Market News

The rapidity of the yen’s appreciation will compel other nations to help Japan weaken the currency from a postwar high that threatens a recovery from its biggest earthquake on record.
Citigroup Inc., Brown Brothers Harriman & Co., and Mizuho Securities Co. are among companies saying that Japan may elicit cooperation from major trading partners in reversing the yen’s climb to 76.36 per dollar today, eclipsing the previous high of 79.75 set in April 1995. The risk of radiation leaks from a crippled nuclear plant stoked prospects Japanese insurers and investors will redeem overseas assets to pay for damages.
Japan’s Finance Minister Yoshihiko Noda said finance ministers and central bankers of the Group of Seven industrialized nations will hold a meeting tomorrow to discuss the aftermath of the March 11 earthquake.
“Although there has been no hint of intervention yet, I still believe the probability of it happening at some point within the next 24 hours is extremely high,” Greg Anderson, a currency strategist at Citigroup in New York, wrote in a note to clients. “It appears almost certain that the G-7 will be in with a coordinated approach.”
Should G-7 nations agree that the yen’s moves are excessively volatile and disorderly, “that may lead to joint intervention by Japan, the U.S. and Europe to sell yen for dollars and euros,” Yasunari Ueno, chief market economist at Mizuho Investors, a unit of Japan’s second-largest bank, wrote in a report published today. Analysts at Nomura Holdings Inc. and Barclays Bank Plc were also among those saying intervention was likely.

EUR/USD
Offers: $1.4055, $1.4075 (option barrier), $1.4080/85, $1.4100
Bids: $1.3985/80, $1.3960, $1.3940, $1.3915/10,

USD/JPY
Offers: Y79.25, Y79.75, Y80.30, Y80.50/60
Bids: Y78.35/25, Y77.75, Y77.00, Y76.25

Energy stocks are collectively up nearly 3%, as measured by the Energy Select SPDR (XLE 75.72, +1.97). Energy issues make up this session's top performing sector. In contrast, utilities stocks continue to underperform as the only major sector that failed to stage a gain -- the Utilities SPDR (XLU 30.85, -0.14) is down about 0.4%.
Among energy plays, oil and gas exploration plays like Schlumberger (SLB 86.68, +3.58) and National Oilwell Varco (NOV 77.51, +3.11) are the top performers. As for utilities, energy generation giant Exelon (EXC 39.44, -0.51) continues to trade lower; it set a new six-month low this morning.

The dollar index remains weak this morning, which is providing strength to most commodities. In the CRB Index, 16 of its 19 components are trading higher led by sugar +3.3%, wheat +3.0% and copper +2.9%.
Natural gas futures trended higher overnight, hitting session highs an hour before pit trading began. Ahead of inventory data it was $0.03 higher at $3.96 per MMBtu. Following the data, which showed a draw of 56 bcf versus consensus of a draw down of 42 bcf, natural gas pushed to new session highs and is now +0.096 at $4.03 per MMBtu.
Crude oil is back near the $100 level as commodities are seeing a broad-based rally. Ongoing events in Japan, a weak dollar and strength in the Nikkei are providing additional strength in crude this morning. In current trade, its +2.2% at $100.13 per barrel.
Precious metals are mixed after gold erased its overnight losses. Gold moved into positive territory near the end of the overnight session and has been in positive territory since. It has pulled back somewhat, but remains above the $1400 level at $1400.40 +4.30 (+0.3%). Silver has gained modestly in recent trade, but remains slightly lower at $34.38 -0.08 (or -0.2%).

U.S. stocks were headed for a modest recovery Thursday, after two days of heavy selling, as investors gear up for several U.S. economic reports while keeping a close eye on Japan.

U.S. stocks posted steep losses Wednesday, with all three major indexes hitting their lowest levels of the year. It was an emotional sell-off, sparked by comments made by EU energy commissioner Günther Oettinger, who said that Japan's nuclear plants could be in for "possible catastrophic events."
World markets:

Economy:
After the market opens, government data on industrial production and capacity utilization in February is on tap. A business research group also releases its index of leading economic indicators, and the Federal Reserve bank of Philadelphia will release a report on manufacturing activity in its district.
Companies: Shares of FedEx (FDX) rose 4% in pre-market trading after the shipping giant issued an earnings forecast that topped analysts' forecasts and said it still expected moderate economic growth this year. FedEx is viewed as an economic bellwether because of its size and global presence.
After the market closes, athletic footwear and apparel maker Nike (NKE) will post results.
Oil for April delivery gained $2 to $99.99 a barrel.
Gold futures for April delivery rose $7.20 to $1,403.30 an ounce.
The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 3.21%.

