Expert Analysis of Today's Market

• The dollar was lower against the yen but stronger against the euro on Monday. The EUR/USD fell on speculation the European Central Bank will signal it is in no hurry to raise interest rates after this week’s expected rate rise. The USD/JPY continued its last week’s dramatic fall but pared losses after US stock markets gained modestly in early trading in New York. The pair is testing support at 114-115. If this support is broken, the USD/JPY may fall to 109.

image 1 of USD/JPY

• The yen continued to unwind risky carry trades and started the week with big gains as stock markets sold off across the globe. Investors lost their risk appetites as the expected return on risky assets declined. The yen was also supported by the Chicago Mercantile Exchange’s announcement on Friday that it was raising the minimum amount of money required to trade yen futures due to higher market volatility.


• The EUR/JPY broke the 154 support today and is likely to test the 150 support. The yen jumped to a 3-month high against the euro and dollar as investors reversed yen carry trades.

image 2 of EUR/JPY

Financial and Economic News and Comments

US & Canada

• US service industries expanded at the slowest pace in almost 4 years in February. The ISM’s index of nonmanufacturing businesses fell to a lower-than-forecast 54.3 in February from 59.0 in January and 56.7 in December, the Institute for Supply Management said.

Europe

• Royal Bank of Scotland Group Plc’s services index declined to 57.5 in February from 57.9 in January. Expansion in European service industries slowed in February after a sales-tax increase damped consumerspending in Germany. However, business expectations improved in February, with the sub-index rising to 68 from 67.8, the highest in 13 months.


• UK’s services index expanded at the slowest pace in 5 months in February. The index fell to 57.4 in February from 59.2 in January, the Chartered Institute of Purchasing and Supply and Royal Bank of Scotland Group Plc said. A small drop to 59 was expected.

Asia-Pacific

• China will crack down on polluting factories and boost spending on farmers and low-income earners as the government seeks a more balanced expansion of the world’s fastest-growing major economy, Premier Wen Jiabao said.


• Australian consumer prices rose 0.2% in February after being unchanged in January, according to a monthly inflation gauge released by TD Securities Ltd. and the Melbourne Institute. Prices increased 3.4% y/y


• Gross operating profits in Australia rose 2.5% from the third quarter, the Bureau of Statistics said in Sydney.