- ADP employment report shows US added 201,000 private-sector jobs in March; In-line with expectations
- US Business Roundtable CEO sentiment survey rises to record 113 in Q1 2011 from 101 in Q4 2010
- IMF lowers GDP forecasts for US, Japan modestly, raises Eurozone slightly, China flat
- Bank of Ireland, two others said to need EUR 9 bln in capital after stress test
- ECB’s Bini-Smaghi: ECB to raise rates gradually; must normalize rates to avoid credit bubble
- ECB’s Stark: ECB must hike rates or investors will demand soon higher premiums
- AIB, Bank of Ireland shares suspended pending stress test results
- Fed’s Bullard: Economy faces many uncertainties but Fed may not wait for all uncertainties to be resolved before normalizing policy; can tighten policy by selling assets before hiking Fed funds rate
- S&P 500 rises 0.7% to 1328; other US averages close at 52-week highs
- US 10-year note falls 4.5 bp after auction calendar completed, end at 3.44%
- Oil falls $0.50 to $104.30
EUR/USD began the day on the defensive, slipping back to test the key area of support around the 1.4050 level at mid-morning in NY. Failing to break that level, prices very quickly jumped to 1.4100 where we settled for a few hours. Hawkish comments from the ECB’s Bini-Smaghi (see above) helped send remaining shorts to the exits and pushed EUR/USD very quickly up toward 1.4150, the top of the recent range, where we promptly stalled.
The first leaks from the Irish stress tests were in line with market expectations and the euro stabilized in the 1.4120s for the balance of the afternoon. Stops are now above the 1.4150 level, it should come as no surprise.
USD/JPY slipped from session highs in the high 83-teens from the outset but dips were modest. We slipped into the high 82.70s as US yields eased during the afternoon but end around 82.90 with very steady demand still seen for the JPY crosses. AUD/JPY and GBP/JPY were in particular demand.
AUD/USD reached an all-time high for the floating currency era this afternoon as risk appetites flourished across many markets. Equities, emerging markets and high yielders were the main beneficiaries. AUD reached 1.0336 amid ongoing talk of 1.0350 barrier protection.
USD/CHF sky-rocket for a time this morning as risk-aversion eased but a softer dollar after the hawkish ECB-speak sent the buck back to 0.9180 late from 0.9274 highs earlier in the day.
GBP was firmer on the day, bolstered particularly on demand for GBP/JPY. Japanese radiation/repatriation are but after-thoughts in today’s optimistic markets.