ICE Brent premium over WTI narrows to just over $10. WTI Crude trades at $100.41 with Brent at $110.68

Data released:
08:15    Switzerland Industrial Production (QoQ) (Q4)     7.4%    4.7%    5.7%    2    
08:15    Switzerland Industrial Production (YoY) (Q4)     6.1%    6.3%    7.8%    2    
08:30    Switzerland SNB Interest Rate Decision (Mar 17)     0.25%    0.25%    0.25%

The yen fell back from a postwar high of Y76.36 per dollar on Thursday amid speculation that the ministry of finance would intervene to weaken the currency.
“We are seeing nervous movements. We will be keeping a close watch on the markets,” Yoshihiko Noda, finance minister, told reporters. He declined to comment on the possibility of yen intervention.
A stronger yen would add to the economic pain of rebuilding from the Tohoku earthquake and tsunami by hampering Japanese exports.
That led traders to speculate that the Ministry of Finance – which makes decisions on the currency – would instruct the Bank of Japan to sell yen in order to stem its rise.
France has convened a conference call of G7 finance ministers and central bankers in order to discuss the yen, raising the prospect of co-ordinated action to stabilise the Japanese currency even though officials said Japan had not made such a request. The G7 call is set for 7am Tokyo time on Friday.
Meanwhile, Eisuke Sakakibara, the man known as “Mr Yen” during his tenure as Japan’s top currency bureaucrat in the 1990s, said the Ministry of Finance should not intervene.
“Y79 is not a problem for Japanese corporations,” Mr Sakakibara told the Financial Times.
Analysts said the currency could become stronger on expectations that Japanese insurers and other financial groups would be bringing back assets from abroad to pay for earthquake reconstruction.
However, Rintaro Tamaki, the top currency bureaucrat at Japan’s Ministry of Finance, said the expectations were misguided.
“After the Kobe earthquake there was actually no yen repatriation. Many people are saying that the move in the yen is because of repatriation flows, but that is not happening among Japanese life insurers and institutional investors,” he said.

EUR/USD fell to $1.3870 before recovered to $1.3992. Later rate continued to go higher and printed high on $1.4054 before settling back to $1.4020.

GBP/USD rose from $1.5980 to $1.6170 before retreated to current $1.6117.

USD/JPY weakened to Y78.34/36.

At 12:30 GMT US Jobless claims report for the week to 12.03 comes, followed by CPI report and Industrial production data at 12:15 GMT.
Philadelphia Fed index is due to come at 14:00 GMT.

USD/JPY extended decline on talk that some cooling operations at a damaged nuclear plant have been stopped due to high radiation levels, despite other market talk that BOJ had been checking staffing of Japanese banks. Dollar has dropped back to Y78.44 and currently trades Y78.48/50.

GBP/USD extends recovery to $1.6175 and currently holds around $1.6150. Offers remain place toward $1.6180/85, a break to expose the key $1.6200 level.

Spot has moved back through $1400 on general dollar weakness. Prices posting a high of $1402.80. Resistance ahead at $1406.25 and a break there opening up again towards $1420. Gold trades $1401.10/40.

The yen strengthened against the dollar, surging to a post-World War II high, on speculation Japan will delay intervention to limit the currency’s advance as the nation struggles to avert disaster at a nuclear-power plant.
The yen soared 4.5% in 26 minutes as markets closed in New York and re-opened in Asia. The yen reached 76.36 per dollar before erasing its gains. The currency resumed its rally as Finance Minister Yoshihiko Noda said policy makers from Group of Seven nations will meet tomorrow to discuss the crisis in the aftermath of last week’s earthquake.
More than 300 workers are racing to prevent a meltdown and spread of radiation from the crippled Fukushima Dai-Ichi power station north of Tokyo, an increase from a core group of 50 engineers yesterday, Tokyo Electric Power Co. said. The nation’s most powerful earthquake on record triggered a tsunami that killed thousands and damaged the reactors’ cooling systems.
“The strength of the yen in the near term will depend heavily on the ongoing developments in the nuclear power plant,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd.. “If that situation were to escalate, then there’s a risk the yen could re-test the levels we saw overnight. The counter to that would be the risk of intervention by central banks has significantly heightened.”
The Bank of Japan sold 2 trillion yen ($25 billion) in September to slow the currency’s appreciation, its first such action since 2004.
The central bank added 6 trillion yen to the financial system in a one-day operation today, bringing total emergency injections this week to 34 trillion yen.
The Swiss franc rose versus all of its major peers on demand for a haven. The Swiss central bank left its key interest rate at 0.25% today, as expected by economists.
The Australian and New Zealand dollars weakened as the Nikkei 225 Stock Average fell as much as 5%, damping demand for higher-yielding assets.

