Dollar extends earlier weakness despite solid job data. ADP employment report showed 217k expansion private sector job markets in February, above expectation of 185k. Though, challenger report showed 20% yoy increase in planned layoff. Dollar struggles to stage a sustainable recovery as gold continues to make new record high and hit 1437.2 in early US session. Crude oil also stays firm around 100 level. EUR/USD breaches recent resistance of 1.3860 while USD/CHF also breaches 0.9233 support. Nevertheless, no follow through selling in dollar is seen yet.

Euro recovers strongly from intraday low of 1.3742 against dollar as data showed factory gate prices posted sharpest monthly gain in 29 years. PPI rose 1.5% mom, highest reading since 1982, 6.1% yoy. Both were well above expectation of 1.0% mom and 5.6% yoy respectively. The jump in prices was mainly driven by energy and intermediate goods while consumer-related goods posted only modest gains. EUR/USD is still capped by 1.3860 resistance for the moment as investors are cautious ahead of tomorrow's ECB meeting, where there are high anticipation for Trichet to step up the tone on inflation. Sterling also recovers against dollar after stronger than expected UK construction PMI which rose to 56.5 in February, versus consensus of 52.9. That's also the highest reading in eight months.

New Zealand dollar is the weakest currency today, shot down by comments from Prime Minister Key. Key said that the market has priced in a cut from the Reserve Bank.... and that would probably be my expectation, that the Reserve Bank would cut. Expectations for a cut on March 9 meeting are building up after the deadly earthquake in Christchurch last month, which would pressure a economy which is near recession.

Other data released today saw Japan monetary base rose 5.6% yoy in February. Australian GDP came in at 0.7% qoq, 2.5% yoy in Q4. Canada IPPI rose 0.2% mom in January while RMPI rose 0.3% mom.

AUD/NZD jumps to 19 year high on broad based weakness in Kiwi and resilience in Aussie. Long term up trend from 1.0628 has resumed by breaking 1.3508 resistance. Current rise should now extend towards 1.4 psychological level and possibly further to 100% projection of 1.2090 to 1.3508 from 1.2771 at 1.4189. Break of 1.3440 support is needed to be the first sign of near term topping. Otherwise, outlook will remain bullish.

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USD/CHF Mid-Day Outlook

Daily Pivots: (S1) 0.9265; (P) 0.9293; (R1) 0.9313; More.

USD/CHF's break of 0.9233 support argues that fall from 0.9774 is resuming. Intraday bias is back to the downside and further decline should be seen towards 100% projection of 1.0065 to 0.9300 from 0.9774 at 0.9009, which coincides with major medium term target. On the upside, above 0.9321 minor resistance will indicate that a short term bottom is formed and bring stronger rebound.

In the bigger picture, the break of 0.9300 support confirms resumption of the long term decline from 2010 high of 1.1729. Next target will be 61.8% projection of 1.8305 to 1.1288 from 1.3283 at 0.8946, which is close to 0.9 psychological level. On the upside, break of 0.9774 resistance is needed to be the first signal of medium term bottoming. Otherwise, outlook will stay bearish even in case of strong rebound.

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Economic Indicators Update

GMTCcyEventsActualConsensusPreviousRevised
23:50JPYMonetary Base Y/Y Feb5.60%6.40%5.50% 
00:30AUDGDP Q/Q Q40.70%0.60%0.20%0.10%
00:30AUDGDP Y/Y Q42.50%--2.70% 
09:30GBPPMI Construction Feb56.553.153.7 
10:00EUREurozone PPI M/M Jan1.50%1.00%0.80% 
10:00EUREurozone PPI Y/Y Jan6.10%5.60%5.30% 
12:30USDChallenger Job Cuts Y/Y Feb20%---46.10% 
13:15USDADP Employment Change Feb217K185K187K189K
13:30CADIndustrial Product Price M/M Jan0.20%0.50%0.70%0.80%
13:30CADRaw Materials Price Index M/M Jan0.30%3.20%4.20% 
15:00USDBernanke Semiannual Testimony at House ---- 
15:30USDCrude Oil Inventories 1.1M0.8M 
19:00USDFed Beige Book ---- 

 

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