News and Events

Poor economic data continues to give the markets a bearish tone, despite the currently rally in Asian and European equities. China's CPI printed at -1.6% y/y, as the current deflation reflect global factors more than domestic demand. In Austria, the NAB business confidence and conditions survey, Manpower employment and ANZ job vacancy data all were weak. In the UK, BRC showed that retail spending has begun to fade, while RICS housing balance fell to -78%. Japan's machine orders dropped -83.9% y/y and Leading Index printed at 77.1 On a final depressing note, German current account balance fell well short of expectations to 8.5bn vs. 9.5bn exp. While all 3rd-tier economic data it highlights the point that there is still considerable weakness in the global economy. Given the current environment, we expect the USD to be supported, as US investors repatriate funds and foreign investors continue to buy safer, liquid US treasuries. Crude continues to trade higher on speculations that the OPEC March 15th meeting will include a production cut. We are closing in on the psychological $50bll mark and a break could reverse the bear trend and accelerate the move as CTA trend traders pile in. FX markets are still range bound, with only the Sterling providing fireworks in yesterday's trading. The EURGBP has penetrated the downtrend from the late December 2008 high and testing the 50% retracement down to the early February low at 0.9245. The USDCAD briefly ran stops above the 1.3000 level forming a quadruple top. The EURUSD continued to bounce around the 1.2500 - 1.2750 range, while the USDJPY has been pulling back from the psychological 100.00 level. The Sterling came under significant selling pressure yesterday, as additional news regarding the troubled UK banking sector emerged. The escalating cost of bailing out UK's banks has been increasing concerns regarding the government balance sheet and full scale nationalization (and in the end the tax pay is liable for these massive sums). In addition, the sharp rally in UK bonds (driven by the BoE shift toward quantitative easing) should continue to weigh on the GBP. Eastern Europe has been the main focus of yesterday's meeting of European ministers with Romania has formally requested aid. According to the FT today the IMF could provide a €20bn rescue package to Romania with the balance coming from European Commission and the World Bank. The G10 calendar is light today with exception to UK Industrial Production data (expected to confirm that the manufacturing recession is destined to be as severe as the early 1980s) and a speech from Fed Chairman Bernanke on Banking regulation this afternoon.

Today's Key Issues (time in GMT):

09:00 GBP Norway CPI (Feb) +0.3%(+2.1%) exp, -0.3%(+2.2%) prior

09:30 GBP Manufacturing Output (Jan) -1.4%(-11.7%) exp, -2.2%(-10.2%) prior

09:30 Industrial Production (Jan) -1.2%(-9.9%) exp, -1.7%(-9.4%) prior

12:00 USD Brazil GDP, % y/y 1.3 exp, 6.8 prior

12:30 USD Fed Chairman Bernanke speaks on bank regulation and reform

14:00 EUR Bernanke speaks on bank regulation

17:05 JPY Central Bank of Luxembourg Governor Mersch speaks on “the origins of the crisis” at American Chamber of Commerce

23:50 JPY Corporate goods price index, % y/y Feb -1.2 exp, -0.2 prior

23:50 Core machinery orders, % m/m Jan -5.0 exp, -1.7 prior