The stock market has spent the past couple of hours stuck in a sideways drift. That has made for steady gains, though.
Amid the stock market's slog, Treasuries have encountered increased selling pressure. That has taken the yield on the benchmark 10-year Note to a fresh three-week high.
Crude oil prices have turned positive after spending the morning in negative territory. The energy component was last quoted with a 0.5% gain at $104.42 per barrel.
Aussie edged to a marginal fresh high for the day around $1.0290, a handy rebound after the pare dumped to near $1.0200 earlier in the day, seemingly intent on talking out the bids and stops below $1.0200. Monday, Aussie stalled and reversed from around $1.0315 area with potential, perhaps, for a cluster of offers and stops into that area.
The yen fell to the lowest level in 10 months against the euro on speculation central banks in Europe and the U.S. are closer to removing stimulus as the global economy recovers.
Japan’s currency weakened against all of its major counterparts as the European Central Bank member Jozef Makuch said it is “highly probable” that the bank will raise interest rates next week. St. Louis Federal Reserve President James Bullard said signs of an improving economy may lead the central bank to curtail debt buying.
“The yen has come under a little bit of pressure the last couple of days alongside the move up in Treasury yields because of the recent hawkish comments coming out of the Fed,” said Omer Esiner, chief market analyst in Washington at Commonwealth Foreign Exchange Inc., a currency brokerage. “The view is becoming increasingly that Japan will lag when it comes to normalization of monetary policy.”
The euro pared losses against the dollar after U.S. consumer confidence dropped to a three-month low of 63.4, according to the Conference Board’s confidence index.
The shared currency’s strength was unfazed against the yen as Standard & Poor’s Ratings services lowered Portugal’s sovereign credit ratings to BBB-/A-3. BBB- is the lowest investment grade. Greece was also cut by S&P to BB- from BB+ and its outlook remains negative.
The ECB will lift its main refinancing rate by 25 basis points to 1.25 percent at its April 7 meeting, according to the median forecast of economists.
Europe’s rate will reach 1.75 percent by the end of this year, up from the current record low 1 percent, while the Fed will lift rates in the first quarter of next year and the Bank of Japan will leave its key interest rate unchanged.
The Nasdaq slipped to a slight loss in the first few minutes of trade, but it has since rallied to an impressive gain that has it out in front of its counterparts. The move has been led by large-cap tech plays like Qualcomm (QCOM 25.45, +1.80), Oracle (ORCL 32.93, +0.38), and Cisco (CSCO 17.31, +1.05). To be fair, though, Intel (INTC 20.16, -0.18) and Apple (AAPL 350.20, -0.24) have been a couple of the heavier drags on the Nasdaq.
Financials have been helped off of their morning lows by broader market support, but the sector is still stuck in negative territory with a 0.2% loss. Insurers have been the heaviest drags on the sector. MetLife (MET 44.10, -0.71), Aflac (AFL 52.09, -0.60), and Lincoln National (LNC 30.06, -0.19) are primary culprits.
However, regional bank shares are providing leadership to the sector. Specifically, Huntington Bancshares (HBAN 6.64, +0.07), SunTrust (STI 29.37, +0.27), and Fifth Third (FITB 13.88, +0.10) have all been bid markedly higher.
Many foreign bank stocks were hit overnight in response to concerns about possible capital raises after Italian lender UBI Banca announced plans to raise 1 billion euros.
CIBC says Mar's confidence drop was "a sign that rising gasoline prices, and a range of other uncertainties are taking a toll on the consumer." Decline came fter five increases and "reflected a sharp decline in the expectations subcomponent to 81.1 from 97.5 which more than offset a modest 3 point increase in consumers' assessment of their present situation. In a sign higher gasoline prices may be taking a toll on a sector that has shown recent strength, auto buying plans eased."
"The expectations index, which is very sensitive to gasoline prices, plummeted to 81.1 from 97.5, a 16.8% drop. But the current conditions index, which tends to reflect the state of the labor market, rose to 36.9, a 28-month high, from 33.8. We feared a much bigger drop in the expectations index, following the collapse in the equivalent measure in the Michigan survey, so overall we are quite relieved." They estimate this is consistent with consumption +2%.
Selling pressure at the open has caused stocks to slide so that every major sector is in negative territory. Overall losses are relatively modest, though.
Recent headlines indicate that analysts at Standard & Poor's downgraded Greece's debt to BB- from BB+. They also dropped Portugal's debt rating from BBB/A-2 to BBB-/A-3, which is just one level above junk status.
EUR/USD $1.4235, $1.4075, $1.4000
USD/JPY Y82.00, Y81.15, Y81.00, Y80.65, Y82.50
GBP/USD $1.6250
AUD/USD $1.0250, $1.0200, $1.0195, $1.0125
U.S. stock futures were slightly higher ahead of the opening bell Tuesday, as investors awaited economic reports on consumer confidence.
Theres's still a lot of uncertainty in the market, between spreading urest in Libya and the Middle East, as well as Japan's recovery efforts and nuclear issues.
Companies: Shares of BP (BP) fell 2.5% in premarket trading after analysts at Collins Stewart reportedly downgraded the stock on concerns about its joint-venture with Russian oil and gas company Rosneft.
BP was also under pressure following a report that federal prosecutors are considering whether to pursue manslaughter charges against company managers for decisions made before the Deepwater Horizon oil rig exploded and killed 11 workers last year.
