Michael Wang of CitiFX says AUD/USD remains underpinned by a variety of factors. First, there is talk of a UK bank buying an Australian financial institution. Second, "insurance companies continued to buy AUD against GBP and CHF to fulfill claims as the residual effect of the Queensland flood." In addition, Chinese stocks have risen 8 of the last 9 trading days and are nearing the year's highs.
GSI Commerce (GSIC 28.99, +9.61) is a top performer today, thanks to the decision by eBay (EBAY 30.80, -0.90) to buy the e-commerce and interactive marketing service provider for $29.25 per share. The offer represents a rich premium of about 50% over the sub-$20 price that the stock settled with this past Friday. The offer's total consideration stands at approximately $2.4 billion. eBay announced that the deal is expected to close in the third quarter and that it will be financed with both cash and debt.
EUR/USD holds $1.4093 area as the euro unable to retain its foothold above $1.4100 area. Earlier rate printed session high on $1.4116. Bids remains on $1.4080 as longs look to buy the dip but chatter suggesting some intra-day stops below $1.4070.
The absence of new trading catalysts has left stocks slog along for most of the session. Still, the tone of trade remains generally positive as most of the major sectors remain in the green.
Telecom has put together the strongest gain of any major sector. As a group telecom plays are up a 1.5%, which is triple the gain of the next best performing sector (energy, +0.5%). Nokia (NOK 8.68, +0.33) is an especially strong performer following an upgrade by analysts at Goldman Sachs.
Analysts at Goldman Sachs downgraded Marriott (MAR 35.18, -2.48), which dropped to a multi-month low earlier today. Although it has bounced up from that low, the stock is still down 5%.
The yen fell against all its major counterparts as radiation levels that can prove fatal were detected at a damaged nuclear power plant in Japan amid signs the global economic recovery is gaining momentum elsewhere.
“Dollar-yen is all about what’s happening with this power plant right now,” said Greg Salvaggio at Tempus Consulting Inc. “The claim numbers are pretty much set and insurance companies know what they’re going to have to pay so what’s happening now is there significantly growing concern on the Japanese government’s inability to contain this situation.”
The euro erased losses against the dollar after European Central Bank President Jean-Claude Trichet said inflation rates that stick above 2% would be a concern.
“Our definition of price stability is below 2 percent, close to 2 percent,” Trichet said. “Differences must be a worry because they can become persistent.”
Trichet, told the European Parliament March 21 he has “nothing to add” to his March 3 remarks when he said policy makers may raise the benchmark rate from a record low of 1 percent at their next meeting April 7.
Markets reacted to Trichet’s “hawkish” comments, said Andrew Busch, a global currency strategist at Bank of Montreal in Chicago.
The dollar earlier advanced after Federal Reserve official James Bullard said the central bank may consider scaling back its monetary stimulus.
“The economy is looking pretty good,” Bullard told. “It is still reasonable to review QE2 in the coming meetings, especially this April meeting, and see if we want to decide to finish the program or to stop a little bit short,” he said, referring to the second round of so-called quantitative easing, due to end in June.
“If you take the Fed speak, coupled with positive data surprises, that could certainly support yields and in turn support the dollar against the yen or the euro,” said Mark McCormick, a currency strategist at Brown Brothers Harriman & Co.
Consumer spending in the U.S. rose more than forecast in February as incomes climbed, helping to bolster the expansion in the world’s largest economy. Purchases increased 0.7%, the most since October, after advancing 0.3% the prior month, Commerce Department figures showed today.
Canada’s currency was the best performer against the dollar as crude oil traded near a two-week high amid concern renewed violence in Libya may further disrupt supplies.
The franc has surged 8 percent in the past year.
“Given the nuclear situation right now, I think yen as a safe haven has disintegrated and Swiss franc as the global safe haven is a much more probable trade right now,” said Tempus’s Salvaggio.
Current price: $1.6033
EUR/USD trades to $1.4112 with recent demand seen from model-driven accounts. Offers and stops around $1.4110/15 were mentioned before, but traders suggesting euro may have legs to $1.4130 or so before running out of steam.
