Market News

EUR/JPY continued to flirt with the morning highs near Y115.00 and the strikes that are said positioned there. Currently cross holds around Y114.88. Offers remain in place at Y115.00 but stops are mentioned above there.

Oil prices in the continuous contract have moved another leg lower so that they now trade at $100.80 per barrel with a 1.4% loss. That puts oil prices more than $2 below their highs.
Natural gas has also been hit by sellers in recent trade. The energy component had been as high as $3.87 per MMBtu, but it is now down to $3.79 per MMBtu, where it trades with a 0.7% loss. Precious metals are in rough shape, too.
With participants willing to take on more risk the price of gold has dropped to a 1.6% loss at $1415 per ounce while silver slumps to a 2.0% loss at $34.11 per ounce.

The euro climbed to almost four- month highs versus the dollar and yen after European Central Bank President Jean-Claude Trichet said the ECB may raise interest rates next month to counter accelerating inflation.
“Strong vigilance is warranted,” Trichet told reporters in Frankfurt after the central bank left its main refinancing rate at 1 percent.
“The market is responding to Trichet’s comments aggressively,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “He’s very hawkish, no doubt about it. This is as close as he can go without actually raising rates.”
An “increase of interest rates in the next meeting is possible,” Trichet said, adding that any increase would not necessarily be the start of a “series” of moves.
Rising oil prices, which surged over $100 a barrel last week, and faster economic growth are fanning inflation which has already breached the ECB’s 2 percent limit for three straight months. At the same time, officials must weigh any rate increase against the risk it will exacerbate Europe’s sovereign debt crisis by tightening policy too soon.
The dollar slumped versus the euro even after a report showed initial jobless claims in the U.S. unexpectedly declined last week to the lowest level since May 2008.
Applications for unemployment benefits decreased by 20,000 to 368,000 in the week ended Feb. 26, Labor Department figures showed. Economists forecast claims would climb to 395,000. The total number of people receiving unemployment insurance fell to the lowest level since October 2008.

Stocks are holding steady at session highs as oil prices trade near $101.40 per barrel with a 0.8% loss.
Treasuries have been backed down amid the stock market's strong bounce this session. In turn, the benchmark 10-year Note is down about 23 ticks so that its yield is back up to 3.56%, which is its highest level in more than a week. The yield on the 30-year Bond is at a one-week high of 4.63% as its price drops more than a point.
The dollar has managed to trim its loss in recent trade. It had been down modestly earlier this morning, but it now trails a basket of major foreign currencies by less than 0.1%.

The ISM Services Index for February was just released. It came in at 59.7, which is better than the 59.0 that had been expected, on average, among economists polled by Briefing.com. The latest Index reading is the highest since 2005.
Stocks continue to trade at session highs in the wake of the report. More than 90% of the issues in the S&P 500 are in higher ground. Of the 30 Dow components, Wal-Mart (WMT 51.85, -0.12) is the only name that has failed to put together any kind of a gain.
Advancing Sectors: Industrials (+1.8%), Financial (+1.5%), Tech (+1.4%), Materials (+1.3%), Consumer Discretionary (+1.3%), Energy (+0.8%), Energy (+0.7%), Consumer Staples (+0.6%), Utilities (+0.6%), Telecom (+0.5%)
Declining Sectors: (None)

U.S. stocks were headed for a higher open Thursday, fueled by the lowest weekly jobless claims figure since May 2008.

U.S. stocks ended slightly higher Wednesday, as nervous investors focused on oil prices, which rose above $102 a barrel on renewed concerns about supply and the Libyan conflict.
Economy: The Labor Department reported that weekly jobless claims totaled 368,000 in the week ended Feb. 26 -- the lowest weekly figure since May 31, 2008.
Analysts surveyed  expected the number of people filing for unemployment benefits to rise to 400,000, up from the revised tally of 388,000 the previous week.
The report came a day before the big labor report, the monthly employment figures from the government. Economists surveyed by CNNMoney expect that 192,000 jobs were created in February, with the unemployment rate rising to 9.1% from 9% in January.
The Institute for Supply Management's service industries index will be released after the opening bell. It's expected to fall to 59 from the January reading of 59.4, but that would still indicate expansion in the sector.
World markets:

Oil for April delivery slipped $1.01 to $101.22 a barrel.
Gold futures for April delivery fell $14.70 to $1,423 an ounce. On Wednesday gold hit an intraday all-time high of $1,441 an ounce, before settling at a fresh record of $1,437.70 an ounce.
The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 3.53% from 3.46% late Friday.

-- ECB staff sees 2012 GDP 0.8% to 2.8%, Dec forecast 0.6% to 2.8%

• Exports shld continue to be helped by global recovery;
  
• High biz confidence may help econ;
  
• Very accommodative monpol stance;
  
• Recovery to be dampened somewhat by bal sheet adjust.

• To continue 1-week, 1-mo ops fixed, ful allot;
  
• To conduct 3-mo ops Apr,May,Jun fixed rate full all;
  
• 3-months fixed at avg rate of mros over life of ops;
  
• Provision of liquidity to be adjusted as apporpriate;
  
• All nonstandard measures temporary;
  
• To continue to monitor all devels very closely.
  

• BOE Bean: Inflation Next Yr May Be More Persistent Than BOE F'cast;
• BOE Bean: Must Weigh Up Inflation Risk Vs Down Growth Risk;
• BOE Bean: Gradual cpi fall allows faster spare cap reduction;
• Bean: BOE Remit Allows Temporary CPI deviations from target;
• BOE Bean: UK recovery still faces significant headwinds;
• BOE Bean:if recovery weak, medium term CPI could be sub-target;
• BOE Bean: banking sector likely to be brake on recovery;
• BOE Bean: Fiscal consolidation likely to weigh on demand;
• BOE Bean: Oil. metals prices more likely to remain elevated;
• BOE Bean: Risk of oil price spike due MENA turmoil;
• BOE Bean: Oil spike would be another headwind for UK recovery;
• BOE Bean:price pass-through from sterling larger than expected.

