Hello
EUROPE: The week comes to a close with Cyprus still to the fore, with the market
still awaiting a resolution to the situation. The data calendar kicks off at
0745GMT, wit the release of a raft of French data, including 4th quarter
employment report, the Mar manufacturing and service sector sentiment reports
and the March business climate indicator. Spanish data follows at 0800GMT, when
the January industrial orders cross the wires. German Finance Minister Wolfgang
Schaeuble is scheduled to hold a press conference, in Berlin, with Cyprus likely
to feature high.
At 0900GMT German IFO (Business Climate, Current Assessment, Expectations)
UK PRESS: The Telegraph says Brussels has upped its attack on the City of
London, but voting to impose bank bonus caps on to fund managers, although with
even tighter restrictions.
US:US Federal Reserve Gov. Sarah Bloom Raskin will give a speech on labour market
conditions in Washington, at 1245GMT.
The US data calendar gets underway at 1400GMT, with the release of the March
Atlanta Fed Inflation data and the February BLS Mass Layoffs data.
Lastly, at 1900GMT, the US March Treasury Allotments numbers will cross the
wires.
EURO: UBS strategist Beat Siegenthaler anticipates a deal to be reached in
Cyprus over the weekend and the euro to briefly gain as a result. But once the
risk of a spike is out of the way, he expects the euro to be vulnerable as
investors become more comfortable being short. "We have argued that for a number
of reasons the euro is facing downside risks even if the trading range might
remain narrow. Cyprus in our view is another factor weighing on the single
currency. Tail risks have increased and institutional credibility has been
undermined," Siegenthaler wrote in a note. Euro is now at $1.2897.
EURO-DOLLAR: Closed in NY at $1.2900 after rate had moved backwards and forwards
through $1.2900 a few times during the session, though noted that each dip was a
higher low and remained wary of the key support area of $1.2880/75. Rate lifted
to $1.2906 in opening Asian dealing before turning lower and touching $1.2890
before it recovered through the mid part of the overnight session, touching a
high of $1.2924 before dropping back to $1.2889 into Europe as market reacted to
a Sarris comment that Cyprus has not received the requested Russian financial
support. Rate holds heavy, currently trading around $1.2891 as European traders
begin to filter in. Trade remains open to Cyprus headline risk. Data for this
morning has Germany Ifo at 0900GMT which could be interesting reading following
Thursday's poor PMI data, with little in the way of market moving numbers in the
US. Support in euro-dollar remains in place at $1.2880/75 ($1.2879 200-dma;
$1.2876 76.4% $1.2844-1.2979) with stiops noted through $1.2875/70. A break here
to open a deeper move toward recent lows of $1.2857 ahead of stronger level at
$1.2844. Resistance $1.2925/30 ahead of $1.2945/55.
EURO-DOLLAR: Claws its way back above $1.2900, after rate was shoved to extended
overnight lows of $1.2889 on reaction to Cyprus Sarris comments that they hadn't
received requested aid from Russia. Market is seen sitting short, positioned for
further bad news from Cyprus as we approach the critical long weekend (Cyprus
holiday Monday), though strong demand in the $1.2880/75 area continues to
underpin. Any positive solution to the current crisis could prompt a decent
short squeeze, with stops noted on a break of $1.2950 and $1.2965 though the
area between $1.2970/85 said to hold decent sell interest. Rate currently trades
around $1.2903.
Cyprus developments (headline risk) and Germany Ifo at 0900GMT
key to direction. 
EURO-DOLLAR: Fundamental levels (orders, options, technicals)
$1.3139 Kijun line
$1.3076 NY close Mar15, gap to $1.2958 Asia open Mar18
$1.3019 21-day ma
$1.3110 Strong offers
$1.3000 Strong offers
$1.29795 Weds high
$1.2916 5-day ma
$1.2975 Tenkan line
$1.2898 ***Current mkt rate 0746GMT Friday
$1.2880 Medium demand
$1.2879 200-dma
$1.2876 76.4% $1.2844-1.2979
$1.2857-44 Wednesday Mar20 low-Tuesday Mar19 low
$1.2850 Medium demand
$1.2830 Medium demand
CABLE: Closed in NY at $1.5174 after rate had been pulled back from a session
high of $1.5210 to $1.5141 before recovering into the close. Rate touched an
early low in Asia at $1.5167 before it pushed higher through the balance of the
session to $1.5195, holding firm into Europe. Euro-sterling closed in NY at
stg0.8501, the rate having seen lows of stg0.8490 before recovering to stg0.8530
then drifting back into the close. Early Asian trade stuck in a tight range
around stg0.8500 before dropping to stg0.8484 as the euro was sold off into
Europe on headlines suggesting Cyprus has not been able to negotiate funding
from Russia. A very light UK domestic data calendar for today with moves to
again be dictated by Cyprus developments, with Germany Ifo to also have some
influence via euro-sterling. Cable offers remain in place from $1.5195 and
extend toward Thursday's high at $1.5210 with stops noted above. A break here to
open a move toward $1.5225/35. Support $1.5165/60 ahead of $1.5145/40 and
$1.5125/20.
YEN: Dollar-yen closed in NY Thursday at Y94.95 after recovering off a session
low of Y94.54, the rate having seen highs earlier in the day at Y96.11. The
recovery extended to Y95.11 in early Asia before it drifted back below the
figure, dropping to Y94.55 as market reacted to late Asia news suggesting that
Cyprus had failed to secure requested Russian aid. Euro-yen led this late
session move as the euro was sold off across the board, the single European
currency continuing to be led by Cyprus developments. Euro-yen saw lows Thursday
at Y122.05 before closing at Y122.53, the recovery extending to Y122.70 before
it dropped back to Y121.89 on that Cyprus news. Dollar-yen importer bids seen
placed into Y94.50 with talk of stops below.
