Lots of green on the NZD/JPY chart, although GBP/JPY probably did better with pip values taken into context.

Other assets:

• Oil +14%
• Silver +15.6%
• Gold +6.6%
• S&P 500 +12%
• Nikkei +11%
• DAX +21%
• Shanghai comp +3%
• Venezuelan stock index +70.6%

• Chicago PMI 62.2 vs 63.0 exp
• U Mich final March consumer sentiment 76.2 vs 74.5 exp
• US personal spending +0.8% vs +0.6% exp
• US personal income +0.2% vs +0.8% exp
• PCE core 1.9% y/y, as expected
• Canada Jan GDP +0.1%, as expected
• Fed’s Lacker: No need for QE3
• Spain to cut ministerial budgets by 17%
• Spain deficit target of 5.3% of GDP this year
• EUR/CHF touches lowest since Sept
• Schaeuble says firewall firepower at 800 billion euros
• Lagarde blesses firewall
• ECB’s Asmussen: ECB may explore bank resolution fund
• S&P 500 gains 0.4% to 1408
• CHF leads, JPY lags

EUR/USD was fairly rangebound. An early run to 1.3367 was wiped out in short order and risk aversion and stops combind for a slide to a low of 1.3309. It was choppy but essentially flat at 1.3339.

USD/JPY ran higher in NY for the third day in a row. A pop below 82 in Europe ran some stops but macro players piled in with Japanese year end now finished sparked a rally to 82.85. Stops above 82.50 and 1.10 in EUR/JPY got things moving in the afternoon.

The stubborn cable bid evaporated early in NY after touching a 4-month high of 1.6037. Some profit-taking knocked GBP/USD down to 1.5965 before closing out very near to 1.60.

AUD was on the defensive most of the day and closes at a session low at 1.0350.

EUR/CHF touched 1.2035, perhaps making for a sleepless weekend at the SNB.

While I duck out for a few minutes to put together the wrap-up, enjoy a video clip of this fine band from England, who I’m going to see on Saturday night. I don’t have the admin rights to post the clip directly in the post but when I do, I plan to abuse that privilege.

Anyone have any good music tips? Thanks for whoever told me about the Avett Brothers last week.

USDJPY ending the week on a high note as it rallied strongly in the NY afternoon. The price finally found resistance against the 200 hour MA at the 82.87 level.    A move above this level will look toward the other highs for the week at the 83.17 and 83.37.

EURUSD

The EURUSD spent all but two hourly bars during the NY and London sessions above the 100 hour MA (@1.3327 currently).   The price also held support against the 1.3309 area which had a number of support lows during the week there.  These levels will be eyed in early trading next week.   The range for the week was an uninspiring 194 pips (after a really slow 159 pips last week). ECB meeting, ISM/PMI data, and the US Unemployment numbers next week should shake the pair up next week, or so you would think.

USDCHF

For 4 1/2 days the USDCHF traded between 0.9091 and 0.9007.  The 84 pips for that time period will have to give at some point.  The bias is to the downside after the rally attempt on Thursday held the 200 hour MA, and the rally on Friday held the lower 100 hour MA.  The only redeeming grace is a double bottom at  0.9007 (on Friday) and the EURCHF should be supported at the 1.2000 level (which should limit the USDCHF decline as well – or so you would think).   Retail Sale (Monday), PMI (Monday), CPI (Thursday) are on tap for next week.

GBPUSD

The GBPUSD broke above the two month trading range on two separate days this week. The first try was on Tuesday. That failed against the always important 1.6000 level. On Friday, the price extended above the 1.6000 level but peaked near topside trendline at the 1.6037 level. (high reached 1.60353). The price closed at 4 PM at the 1.5993 area, below the Tuesday high/above the Feb high at 1.5990.  There are many who are feeling “Why so high?”  and maybe the 5 minute chart below is showing signs of topping with the 100 and 200 bar MA coming togther and starting to turn over. Nevertheless, the early trade in the new week, may be needed to cast the final vote.

Next week, the PMI (Monday), PMI services (Wednesday), BOE Interest Rate announcement (Thursday), are event highlights next week.

