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| Action Insight Weekly Report | Markets Snapshot |
Yen Holds Near Term Support Despite G7 Intervention, Euro Strong on Rate ExpectationsThe triple whammy of earthquake, tsunami and nuclear crisis in Japan dominated the markets in the past two weeks and overshadowed everything else. Tremendous volatility was seen in the Japanese yen which jumped to new post war high against dollar as worry on nuclear crisis intensified, USD/JPY hit as low as 76.25 as recorded on EBS. Selloff in yen crosses also helped dollar recover against other major currencies, except versus swiss franc, which continued to made record highs against dollar and sterling. Situation in MENA region also helped drive risk aversion. However, markets reversed sharply towards the end of the week after G7 agreed on concerted intervention to reverse yen's rally. Libya's government also announced a ceasefire against the rebels. |    |
| Featured Technical Report | |
USD/JPY Weekly OutlookUSD/JPY dived to new record low of 76.40 last week but rebounded strongly on intervention to close at 80.58. Firstly, the break of 80.29 and 79.75 key supports indicate long term down trend resumption. Secondly, while the rebound from 76.40 was strong, it's still limited well below 84.49 key near term resistance and thus, there is no indication of reversal. Hence, while some consolidations would be seen above 76.40 first, we'd continue to favor a downside breakout eventually to extend the long term down trend. Below 79.74 minor support will turn bias back to the downside for 76.40 first. |
| Special Reports |
G-7 Engages in Joint Intervention, Short-term Positive for USDJPY and JPY-CrossesJapanese yen fell from a post-war high against the US dollar after G-7 countries pledged to have joint intervention on the currency market. This is the first joint intervention since September 2000 when the Group bought the euro as it slumped in the second year of existence. The collaboration would be helpful if the Group manages to weaken the yen. SNB Pauses Again. Raises Growth And Inflation ForecastsAs widely expected, the SNB left the 3-month Libor target at 0-0.75%. Although the growth momentum has remained robust, inflation pressures have been mild. Moreover, strength in Swiss franc has offset the effects of accommodative monetary measures, hence reducing the needs for tightening. Policymakers also raised growth and inflation forecasts higher than 3 months ago. Fed On Hold, Economic Assessments More BullishAs expected, the Fed left the policy rate unchanged at 0-0.25% and the asset-buying program at $600B with expiry in June. The language used in the meeting statement was more upbeat though, reflecting improvements in economic outlook since the January meeting. Fed members upgraded their assessment on the economic outlook and affirmed that they are paying ‘close attention to the evolution of inflation and inflation expectations’. Yet, there were no comments on the situation in the Middle East and North Africa nor Japan’s earthquake. |
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