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• More from the Fed’s Duke: Fed may hold mortgage-backed bonds longer
• Fed’s Duke: February jobs report ‘strong in a number of dimensions’ but only one datapoint
• China CPI and PPI recap – If the CPI sustains above 3.5% expect further tightening
• New political party in Germany – their aim is dissolution of the euro
• TPG to buy Australian poultry business for around $880m
• Data – Saturday release: China February PPI -1.6% y/y (vs. -1.5% y/y expected)
• Data – Saturday release: China February CPI 3.2% y/y (vs. 3.0% y/y expected)
• ForexLive Americans wrap: An even better day if your job was as a US dollar bull
• One for the ladies, and one for the road
• COT report: Speculative market loading up on US dollars
• CFTC positioning data out shortly
• WSJ’s Hilsenrath: Job gains unlikely to alter Fed’s course
• It’s been a good year for forex trading
• Euro pops above the post-NFP highs
• More music for International Women’s Day
• Biggest mover in the forex market this week: AUD/JPY
• My own Women’s Day tribute
• USDJPY and EURJPY lower but finding a few buyers
• Italy: ratings summary
• EURJPY sharply lower at 124.25

More from the Fed’s Duke: Fed may hold mortgage-backed bonds longer Posted: 08 Mar 2013 08:07 PM PST The Fed may consider holding MBS longer on its balance sheet to minimize market disruption instead of selling them as it exits easy monetary policy in the future the broad recovery in U.S. housing was likely to strengthen as an improving economy unleashed pent-up demand but tight credit conditions could be a drag on the upswing  the improving housing market shows that the central bank's $85 billion in monthly purchases are working to boost the economy "I am optimistic that the housing recovery will continue to take root and expand," Reuters San Franciso Chronicle

Fed’s Duke: February jobs report ‘strong in a number of dimensions’ but only one datapoint Posted: 08 Mar 2013 07:32 PM PST Elizabeth A. Duke is on the Fed’s Board of Governors and has an FOMC vote. She’s a centrist/dove. Duke was speaking at a mortgage banking conference and took audience questions. She also said: Major economic indicators this year have been on the strong side and she’d like to see the improvements continue

China CPI and PPI recap – If the CPI sustains above 3.5% expect further tightening Posted: 08 Mar 2013 06:46 PM PST China February CPI +3.2% y/y (vs. +3.0% expected); the CPI is now at a 10-month high Food price component +6.0% y/y (a 9-month high) CPI +1.1% m/m (vs. +0.8% expected) Its unclear how much distortion was cause by the late Lunar New Year (February this year, January last year) “Consumer-price gains may moderate in March as the impact of the holiday fades and better weather boosts production of agricultural products including vegetables, the statistics bureau said in a separate statement on its website.” China has set an inflation goal of 3.5% for this year (compared to  2.6% in 2012) The nation may need to raise interest rates should CPI gains stay at more than 3.5 percent for three months, Chen Dongqi, a senior researcher affiliated with China's top planning agency, said March 7. Qian Yingyi, an academic adviser to the central bank, said a rate increase can't be ruled out for 2013, the Shanghai Securities News reported March 6. - On the PPI: Down 1.6% in February y/y (also -1.6% in January), the 12th consecutive decline +0.2% m/m for February - Reuters Bloomberg

New political party in Germany – their aim is dissolution of the euro Posted: 08 Mar 2013 06:24 PM PST Alternative für Deutschland (Alternative for Germany) has been founded by “ a collection of some of the country’s top economists and academics”. Their aims: “the dissolution of the euro in favor of national currencies or smaller currency unions” an end to aid payments Dismantling of the European Stability Mechanism bailout fund Better hit the shopping malls and start kissing babies chaps. Germany’s New Anti-Euro Party

TPG to buy Australian poultry business for around $880m Posted: 08 Mar 2013 06:15 PM PST TPG paying around $A880m Inghams family to retain property assets and the racing business More here (may be gated) TPG signs $1bn deal for Inghams TPG to Buy Inghams Enterprises

Data – Saturday release: China February PPI -1.6% y/y (vs. -1.5% y/y expected) Posted: 08 Mar 2013 05:37 PM PST China February PPI in at -1.6% y/y (vs. -1.5% y/y expected) Prior was -1.6% y/y Preview (with past results graph) posted here

Data – Saturday release: China February CPI 3.2% y/y (vs. 3.0% y/y expected) Posted: 08 Mar 2013 05:36 PM PST Prior was 2.0% y/y Preview (with past results graph) posted here February at 3.2% y/y has come in a little above expectations, indicating inflation in China is still something the PBOC is going to be monitoring closely. The CPI is expected to fall back a little in March, though, as food prices have since fallen.