AUDUSD

The AUDUSD closed below the 200 and 100 day MA (green and blue line in the chart above) for the first time since January 17th.  A trendline started at the the low going back to October 4th was broken on Thursday but failed. The trendline may be tested again on Monday and a break below may more damaging.  Conversely a move above the 100 and 200 day MAs should be a signal for the bulls to get back in.  Key time for the AUDUSD. China PMI will be released over the weekend and will cast the vote for the bulls and the bears.  The expectations is for 50.8.   The RBA will have an interest rate decision on Tuesady at 12:30 AM. Retail Sales on Monday at 9:30 PM and the Trade Balance Tuesday. 

EURJPY

EURJPY ended the week strongly – moving above the 200 and 100 hour MAs and above the channel trendline (acceleration of the trend). The good news is that is bullish. The bad news is if the acceleration does not continue and the price moves back into the channel, the market can become disappointed. Nevertheless, the week ends with a bullish bias.

From the weekly Commitments of Traders report:

• EUR net short position 89K vs 82K prior
• JPY shorts 67K vs 26K prior
• GBP shorts 11K vs 15K prior
• AUD longs 59K vs 45K
• CAD longs 23K vs 42K prior
• NZD longs 3.9K vs 4.2K prior
• CHF shorts 15K vs 11K prior

AUD/USD touched a session low of 1.0350 in a late day swoon but barriers at that level appear to be holding.

I suspect we’re seeing some AUD selling before the weekend on apprehension about China’s manufacturing PMI, which will be released on Sunday. Expectations are for a slide to 50.8 from 51.0 in February but a rumor has been circulating about a strong reading (these rumors are almost never real).

The Eurogroup has approved a Greek plan not to pay out the approximately 6 billion euros of hold outs who own Greek bonds written under international law.

I think it’s nearing the time where we stop reporting on this story. It will be in the courts for years, maybe a decade. Argentina defaulted on internationally-written bonds in 2001 and it’s still in the courts. Moreover, unless Greece decides to them out 100% (a less than 1% possibility) or the bondholders agree to the full haircut (even less likely), it will have no effect on the euro.

Two confidential EU papers obtained by the FT show that senior officials believe the LTRO has not ended the crisis but bought time for banks and governments to put balance sheets in order. They say contagion may re-emerge at short notice.

"If this window of opportunity is not most effectively used … we might have missed the last chance for a considerable amount of time," the analysis said.

• Need more robust growth before saying crisis over
• ECB loans not reaching economy yet
• Slovenia’s economy may contract 1.2% this year, urges govt to impose savings
• He spoke in an interview with Delo

WASHINGTON (MNI) – The Federal Reserve issued the following
advisory Friday:

Agencies Clarify Effective Date for Section 716 of the Dodd-Frank Act

Three federal financial regulatory agencies on Friday issued
guidance clarifying that the effective date of section 716, the
so-called Swaps Pushout provision, of the Dodd-Frank Wall Street Reform
and Consumer Protection Act is July 16, 2013. The guidance is being
issued by the Board of Governors of the Federal Reserve System, the
Federal Deposit Insurance Corporation, and Office of the Comptroller of
the Currency after receiving inquiries seeking clarification about the
effective date. Section 716 prohibits certain types of Federal
assistance, such as discount window lending and deposit insurance, for
certain uses to a swaps entity, subject to specified exceptions, with
respect to its swap, security-based swap, or other activity.

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: MK$$$$,M$U$$$,MMUFE$,MGU$$$,MFU$$$,M$$DR$]

By Joe Plocek, Alyce Andres-Frantz and Steven Levine

WASHINGTON (MNI) – The coming week opens a new quarterly period and
the key event is Easter Friday’s March employment report, where analysts
look for about a +200,000 print to confirm good growth yet do little to
resolve the debate about why decent job gains remain consistent with
slow growth. Meanwhile, market participants hope the Treasury curve can
flatten on lack of supply.

Debate in the markets will continue about whether slow growth means
additional Fed intervention, with the attendant push-pull on bonds
leaving Treasuries in their recent range. Additional mortgage
origination ahead of fee hikes and corporate supply ahead of earnings
season begins on April 10 may pressure spreads.

Goldman’s international analysts, led by Silvia Ardagna, continue
to expect higher intermediate bond yields in major economies. They said
“the broader cyclical outlook supports the case for a gradual increase
in real rates, and we expect UST 10-year to trade at 2.50-2.75% in
2012H2, with German Bunds at 2.0-2.25% over the same period.”