JAPAN STOCKS CLOSE: Japan's benchmark stocks are trading lower Friday, as
markets are pressured by the stronger yen. The Nikkei 225 was lower by 297.16
points, or 2.35%, at 12338.53. Into the close, the broader-based TOPIX was lower
by 16.98 points at 1041.12. Market breadth indicators saw 18 issue higher, 203
lower and 4 unchanged. Preliminary volume stood at 1.354 bn shares.
AUSSIE: The Australian dollar's trade-weighted index rose to 79.2 today vs 78.9
on Thursday, data compiled by RBA and based on exchange rate at 1600 hours today
showed. This is just shy of lifetime high of 79.3. A research paper from RBA
published today said the economy's response in the years ahead depends on the
response of the currency to economic developments, "in particular, to the extent
that the exchange rate does not depreciate in line with any unexpected declines
in the terms of trade, this will affect the adjustments in other sectors of the
economy." Aussie is now at $1.0425 and overnight the exchange rate made gains
not only vs the USD but also vs the euro.
OPTIONS: FX: Option expiries for today's 1000ET cut,
* Euro-dollar; $1.2850, $1.2900, $1.2950, $1.2960, $1.3000
* Dollar-yen; Y94.75, Y95.00, Y95.50, Y95.60, Y96.00
* Euro-yen; Y123.00
* Cable; $1.5100, $1.5200, $1.5300
* Euro-sterling; stg0.8550
* Sterling-Swiss; Chf1.4350
* Dollar-Swiss; Chf0.9500
* Aussie; $1.0250, $1.0265, $1.0325, $1.0390, $1.0400, $1.0420
Exotic; $1.0400 digital
* Aussie-Kiwi; NZ$1.2500
* Dollar-Canada; C$1.0200, C$1.0250
EUROZONE ISSUANCE: There is no sovereign bond issuance planned Friday, which has
now been completed for this week and totals E24.66bln vs E22.28bln sold last
week. As a recap, Slovakia kicked off issuance on Monday with tap of the floater
Nov 2016 SLOVGB218 and also 3.875% Feb 2033 SLOVGB224 issues for E99.8mln and
E50.5mln, respectively. The Netherlands launched its new 10-year bond 1.75%
July 2023 DSL via the Dutch Direct Auction (DDA) for E6.52bln. On Wednesday,
German re-opened its 10-year 1.50% Feb 2023 Bund issue for up to E4.0bln. On
Thursday, France sold a new 0.25% Nov 2015 OAT and also taps its 1.00% Mar 2018
OAT issues for E7.993bln. In addition, the AFT tapped linkers -- 0.25% July 2018
OATei, 1.30% July 2019 OATi and also 1.85% July 2027 OATei for E1.482bln. Also
Thursday, Spain taps its 2-year benchmark 2.75% 2015 Bono, 10-year benchmark
5.40% 2023 Obligacion and also off-the-run 4.50% 2018 Bono for E4.513bln. In
terms of reinvestment flows, there are no redemption payments and coupon
payments from Italy E0.1bln and Greece E0.1bln -- leaves net cash flow negative
to the tune of E24.5bln vs -E0.3bln last week.
EUROZONE ISSUANCE: Looking ahead into next week, sovereign bond issuance in the
eurozone is planned from Belgium, Italy and the Netherlands -- seen falling to
around E16.0bln vs E24.66bln this week. On Monday, Belgium taps its 5-year
benchmark 1.25% June 2018 OLO, 10-year benchmark 2.25% June 2023 OLO and also
20-year benchmark 4.00% Mar 2032 OLO issues -- expected to be for
E2.0bln-E2.5bln -- size details to be confirmed today. Also on Monday, Italy
taps its 2-year zero coupon Dec 2014 CTZ bond for between E2.0bln-E3.0bln and
also taps linkers 1.70% Sep 2018 BTPei & 2.60% Sep 2023 BTPei issues for
combined size of between E750mln-E1.0bln. On Tuesday, the Dutch State Treasury
Agency re-opens its 5-year benchmark 1.25% Jan 2018 DSL for between
E2.0bln-E3.0bln. On Wednesday, Italy conducts its month-end auctions -- expected
to be benchmark 5-year and 10-year BTPs for between E5.0bln-E7.0bln -- details
to be confirmed today. In terms of reinvestment flows, there redemptions from
Slovakia E0.04bln and Belgium E12.72bln and coupon payments from Italy E0.2bln
and Belgium E6.8bln -- leaves net cash flow negative to the tune of E3.04bln vs
E2.6bln last week.
EUROZONE: Timeline of key events in the eurozone for next few weeks:
- Mar 22 EU Barroso & EU Medvedev speak at 0900GMT
- Mar 22 Cyprus FinMin Sarris speaks at conf on "What Lies Ahead for Cyprus"
- Mar 22 German Ifo Mar Business survey
- Mar 22 ECB announces 3-year LTRO repayment amount for following week
- Mar 22 Portugal T-bill redemption for E2.205bln
- Mar 22 Greek T-bill redemption for E1.6bln
- Mar 25 Berlusconi hearing in Ruby case
- Mar 25 Italy CTZ/linker auction for up to E4.0bln
- Mar 26 Italy sells 6-month T-bill for E8.5bln
- Mar 26 Bank of Portugal releases Spring economic bulletin
- Mar 27 Eurozone flash HICP
- Mar 27 Italy BTP auctions
- Mar 28 Italy T-bill redemption for E10.35bln
- End Mar Earliest date new Italian government can be formed
- Apr 4 ECB Governing Council meeting, Draghi press conference
