                             Gold:$1121.60

No major US economic data due out today.

HAVE A GREAT DAY & GOOD LUCK

Eurozone CPI Flash Estimate

Eurozone CPI Flash Estimate came in at 0.9%, weaker than the 10.% expected and 1.0% prior reading.

Eur/Usd making a push higher on news, currently trading at 1.3505.

UK Construction PMI

UK Construction PMI came in at 48.5, weaker than the 48.9 expected and prior reading of 48.6.

Gbp/Usd has remained either side of 1.4900.

Greece’s Christodoulou comments on bonds

In an attempt to act prudent and not out of desperation Greece’s debt agency chief Christodoulou states the country is not under pressure to sell bonds anytime soon. He goes on to say Greece will sell bonds when conditions are favorable, hoping to raise more capital when time is right.

This may boost the European currencies as any seemingly positive commentary out of Greece is welcome.

Swiss GDP

Swiss GDP q/q came in at 0.7%, stronger than the 0.4% expected and the 0.5% prior reading.

Strong number for the Swiss economy, however not the reaction you might think in the currency markets as Euro and GBP weakness is still the focus of most traders. Chf just running in place against the majors.

Eur/Chf currently trades at 1.4635 and Usd/Chf at 1.0820.

RBA Rate Decision

The market anticipated a 25 basis point hike in the Australian interest rate and the market got it this time around as the RBA raised rates to 4%. The AUD/USD pair quickly popped to .9031, however has since moved below the 90 cent handle as this hike has been built into the price for sometime. The accompanying comments from the RBA did not help the AUD sustain its early bid, the comments were as follows:

• Expansion still hesitant in major countries.
• Growth likely to be close to trend.
• Many countries have ongoing excess capacity.
• Appropriate for rates to be closer to average.
• Growth in Asia continued to be quite strong.
• Today’s increase a step toward average rates.
• Home loan approval moderated in recent months.
• Concerns regarding some sovereigns remain elevated.
• Dwelling prices have risen significantly over the past year.
• Australia 2009 economy stronger than expected.
• Lenders becoming more willing to lend.
• Australia’s jobless rate appears to have peaked.
• Economic growth has been close to trend for a few months.
• Growth in Aussie economy at or close to trend.

Mixed Economic Data from Australia

A mix of both positive and negative economic releases out of Australia gave the AUD/USD pair a quick run up before trading down to levels lower than it was prior to the release. The seasonally adjusted Retail Sales figures came in much better than expected for January at +1.2% versus the expectation of +0.5% and the prior release of -0.7% (revised lower to -0.9%.) However, the Building Approvals came in much worse for January which sent the AUD initially lower. This is all in prelude to rate decision expected at 10:30 pm est.