Whether interest rates rise much will depend on how the Fed reacts
to incoming data, analysts said. PIMCO’s position is that “The
combination of stronger economic data and rebounding inflation
expectations makes it more likely that the Fed will hint at rather than
decide on QE3 when it meets again on April 25th.”

PIMCO’s strategist Tony Crescenzi notes that when QE ends, a large
buyer disappears and “global investors will be left to shoulder the
burden” of Treasury supply. Some of these investors already have stepped
up.

Strategist David Keeble at Credit Agricole said weekly ICI data
suggest “equity outflows have moderated significantly but, somewhat
surprisingly, bond inflows appear to have accelerated” and could run to
about +$34 billion in March. Most fund inflows are “heading toward
taxable bond funds” — governments, mortgages and corporates — and this
could be a market support ahead.

Analysts at TD Securities suggest Fed Chairman Ben Bernanke “raised
the bar for inaction” in a recent speech, saying that a drop back under
+200,000 jobs per month are a problem, while +250,000 might be required
to satisfy the Fed that things are improving. TD said this changed
market thinking — more asset buys from the Fed is facing a probability
function based on payrolls rather than the On/Off approach that the
market assumed.

Other analysts disagree. Pierpont Securities chief economist Steve
Stanley said Fed doves have shifted to the defensive and hawks are
gaining. “Barring a breathtaking swing in the economic data, the FOMC is
not going to adopt QE3 or any other further expansion or lengthening of
the balance sheet,” he said.

Deutche Bank’s economists highlight “that we are now at a point in
the year where the data has often disappointed over the last decade.
Over this period U.S. data has typically beaten expectations between
November and January but have then disappointed for 8 of the next 9
months with the notable exception of May.”

The median estimate for March jobs is +200,000. RBC’s economists
said the most important data next week are Monday’s manufacturing ISM,
which could soften, and the Friday employment report. They agree “the
hurdle to please the market has increased” for jobs. They say a
ratcheting down in jobs is possible due to a reversal of weather
effects and they estimate +205,000 for March jobs.

Good Friday, also employment Friday, has an early bond close and no
trading in stocks. That should make any market reaction protracted into
the next week.

There are no Treasury auctions this week, although new 3-10-30-year
supply is announced Thursday. With April tax collections building and
Floating Rate Notes in the offing, some economists indicate there are
risks that the sizes of the sales could be trimmed.

The Fed announced a new calendar of Operation Twist buys and sales,
and will, a friendly event since they are all buys.

April 2, Outright Treasury Coupon Purch 05/15/2020-02/15/2022, $4.25-$5b
April 3, Outright TIPS Purchases 07/15/2018-02/15/2042, $1- $1.5b
April 4, Outright Treasury Coupon Purch 02/15/2036-02/15/2042, $1.5-2b
April 4, Outright Treasury Coupon Purch 04/30/2018-02/15/2020, $4.25-$5b

In total, April has $44 billion buys nad $43 billion sells in 21
operations.

Several regional Fed officials and a CFTC commissioner have
speeches interspersed during the coming period.

A calendar of upcoming market events is below:

02-Apr 1000 Mar-12 ISM Index, est 53.5
02-Apr 1000 Mar-12 Help-wanted Online
02-Apr 1000 Feb-12 Construction Spending
10.00am St Lou Fed Pres Bullard-Mar 28 remarks released
April 2, Outright Treasury Coupon Purch 05/15/2020-02/15/2022, $4.25-$5b
11.00am UST announces 4wk bills.
11.30am UST auctions 3/6m bills.
12.35pm Cleveland Fed Pres Pianalto at OH Val Econ Rdtab
4.05pm SF Fed Pres Williams at SFU.
03-Apr — Mar-12 Domestic Vehicle Sales
03-Apr 0745 31-Mar ICSC-Goldman Store Sales
03-Apr 0855 30-Mar Redbook Average
03-Apr 0945 Mar-12 ISM-NY Business Index
03-Apr 1000 Feb-12 Factory Orders
April 3, Outright TIPS Purchases 07/15/2018-02/15/2042, $1- $1.5b
11.30am UST auctions 4wk.
03-Apr 1400 — FOMC Meeting Minutes
04-Apr 0700 30-Mar MBA Mortgage Application Index
04-Apr 0815 Mar-12 ADP Natl Employment Report
9.00am USTsy’s Geithner speech, Chicago Economic Club
04-Apr 1000 Mar-12 ISM Non-Mfg Index
April 4, Outright Treasury Coupon Purch 02/15/2036-02/15/2042, $1.5-2b
04-Apr 1030 30-Mar EIA Crude Oil Stocks
11.00am SF Fed Pres Willams speech.
April 4, Outright Treasury Coupon Purch 04/30/2018-02/15/2020, $4.25-$5b
05-Apr — Mar-12 Store Sales
4.00am ABA Q4 consumer delinq data.
05-Apr 0730 Mar-12 Challenger Layoffs
05-Apr 0830 31-Mar Jobless Claims
9.10am St Louis Fed Pres Bullard speech
05-Apr 0945 01-Apr Bloomberg Comfort Index
05-Apr 1030 30-Mar EIA Natural Gas Stocks
11.00am UST announces 3/6m bills, 3-10-30y.
05-Apr 1500 Mar-12 Treasury STRIPS
05-Apr 1630 26-Mar Money Supply (M2)
06-Apr 0001 Feb-12 Monster Employment Index
8.30am CFTC’s Sommers at panel on clearing.
06-Apr 0830 Mar-12 Non-farm Payrolls etc, est +210k
06-Apr 1500 Feb-12 Consumer Credit

