By ForexMansion.com
The Central Banks to the Rescue
The G7 countries announced a coordinated currency intervention in an effort to calm volatility within the capital markets, specifically the increasing strength of the Yen. The BOJ, Bundesbank, BOE and Bank of France purchase dollars and euro’s and sold yen. The yen weakened as much as 3.5% versus the dollar, reaching the resistance at 82. This is the first coordinated intervention since September, 2000.
The G7 coordinated intervention has improved appetite for risk and led to the unwinding of some recent safe haven flows. Equity markets, have moved higher along with commodities, such as petroleum.In the currency markets, the euro and the Aussie benefitted, while the Swiss franc and yen lost ground. The continued drama that unfolds in Japan will likely keep volatility a consistent in the Yen market.
In a counter to the liquidity provided by the BOJ, the PBOC announced Friday it will raise the share of deposits banks must hold in reserve by 50 basis points, the third increase this year. The increase, which takes effect March 25, comes after the country’s consumer price index rose 4.9% in February.
Libya’s foreign minister claimed that his country would abide by the United Nations Security Council resolution calling for military action against Col. Moammar Gadhafi’s forces the implementation of a no-fly zone was part of the UN action. Oil prices initially moved higher touching $103 on the news of the vote, but moved quickly back toward $101.
Next week the calendar is light on Monday and markets participants will be eyeing events in Japan, along with a potential next stage in Libya’s unrest. In the US on Monday, Existing Home Sales will be released at (1400 GMT).
