Archived IMT (2011.04.06)

U.S. Roundup & Asia Preview: A bailout doesnt have the effect it used to as EUR/USD shrugged off Portuguese request for a funds and climbed to a 14-month high; USD fell with the Fed stuck on the sidelines and a U.S. government shutdown looming; and CAD hit a 3-year high on oil and a strong PMI. In Asia/Pacific, Australia is expected to add 23.1K jobs

in March and the BOJ will announce fresh stimulus.

Portuguese PM Socrates announced he will turn to the EU for aid but the euro rallied as high as 1.4349 due to: a) an expected ECB hike on Thurs and b) an eventual bailout (most thought in June) was essentially a foregone conclusion. The market reaction is a surprise but if euro strength holds up through Thursday, it bodes well for the euro. USD struggled (gaining only against JPY) as commodities climbed and the focus shifted to budget problems. Parts of the U.S. government affecting 800k employees will shut down on Friday if legislators fail to pass a budget. The move is now highly likely and is currently weighing on the dollar but an analysis of past two shut downs (last in 1995) shows the USD has been rather indifferent. The risk is that anextended shut down will weigh on growth. CAD WAS POWERED BY Canadas manufacturing PMI. USD/CAD hit a 3-year low of 0.9568 after the Ivey PMI jumped to 73.2 from 69.3 (Exp: 65.2). The pair retraced back to 0.96 afterwards in yet another example of how this volatile indicator sparks outsized CAD moves that arent sustained. WTI hit $109 but CAD is trading more with the risk on/risk off theme than with oil at the moment.

ASIA PACIFIC PREVIEW: AUD/USD rallied to a fresh record high Wednesday after two days of declines ahead of Thursdays employment report at 0230 GMT. The market may still be priced for a slightly higher print than the 23.1K

consensus after a 10.1K contraction in Feb. This leaves AUD vulnerable

as the RBA described rates as mildly restrictive in Tuesdays rate

decision. A second negative print may prompt a rate cut later this

year while AUD bulls may start taking profits quickly after a print

near +40K. BANK OF JAPAN: decision has no fixed time but is usually delivered around 0400 GMT. A press conference follows. The yen will continue to take out stops as the BOJ announces further dovish measures.

A BoE PREVIEW TO FOLLOW LATER IN THE EVENING

By AB - AshrafLaidi.com Staff