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Markets are rather steady this morning in beginning of European session as investors calmed down from higher than usual volatility driven by ECB and G20 yesterday. During the G20 Summit in London, the leaders showed unity and pledged a 'global plan for recovery in developed countries as well as in emerging markets'. The plan includes repairing the financial system, promoting global trade and investment, credit-rating firms and risk-taking by banks, rejecting protectionism and building an inclusive, green and sustainable recovery. Unprecedented amount of additional $1.1 trillion funds are committed to back the words, including tripling of IMS's resources to $750b, new allocation of $250b Special Drawing Rights and $100b lending by World Bank and other institutions and $250b to support trade finance. Concerning the financial market, stricter rules will be placed on hedge fund and other financial institutions. A new Financial Stability Board will be established, uniting regulators and IMF to provide early warnings of potential threats. China as well as other developing countries will become more influential. At the same time, impact from the US will be reduced. The yen fell against the dollar and headed for its biggest weekly decline against the euro since February as the Group of 20 nations pledged $1.1 trillion to spur economic growth, sapping demand for Japan's currency as a refuge. The yen traded above 100 for the first time since beginning of November and weakened against seven of Asia's 10 most-traded currencies as stocks rallied, increasing demand for higher-yielding assets. The VIX, a Chicago Board Options Exchange gauge reflecting expectations for stock price changes that's used as a measure of risk aversion, fell 0.6 percent yesterday, the third day of declines. Today Markets will focus on job report from US. Non-farm payrolls are anticipated to have reduced -660K in March (Prior: -651K), bringing the unemployment rate up to 8.5% (Prior: 8.1%) as increase in both initial and continuous claims in previous weeks signaled further deterioration in the job market. The ADP employment report, released on last Wednesday, showed -742k in the private job markets in March and argues that today's NFP might post downside surprise. Average hourly earnings should have raised 0.2% mom during the month, same level as in February. Another focus is ISM non-manufacturing index, which probably rose slightly to 42 in March from 41.6 in February. Despite the improvement, the reading still suggested economy is in contraction mode. Later today, Fed Chairman Ben Bernanke will speak about the Fed's balance sheet at 16:30 GMT.

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Today Key Issues:

  • 08:00 EUR German Purchasing Manager Index Services 41.7 vs. 41.7
  • 08:00 EUR Euro-Zone Purchasing Manager Index Services 40.1 vs. 40.1
  • 12:30 USD Change in Non-Farm Payrolls -660k vs. -651k
  • 12:30 USD Unemployment Rate 8.5% vs. 8.1%
  • 12:30 USD Change in Manufacturing Payrolls -160k vs. -168k
  • 12:30 USD Average Hourly Earnings (MoM) 0.2% vs. 0.2%
  • 12:30 USD Average Hourly Earnings (YoY) 3.5% vs. 3.6%
  • 15:00 USD Fed's Kohn Speaks on Economic Crisis in Wooster (Ohio)
  • 15:00 USD Bernanke Speaks at Fed Credit-Markets Conference in Charlotte

The Risk Today:

EurUsd The break above 1.3420 yesterday indicates the euro is better bid than we had dared to hope. Consequently after the release of the numbers today we are looking for further gains and a run at the 1.3605 Fibo level. Following a bullish March candle we believe the longer term outlook for EUR/USD is even more positive.

GbpUsd We are mindful that 3-5 day corrective rallies have been common over the last four months and on day five of the recent rise the risks of profit taking are high, especially given the proximity of the recent range high.

UsdJpy With weekly momentum charts rolling bearish at overbought levels and the 200 day average capping, downside risks for the dollar are increasing but USD/JPY continues to hold its ground and even managed to close above its 200 day average last night. Intraday consolidation above 98.20 keeps the pressure on the upside and suggests a run at 102 before a more important top later in the quarter.

UsdChf In the absence of a close above a zone of resistance between 1.1490/65 we expect the dollar to drift lower with in its recent range the base of which is at 1.1165.

EURUSDGBPUSDUSDJPYUSDCHF
1.36801.5000102.401.1660
1.35901.4985100.901.1550
1.35201.4875100.551.1505
1.34631.4795100.021.1340
1.33101.452098.401.1290
1.32501.443097.501.1225
1.31651.433097.051.1160
S: Strong, M: Minor, T: Trendline, K: Keylevel, P: Pivot