Apollo Group (APOL) was under pressure, with shares falling nearly 8% in premarket trading after the education provider lowered its outlook.
Shares of Lennar Corp (LEN) rose nearly 3%, after the homebuilder swung to a profit in the first quarter.
News Corp (NWS, Fortune 500) was also in focus amid speculation that the publishing company is in talks to hand over control of Myspace to Vevo.com, the online music website.
Economy: US data starts at 1400GMT, when Conference Board consumer confidence is expected to fall to an index reading of 64.0 in March after jumping to a three-year high in February.
USD/JPY continues to go higher, holding around new session highs at Y82.44 currently. Offers were mentioned earlier between Y82.45/50 area, a bit lower the 100 day MA at Y82.62.
Data released
08:30 UK M4 money supply (February) final -0.3% -0.9% 0.8%
08:30 UK M4 money supply (February) final Y/Y -1.5% -0.9% -1.7%
08:30 UK Consumer credit (February), bln 0.8 -0.2 -0.3
08:30 UK GDP (Q4) final -0.5% -0.6% -0.6%
08:30 UK GDP (Q4) final Y/Y 1.5% 1.5% 1.5%
08:30 UK Current account (Q4), bln -10.5 -10.5 -8.7 (-9.6)
The euro appreciated against the yen on speculation European Central Bank officials speaking today will reiterate their willingness to raise borrowing costs.
ECB council members Jozef Makuch and Yves Mersch are due to speak later today.
“The euro is squeezing up as people are concentrating again on the prospect of widening rate spreads,” said Jeremy Stretch at Canadian Imperial Bank of Commerce. “There are expectations that the ECB comment we will get today from Mersch and Makuch will play in to the rate-hiking story.”
“The yen is weakening as expectations of monetary tightening at the other major central banks except the Bank of Japan are starting to build,” said Lee Hardman, a strategist at Bank of Tokyo-Mitsubishi UFJ Ltd..
Europe’s common currency has strengthened 5.2% versus the dollar this year, and 6.6% against the yen, as euro-region policy makers stiffened their anti-inflation stance.
The ECB will lift its main refinancing rate by 25 basis points to 1.25% at its April 7 meeting, according to the median estimate of economists.
The ECB’s rate will reach 1.75% by the end of this year, up from the current record low of 1%, while the U.S. Federal Reserve will lift rates in the first quarter of next year and the Bank of Japan will leaves its key interest rate unchanged, separate surveys show.
EUR/USD rose strongly to session highs on $1.4145/50 before offers on $1.4150/60 capped the rally and rate fell back to $1.450.
GBP/USD weakened after testing strong resistance at $1.6040 and currently holds around session lows on $1.5966.
USD/JPY held within the Y81.50/80 range before rising up to Y82.24.
US data starts at 1400GMT, when Conference Board consumer confidence is expected to fall to an index reading of 64.0 in March after jumping to a three-year high in February.
EUR/JPY refreshed session highs around Y115.74. Stops now reported in the Y115.95-Y116.25, which if flushed opens a bigger move to Y117.00/05. Cross trades Y115.55.
EUR/USD remains under pressure, as rate extends its corrective pullback off earlier highs at $1.4140/45. Euro declines amid Fed Bullard's comments as to Fed's monpol prospects. Rate broke below $1.4082 (76.4% $1.4061/1.4149) and then refreshed session lows around $1.4050.
GBP/USD holds around $1.5992 after rate exposed small bids on $1.6000. Earlier rate printed session high on $1.6040 (strong resistance), but failed to go higher. Strong offers at $1.6050/60.
USD/JPY rises amid notable buying from UK and Swiss names, which has taken the pair to a fresh high of Y81.96. Offers remain towards Y82.00 with a break above will trigger some stops. Stronger stops seen towards Y82.30. Larger offers await at Y82.50 with more stops around Y83.00.
The dollar gained on the yen as the gap between U.S. and Japanese yields widened in the greenback's favor, but the greenback may be vulnerable to renewed selling, especially if forthcoming U.S. jobs data disappoints.
Some upward pressure on the dollar and U.S. yields was sparked by the Philadelphia Federal Reserve president, who on Friday said the central bank would have to tighten policy soon to avoid inflation.
But analysts said the market overreacted to the comments from the Fed's Charles Plosser, a traditional policy hawk, and noted that recent U.S. economic data, particularly regarding the housing market, has shown signs of weakness.
While the Commerce Department on Monday said consumer spending rose more than expected in February, its eighth consecutive monthly gain, higher gas and food prices are expected to slow spending growth in the first quarter.
U.S. employment data is due on Friday, and economists polled by Reuters expect 190,000 job gain in March, steady with the 192,000 jobs added the prior month.
The market expects the European Central Bank to lift interest rates on April 7 after ECB President Jean-Claude Trichet said Monday inflation rates are above the central bank's price stability target.
But the euro gains may falter after an ECB rate hike, partly on the view that the euro zone economy is too fragile to withstand a series of interest rate hikes.
EUR/USD fell after it challenged session highs on $1.4150. Rate currently testing bids between $1.4105/00 with stops below. Rate currently trades around $1.4106.
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.
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.
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.
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.
EUR/USD: the pair become stronger in around $1,4085.
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