The major equity averages are up modestly this morning. The underlying bid remains broad based as many of the market's major sectors stage gains.
Telecom is in the strongest shape of any major sector. It currently sports a 0.9% gain, which has been led by integrated plays Verizon (VZ 37.59, +0.30) and AT&T (T 29.17, +0.32).
Energy stocks are having some difficulty pushing up from the neutral line into positive territory, though. The sector's relative weakness comes as oil prices slide 1.5% to $103.80 per barrel.
"Normally, we might have seen a more vigorous rebound in real spending in February and March, but the surge in energy prices sapped household purchasing power. With energy prices seemingly stable now (barring another new shock in the Middle East), the path is clearer for a substantial acceleration in real spending in Q2."
U.S. stocks were set for a solid open Monday, as investors awaited key economic data and continue to focus on global developments.
Stocks managed to head higher last week, as investors turned their attention to strong corporate earnings and shrugged off geopolitical concerns. The Dow gained more than 3%, the S&P 500 gained 2.7% and the Nasdaq surged 3.7%.
Economy: The Commerce Department reported that spending by individuals increased 0.7% in February, topping a forecasted 0.5% rise. Personal incomes rose 0.3% in the month, matching expectations.
Additionally, the National Association of Realtors will issue its January pending home sales report at 14:00 GMT. Pending home sales are expected to increase 0.3%.
Oil for May delivery slipped 20 cents to $105.40 a barrel.
Gold futures for April delivery fell $10.60 to $1,415.60 an ounce.
The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 3.44% from 3.40% late Friday.
Sees slight lift to $1.4045 area now amid muted flows, the euro finding a base near $1.4020 area and thus reinforcing the earlier chatter of sovereign demand in that area. Offers eyed at a distant $1.4090/00. $1.4000 remains a pivot point in the pair, being the midpoint of the March range in the euro.
The dollar strengthened before data forecast to show growing U.S. consumer spending after Federal Reserve official James Bullard said the central bank may scale back its monetary stimulus.
“The economy is looking pretty good,” Bullard told reporters in Marseille, France. “It is still reasonable to review QE2 in the coming meetings, especially this April meeting, and see if we want to decide to finish the program or to stop a little bit short,” he said, referring to the second round of so-called quantitative easing, due to end in June.
Atlanta Fed President Dennis Lockhart and Chicago Fed President Charles Evans both speak today.
The yen weakened versus most of its major counterparts on signs the global recovery is gaining momentum, boosting appetite for higher-yielding investments. Policy makers should review whether to curtail plans to buy $600 billion in Treasuries because of strong economic data, St. Louis Fed President Bullard said on March 26. The euro depreciated for a second day against the dollar after German Chancellor Angela Merkel’s coalition was defeated in a regional election. Australia’s dollar advanced to its highest level since 1983.
“Commentators from the Fed have been hawkish,” said Hans- Guenter Redeker, global head of foreign-exchange strategy at BNP Paribas SA in London. Prospects for “higher U.S. rates and yields” are supporting the dollar, he said.
US events start at 1230GMT, when personal income is expected to rise 0.4% in February, as payrolls posted a solid increase, but hourly earnings were flat and the average workweek was unchanged from January. PCE is forecast to rise 0.6%, as retail sales were up 1.0% and nonauto retail sales rose 0.7%. The core PCE price index is expected to rise 0.2%. US data continues at 1330GMT with the weekly MNI Capital Goods Index, followed at 1400GMT by Pending Home Sales for February.
Slippage was extended to $1.0270 after the earlier fresh post float high of $1.0314 following the flushing of a reported barrier at $1.0300. Talk of plenty of supply now above $1.0300, but option related demand continues to be attracted to dips with further gains possible. Support eyed at $1.0250, more on approach to the session low $1.0235.
EUR/USD $1.4050, $1.4200
AUD/USD $1.0200, $1.0100, $1.0000
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