EUR/USD fell to $1.3870 before recovered to $1.3992.
GBP/USD printed high on $1.6120 before retreated to $1.6080.
USD/JPY holds within the 150-points range, holding under pressure.

At 12:30 GMT US Jobless claims report for the week to 12.03 comes, followed by CPI report and Industrial production data at 12:15 GMT.
Philadelphia Fed index is due to come at 14:00 GMT.

• Biz confidence points to favorable developments coming mos

• Slowing exports point to slower growth in course of 2011

• Prospects for swiss eocn have improved sionce last quarter

• Emu debt problems,high oil prices pose considerable risks

• Consequences of japan disaster difficult to assess

• Geopolitical tensions lead to upside infl risks

• Rising commodity prices lead to upside inflation risks

• Survey data show swiss inflation expectations stable

• Sees 2011 inflation of around +0.8% (prev: +0.4%)

• Sees 2012 inflation of around +1.1% (prev: +1.0%)

• Sees 2013 inflation of around +2.0%

The yen reached its strongest level since 1995 versus the dollar as increased risk in Japan of radiation leaks from crippled nuclear power plants boosted speculation investors there will bring home overseas assets.
Japan’s currency gained for the fourth straight day amid speculation the strength of the yen may prompt intervention to weaken it by the Bank of Japan for the first time since September.
“The more macabre headlines you see pertaining to the nuclear reactors, the more speculation you are going to see over repatriation,” said Jessica Hoversen, an analyst at MF Global Holdings Ltd. “I think 80 is a line in the sand for the central bank.”
“There are real concerns that if it’s a disorderly move down in dollar-yen, the BOJ may start to intervene,” said Paresh Upadhyaya at Bank of America Corp.
In an attempt to slow the yen’s 15% appreciation last year, the Bank of Japan sold 2 trillion yen ($25 billion) in September in the nation’s first currency market intervention since 2004.
The euro fell for the first time in four days after Moody’s Investors Service downgraded Portugal’s credit rating, reviving concern about the region’s ability to solve its debt crisis. The company cited the nation’s “less supportive” economic environment and said its outlook remained negative given Portugal’s “subdued growth prospects” and risks that the government won’t be able to implement deficit-reduction plans.
The Swiss franc gained as violence in the Middle East and concern in Japan prompted haven-asset buying. Bahrain closed its stock exchange as clashes between security forces and anti-government protesters intensified.
Concern that violence may spread to neighboring Saudi Arabia, the world’s biggest oil producer, damped demand for higher-yielding assets and increased commodity prices. The Thomson Reuters/Jefferies CRB Index of raw materials rose 1.1% after falling 3.6% yesterday.

EUR/USD tested $1.4000 in Asia, but failed to break above and retreated to $1.3864. Later rate recovered to $1.3970.

GBP/USD printed high on $1.6130 overnight. Decline to $1.6050 was short-lived and rate back to $1.6115 before weakened to $1.5880.

USD/JPY fell to Y76.40 (1995 lows), but intervemtion concerns capped further decline.

SNB rate decision at 08:30 GMT will be the one key EU release.
At 12:30 GMT US Jobless claims report for the week to 12.03 comes, followed by CPI report and Industrial production data at 12:15 GMT.
Philadelphia Fed index is due to come at 14:00 GMT.

Majors close
Nikkei  +489  (+5.58%)  9093.72
Topix  +51  (+6.64%)  817.63
DAX -133.82  (-2.01%)  6514
CAC  -84.29  (-2.23%)  3697
FTSE-100  -97.05  (-1.70%)  5598
Dow  -242.12  (-2.04%)  11613.20
Nasdaq -50.51  (-1.89%)  2616.82
S&P500  -24.99 (-1.95%)  1256.88
Oil  +1.10%  $98.28
10-Years  -0.11  3.21%

Japanese stocks rose for the first time in five days on speculation a selloff that drove valuations to a 28-month low was excessive even as the country battles to prevent a nuclear disaster after its strongest earthquake.
Toyota Motor Corp., the world’s largest carmaker, surged 9.1 percent.
Sony Corp., Japan’s biggest exporter of consumer electronics, jumped 8.8 percent.
Mizuho Financial Group Inc., Japan’s No. 3 bank, surged 5.4 percent.
Tokyo Electric Power Co., Asia’s biggest power generator, tumbled by the daily limit for a third day after the company said today a new fire broke out at a reactor following an earthquake on March 11.
Panasonic Corp., the world’s largest maker of plasma televisions, advanced 7.4 percent to 930 yen, the biggest gain since July 2009. The company plans to boost production of dry- cell batteries in Japan and may start importing the product from overseas factories to meet surging demand for disposable batteries after last week’s earthquake, said spokesman Akira Kadota.