AUD/USD continues to rise, heading for offers/resistance ahead of $1.0200. Rate printed session high on $1.0184. Larger offers seen layered above from $1.0200 to $1.0250. Aussie trades $1.0181/83.

Data released:
07:00     Germany     Retail sales (January) real adjusted    1.4%    0.3%    -0.3%
07:00     Germany     Retail sales (January) real unadjusted Y/Y    2.6%    1.7%    -1.3%
08:45     Italy     PMI services (February)    53.1    51.1    49.9
08:50     France     PMI services (February)    59.7    60.8    57.8
08:55     Germany     PMI services (February) seasonally adjusted    58.6    59.5    60.3
09:00     EU(17)     PMI services (February)    56.8    57.2    55.9
09:00     Italy     PPI (January)    1.1%    0.9%    0.6%
09:00     Italy     PPI (January) Y/Y    5.1%    4.6%    4.6%
09:30     UK     CIPS services index (February)    56.2    54.2    54.5
10:00     EU(17)     Retail sales (January) adjusted    0.4%    0.2%    -0.4 (-0.6)%
10:00     EU(17)     Retail sales (January) adjusted Y/Y     0.7%    0.3%    -0.9%
10:00     EU(16)     GDP (Q4) revised    0.3%    0.3%    0.3%
10:00     EU(16)     GDP (Q4) revised Y/Y    2.0%    2.0%    2.0%

The euro declined against the dollar, falling from its strongest level in almost four months, before the European Central Bank announces a decision on interest rates.
ECB policy makers will leave their main refinancing rate unchanged at a record low of 1%, according to all economists in a survey, while central bank President Jean-Claude Trichet may indicate future policy at a press conference that follows the decision.
The ECB, which aims to keep annual gains in consumer prices to just below 2%, will publish inflation projections for 2011 and 2012 today after its monthly policy meeting.
The franc erased a decline against the euro after Swiss central bank Vice Chairman Thomas Jordan said there is no need for intervention at the moment. Also he noted that Swiss franc at very strong level at the moment.

EUR/USD rose to $1.3880 before tested session lows around $1.3830. Rate failed to break above the resistance/offers at $1.3880 and retretaed to $1.3859.

GBP/USD initially consolidated within the $1.6300/30 range before weakening to $1.6250.

USD/JPY remains within the Y81.70/90 range.

The main event of Thursday is set to be the European Central Bank meeting where the announcement is due at 1245GMT.
ECB President Trichet's press conference is at 1330GMT..
Jobless claims due to come at 13:30 GMT too.

EUR/GBP following the euro-dollar rise. Cross extending its recovery off earlier lows at stg0.8480 to stg0.8535. Next resistance seen at stg0.8550/55.

AUD/USD rises, currently holding around session high on $1.0177. Rate trades a bit lower Asian highs of $1.0180. Offers await towards $1.0200 and very heavy ahead of $1.0250.

The euro hovered near a four-month high against the dollar on Thursday on expectations the European Central Bank will move towards an eventual rate hike.
With many market players already counting on the central bank to send strong signals that it will raise rates to counter inflation, there is a risk the euro will slip after an ECB meeting on Thursday, some traders said.

Some market players think the bank will stop supplying three-month liquidity in the second quarter, switching the operations back to capped-limit, variable rate tenders - a step in the phasing out of crisis support that could lead to a rate hike.
But others see the chance of the bank extending the measure in light of lingering worries about bank funding in some euro zone periphery countries -- an outcome that could push back market expectations of a rate rise.
"I think the euro rally will fizzle after the ECB today. There has been a lot of hype in the market on the ECB for some time, so I expect the euro to lose steam pretty much regardless of what the ECB does today," said Teppei Ino, currency analyst at the Bank of Tokyo-Mitsubishi UFJ.

GBP/USD corrected to $1.6261, as the EUR/GBP broke above resistance at stg0.8525 to extend its recovery off earlier lows at stg0.8480. Below $1.6260 rate can ease toward $1.6250 (stops below). Key support noted at $1.6246 (76.4% retrace of Wednesday's move up from $1.6216 to $1.6344). While rate holds above here seen keeping positive tone alive.

Fourth real GDP unrev +0.3% q/q, unrev +2.0% y/y, Eurostat reported on Thursday.

Retail sales in came in a little weaker than expected in January, rising 0.4% on the month versus calls for a 0.5% increase. 

Taking into account December's upward revision, January's rebound lifted the annual change to +0.7%.

00:30   Australia Trade Balance 1.87

The dollar fell against most of its major counterparts, reaching the weakest level versus the euro in almost three months, as oil rose above $100 a barrel for a second day amid unrest in North Africa and the Middle East.
Crude oil for April delivery climbed as much as 2.8 percent to $102.37 a barrel in New York as turmoil in North Africa and the Mideast spread, fueling concern supplies will be disrupted.
Libyan forces loyal to Muammar Qaddafi counterattacked rebels in the east coast, where much of the country’s crude is refined or shipped abroad.
The euro gained versus most major currencies after a report showed European producer-price inflation accelerated more than forecast in January, adding to speculation the central bank will signal tightening monetary policy at its meeting tomorrow. 
The euro erased early losses after factory-gate prices in the euro region jumped 6.1 percent from a year earlier, following a 5.3 percent rise in December, the European Union’s statistics office in Luxembourg said today. That’s the fastest since September 2008. 
New Zealand’s dollar was the worst major performer after the prime minister said he expected an interest-rate cut. The Swiss franc rose to a record versus the greenback.