ForexLive Americans wrap: An even better day if your job was as a US dollar bull Posted: 08 Mar 2013 01:27 PM PST Non-farm payrolls 236K vs 165K exp Canadian employment 50.7K vs 8.0K exp Canada housing starts 180.7K vs 175K exp US Jan wholesale inventories +1.2% vs +0.3% exp Traders see early 2015 US rate hike Hilsenrath: Job gains unlikely to prompt taper S&P 500 up 0.4% to 1550; up 2.2% on the week CAD leads, JPY lags On the week, AUD leads and JPY lags Even for a great non-farm payrolls report, the reaction was impressive. EUR immediately fell 75 pips and later added 75 more. Cable dropped more than a big figure and USD/JPY jumped over 96.50. The weekly CFTC numbers show traders licking their chops on USD longs so it wasn’t a big surprise that they jumped on the upbeat payrolls data. The Canadian dollar resisted the US dollar surge — at least initially. After falling to 1.0240 on the strong Canadian jobs report, USD/CAD slowly clawed back to unchanged on the day at 1.0291. Look out for Chinese data on the weekend — CPI, retail sales, industrial production. Also remember that the US and Canada move their clocks forward one hour this weekend.

One for the ladies, and one for the road Posted: 08 Mar 2013 12:57 PM PST So nice to see the responses to International Woman’s Day. Have a great weekend.

COT report: Speculative market loading up on US dollars Posted: 08 Mar 2013 12:36 PM PST Futures market speculative positioning data from the CFTC as of the close on Tuesday: EUR net short 26K vs short 9K prior JPY net short 73K vs short 65K prior GBP net short 44K vs short 36K prior AUD net long 7K vs long 26K prior CAD net short 46K vs short 21K prior NZD net long 19K vs long 20K prior CHF net short 11K vs short 8K prior The US dollar gained ground against all seven currencies. The moves away from AUD and CAD were particularly violent. Canadian dollar positioning has gone from the longest on record to the shortest since early 2007 in the span of six months. CAD positioning CFTC commitments of traders

CFTC positioning data out shortly Posted: 08 Mar 2013 12:26 PM PST Here’s a recap of last week’s changes. EUR net short 9K vs net long 19K prior JPY net short 65K vs 66K prior GBP net short 36K vs 23K prior AUD net long 26K vs 44K prior CAD net short 21K vs net long 19K prior

WSJ’s Hilsenrath: Job gains unlikely to alter Fed’s course Posted: 08 Mar 2013 12:20 PM PST The WSJ Fedwatcher interviewed uber-dove Evans, from the Chicago Fed, who says there is still a long way to go. “We need job growth of around 200,000 per month over a six-month period. But that’s not all. We also need to see output growth above trend, reinforcing that job growth,” Evans said. Hilsenrath offers his own take as well: Though the Fed looks sure to continue its programs in the short-run, Friday’s report could spur speculation in markets that the central bank might ultimately pull back sooner than now expected. So far, that doesn’t seem to be the case with the S&P 500 up 6 points today. Right now it’s an absolute dream scenario for the stock market with the economy improving and the Fed continuing to push on the gas pedal.

It’s been a good year for forex trading Posted: 08 Mar 2013 11:45 AM PST Here’s a request from twitter. 2012 was a sort-of trendless year, not a great environment for trading. This year has been outstanding, especially in the yen crosses.

Euro pops above the post-NFP highs Posted: 08 Mar 2013 11:32 AM PST The temptation is to say it’s late-day position squaring as the euro climbs above 1.3008. But what it looks like to me is some momentum trades jumping in. The Italian downgrade was bad news yet the euro held the post-NFP low of 1.2955 — that’s a positive signal and a reason to cover if you’re short.

More music for International Women’s Day Posted: 08 Mar 2013 11:08 AM PST By request. This one as well, for the country girls.

Biggest mover in the forex market this week: AUD/JPY Posted: 08 Mar 2013 10:53 AM PST AUD/JPY is the best performer this week, gaining a whopping 2.78% or 263 pips. The drivers for the rebound in the Aussie this week were the RBA decision to leave rates unchanged and the slight beat on GDP. The yen, meanwhile, continues to crater. The weekly chart shows a bullish reversal after last week’s drop below 93.00. Resistance is almost nil until the 2008 high near 104.50. AUDJPY weekly I’m not terribly bullish on the Australian dollar but it’s a difficult currency to bet against (considering the carry) and it’s shown some resilience this week.

My own Women’s Day tribute Posted: 08 Mar 2013 10:20 AM PST Well said Adam. Years ago as a trainee dealer ( yep, I can just about remember that far back ! ) I worked with one of the very first women in the London FX market and they have sadly been a rare breed since. So before I go, and to keep it all things UK, here’s a musical offering from one of my fave English singers and apt given the many moments of currencies falling today. I’m sure Adam will be posting lots more before the day is out. Have a great week-end everyone, and thanks for all your great input and feedback this week as always.

USDJPY and EURJPY lower but finding a few buyers Posted: 08 Mar 2013 09:51 AM PST The sell- off has added pressure to cap any EURUSD rally Market caught a little bit long on both JPY pairs Now 95.55 and 123.90 but finding a few buyers down here giving a base to EURUSD  for the moment

Italy: ratings summary Posted: 08 Mar 2013 09:28 AM PST Fitch’s downgrade to BBB+  from A- with a negative outlook is same level as S&P but Moodys are already one rating below at Baa2 also with a negative outlook

EURJPY sharply lower at 124.25 Posted: 08 Mar 2013 09:24 AM PST Low posted 124.20 Currently 124.35 Not seeing those buyers holding it up too well so far EURGBP interestingly unmoved by the news at 0.8687 still

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