Yen Strengthens on Japanese Repatriation
The currency markets were dominated by news that continued to stream out about Japan’s nuclear condition. The EU and the US both gave grim accounts of the situation, as Japan took the lead on how to rectify the situation. The Yen strengthen against most major currencies as repatriation continues to drive Yen appreciation.
In Europe, Moody’s cut Portugal’s credit rating by two notches to A3 and kept a negative outlook despite the recently announced fiscal tightening and the tentative agreement by EU leaders to expand the EFSF. Portugal is still 4 notches above junk rating. The action should not come as a surprise as the country was already in review for a downgrade. The euro experienced range bound price action, trading near the $1.40 level with little conviction in either direction. The downgrade has appeared to have little impact on the euro as the market continues to expect the ECB to maintain the course and hike sometime in Q2, while the Fed remains on the sidelines. Tomorrow the SNB Interest Rate Decision (830 GMT) and EMU Output Construction (10:00 GMT) will dominate European economic data.
In the US, Producer prices increased in February by the most in nearly two years due to higher energy costs and the steepest rise in food prices in 36 years. Core PPI, which excludes volatile categories such as food and energy, was relatively benign.
According to the Labor Department the Producer Price Index rose a seasonally adjusted 1.6 percent in February, double the 0.8 percent rise in January. Excluding food and energy, the core index ticked up 0.2 percent, less than January’s 0.5 percent rise. Tomorrow CPI will give a solid picture of Consumer Prices (1230 GMT)
Additionally, The Commerce Department says that the current account trade deficit fell 9.7 percent to $113.3 billion in the fourth quarter of 2010.While the fourth quarter deficit declined, economists are forecasting a widening of the deficit in the first quarter due to increasing oil prices.Â