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$$FI$,M$U$$$,MTABLE,MAUDS$]

This is it. April and May will reveal if it’s finally, truly springtime for the US economy after the nuclear winter sparked by the credit crisis.

An unease has crept into markets over the last two weeks after 10 weeks of one-way optimism to begin 2012. Bernanke's latest comments have been foreboding and economic data has been missing estimates.

It’s important to note that the data misses have been on second-tier indicators like regional manufacturing and housing but that will change in the week ahead with the ISMs and non-farm payrolls on tap and corporate earnings close behind.

It's the start of a two-month period that is critical to the fledgling US recovery. The three biggest questions that need to be answered:

• Are recent improvements in hiring an consumer sentiment real, or skewed by good weather?
• Is housing near a bottom?
• Are we overly skeptical because of similar head-fakes in 2010 and 2011?

At the moment, Bernanke is itching to pull the trigger on more QE but a third round is unlikely to have the same positive effect. Granted, the knee jerk reaction will be to sell the dollar as QE3 is priced in – and maybe even to buy stocks — but it will be a very short-term trade.

The more lasting trade will be to sell risk assets as another downturn deals a punishing psychological blow to bulls who seem to have finally gotten the upper hand.

It's difficult to overstate the consequences if the economy stumbles:

1. The rest of the world is depending on US growth. The US is expected to be the global growth driver this year with Europe in recession, emerging markets slowing and Japan flatlined.
2. Upheaval in Washington. All bets will be off with the November elections, civil discord will spread and markets will fear the worst.
3. Stocks have more room to fall than at any time since the crisis. The S&P 500 has built in significant growth expectations, including a 13% rise in the index so far this year, this growth premium could come quickly evaporate and spark cascading losses.
4. Corporate balance sheets are in great shape and the latest CEO survey shows a willingness to invest but if the recovery doesn't come to fruition those plans will be scrapped in a flash.

From a trading perspective, expect larger than normal swings on economic data over the next two months. If the US falters, the Canadian dollar will be square in the crosshairs with its Australian and New Zealander cousins next in line. The opposite holds true if the recovery perks up.

My take is that the recovery will continue to gain strength but — just like Bernanke and the market — I will be uneasy until the strength is sustained into the spring.

Bonds are slumping badly with 10-year yields up to 2.21% from 2.15% just two hours ago. The move up may be overdone by fund managers who don’t want to show Treasuries on their balance sheets because of it was a bad quarter for bonds.

A rise above Wednesday’s highs at 2.22% could spark another round of USD/JPY buying.

COPENHAGEN (MNI) – The increase in the European financial firewall
announced Friday should clear the way for a boost in resources for the
International Monetary Fund, Olli Rehn, the EU economic and monetary
affairs commissioner, said.

“We are satisfied with this decision,” Rehn said at a press
conference following the meeting of finance ministers and central
bankers here. “I trust this decision will pave the way for an increase
in IMF resources at the IMF spring meetings,” he said.

His remarks echoed those of ECB Executive Board member Joerg
Asmussen, who spoke at the same press conference.

Finance ministers on Friday approved a temporary increase in the
lending ceiling of the combined European bailout funds to E800 billion
from E500 billion. The actual amount of funds available for new lending
were essentially capped, however, at E500 billion.