European stocks retreated for a sixth day as the European Union’s energy chief said Japan’s crippled Fukushima Dai-Ichi nuclear power plant risks provoking a “major disaster,” increasing concern the crisis will worsen.
BNP Paribas SA and HSBC Holdings Plc (HSBA) led banks lower as Moody’s Investors Service downgraded Portugal’s debt rating.
Automakers Renault SA (RNO) and Bayerische Motoren Werke AG (BMW) lost more than 2 percent amid speculation the Japanese crisis may hurt the economic recovery.
Sonova Holding AG (SOON) plunged the most in eight years after the Swiss hearing-aid maker cut its forecasts.
Moody’s downgraded Portugal’s debt rating by two levels, citing a weaker outlook for economic growth, risks to the government’s deficit-reduction plans and a possible need to recapitalize the country’s banks. The rating was downgraded to A3, four steps from so-called junk status.
Bourbon SA (GBB) fell 5.2 percent to 32.06 euros as the owner of the second-biggest fleet of supply and crew ships for the oil industry reported a 75 percent drop in 2010 profit.

A sell-off in U.S. stocks accelerated Wednesday, with all three major indexes ending at their lowest levels of 2011.
The Dow Jones industrial average (INDU) tumbled 242 points, or 2%, with all 30 components of the blue chip index in the red. IBM (IBM, Fortune 500), General Electric (GE, Fortune 500) and American Express (AXP, Fortune 500) led the decline. The index was down almost 300 points at its low for the day.
The S&P 500 (SPX) slipped 25 points, or 2%, to end at 1,256.88. The broad index closed 2010 at 1,257.64.
The Nasdaq (COMP) lost 51 points, or 1.9%, to finish at 2,616.82. The tech-heavy index closed at 2,652.87 last year.
Economy: The government said new home construction fell 22.5% in February, more than economists were expecting, while the number of permits for future housing construction fell 8.2% to all all-time low.
Separately, the government's Producer Price Index showed that prices at the wholesale level jumped 1.6% in February, which was much more than expected.

Comments: Rate remains under pressure after setting record lows. Initial support comes at Chf1.8980 (overnight lows), stronger one - at Chf0.8920 (record low). Resistance is around Сhf0.9060 (overnight high), then - at Chf0.9120. Stronger level comes on Chf0.9200 (Wednesday's high).

Support 1: $1.5980
Support 2: $1.5920          
Support 3: $1.5870 

Japan's benchmark stock indices ended Thursday's session lower, but well off the day's lows. The Nikkei 225 ended the seesaw session down 131.05 points, or 1.44%, to stand at 8962.67. The broader-based TOPIX was 6.57 points lower at 811.06.

The Nikkei 225 Index is down 1.48% at 8959.13, paring morning losses after Japan's economics minister Kaoru Yosano said there was no need for the government to consider intervening tosupport the stock market.
Tech stocks are the chief laggards on fears that the yen will continue to strengthen, despite the Japanese currency weakening during Asian trading on expectations that the Bank of Japan will intervene to depress the value of the currency.
Utilities and oil majors are proving key support.

08:30     Swiss     SNB press-conference         0.00-0.75%    0.00-0.75%
11:00     UK     CBI industrial order books balance (March)         -    -8%
11:00     UK     CBI industrial output balance (March)         -    23%
12:30     USA     Jobless claims (week to 12.03)         385K    397K
12:30     USA     CPI (February)         0.4%    0.4%
12:30     USA     CPI (February) Y/Y         -    1.6%
12:30     USA     CPI excluding food and energy (February)         0.1%    0.2%
12:30     USA     CPI excluding food and energy (February) Y/Y         -    1.0%
13:15     USA     Industrial production (February)         0.6%    -0.1%
13:15     USA     Capacity utilisation (February)         76.5    76.1
14:00     USA     Leading indicators (February)         0.9%    0.1%
14:00     USA     Philadelphia Fed index (March)         27.0    35.9
20:30     USA     M2 money supply (07.03), bln         -    +15.9
23:50     Japan     BoJ meeting minutes (16-17.02)