“We see this as a lasting decision,” Rehn added. “We are finally
complementing the monetary union with a truly integrated economic
union,” he said.

On other topics, Rehn said he welcomed the Spanish government’s
reaffirmation in the 2012 budget presented on Friday that it will reduce
its deficit to 5.3% of GDP this year. He said it was of “paramount
importance” that the target of 3% of GDP be reached by 2013.

–Paris newsroom; +33142715540; jduffy@marketnews.com

[TOPICS: M$$CR$,M$X$$$,MGX$$$,M$S$$$]

COPENHAGEN (MNI) – The European Central Bank is satisfied with the
Eurozone’s enlarged bailout fund and expects a boost in International
Monetary Fund resources to follow, ECB Executive Board Joerg Asmussen
member said Friday.

“Recent developments in financial markets confirm that there is no
room for complacency to establish a euro area firewall,” Asmussen said
during a press conference at the Informal Ecofin meetings here.

“In our view, the Eurogroup has today taken a significant decision
to establish European firewalls. We are as the ECB satisfied with the
decision the Eurogroup has taken,” he added.

Earlier today, the Eurogroup decided to boost the firewall to E800
billion. However, of that E800 billion, E300 billion has already been
committed to running programs. The deal might thus be criticized again
for not being powerful enough.

However, Asmussen said, “now we Europeans can travel to the meeting
of the IMF in Washington having done our homework on European
firewalls.” Additional protection should then be built via increased IMF
funds, he added.

Asmussen stressed that “no firewall at all, whatever size it has,
can substitute for reform efforts at the level of member states: a
firewall is no substitute for economic reform.”

Asked about a reaction to Ireland’s promissory note deal announced
on Thursday, Asmussen reiterated the bank’s statement that it had “taken
note” of the deal.

Looking ahead, the ECB expects that “promissory note will be
served according to the schedule that the government has set,” Asmussen
said, repeating almost verbatim the ECB’s statement from Thursday
evening. “As Ireland strives to regain market confidence, it is of the
utmost importance that the commitments of the Irish state are met
according to the standing contracts,” he added.

“I will recall that the Eurosystem has provided unprecedented
support for the Irish banking sector and the intention should be to
reduce over time the reliance of irish banks on central bank funding and
in particular on emergency liquidity,” Asmussen said.

–Frankfurt newsroom +49 69 72 01 42; e-mail jtreeck@marketnews.com

[TOPICS: MT$$$$,M$$EC$,M$X$$$,M$$CR$,MGX$$$]

COPENHAGEN (MNI) – The Spanish candidate for the European Central
Bank Executive Board has all the qualifications needed and continues to
be supported by his government, Spanish Finance Minister Luis de Guindos
said Friday.

Briefing the press following the meetings of European finance
ministers and central bankers, de Guindos said that “Spain has a
magnificent candidate for the ECB.”

ECB Governing Council member Yves Mersch, who heads the Luxembourg
Central Bank, and Spaniard Antonio Sainz de Vicuna, who runs the ECB’s
legal division, are the two principle candidates to succeed Gonzalez-
Paramo when the latter’s eight-year term on the ECB Board expires at the
end of May.

The Spanish government “continues to support” Sainz, de Guindos
said. He is a candidate “whom we believe fulfills all the conditions.”

De Guindos described his colleagues’ reaction here to the details
of Spanish budgetary policy as “positive.” People recognize that Spain
“is making a total effort from the point of view of expenditures” to
reduce the public deficit, he said.

“If countries don’t do what they have to do in terms of fiscal
consolidation and economic reforms, there is no bailout fund
sufficiently large,” he cautioned.

–Frankfurt bureau tel.: +49-69-720142. Email: dbarwick@marketnews.com

[TOPICS: MT$$$$,M$$EC$,MGX$$$,M$$CR$,M$X$$$,M$S$$$]

• Bailout has never been on the table
• Spain aims to speed budget through parliament
• Aim is for rescue mechanism not to be used
• Tapping funds would be a sign of failure (mark tape, those words will come back to bite him…)

Spain is not Greece…

Maybe that’s why he used a two-handed backhand.

What? Different Borg? Never mind…

… so do the JPY crosses

• Today’s decision significant, lasting (accept the part that expires nest year…that’s not lasting)
• EUR 800 bln enough to cope with crisis
• Euro area responded to to global calls