Key Overnight Developments

• UK Retail Sales Rise on Easter Boost, House Prices Slump
• Japanese Corporate Prices Underperform, Reinforce Deflation
• Australian Business Confidence Edges Lower in March

Critical Levels

euro open 04132010 1

The Japanese Yen outperformed in Asian trade, rising against the spectrum of its major counterparts as stocks sold off, boost demand for the safety-linked currency. The Euro slid 0.1 percent against the US Dollar ahead of a Greek bond auction (see below). The British Pound followed the single currency, mirroring the 0.1 percent decline against the greenback. We remain short EURUSD and GBPUSD.

Asia Session Highlights

euro open 04132010 2

UK Retail Sales surged 4.4 percent in March according to a report from the British Retail Consortium. BRC Director General Stephen Robertson struck a cautious tone in the statement accompanying the release however, saying, “These are strong figures – the best total sales growth since April 2006, but they would have been only half as good without the distorting effect of Easter.” Indeed, the holiday began a week earlier in 2010 compared to the previous year, putting it in March rather than April. Meanwhile, UK House Prices weakened according to a survey from the Royal Institution of Chartered Surveyors (RICS). The report showed that real estate agents reporting higher prices outnumbered those reporting falling ones by just 9 percent in March, the smallest margin in eight months.

Japan’s Domestic Corporate Goods Price Index fell 1.3 percent in the year to March – larger decline than the 1.1 percent drop economists expected ahead of the release – reinforcing deflationary pressure on overall prices and underpinning expectations for a dovish Bank of Japan in the foreseeable future.

A gauge of Australian Business Confidence fell for the first time in three months in March according to figures from the National Australia Bank, although the print at 16 came in well within the recent range of outcomes that has held since August so it’s likely too early to draw any firm conclusions from the outcome.

Euro Session: What to Expect

euro open 04132010 3

The economic calendar is unlikely to prove market-moving with the data docket featuring ample but relatively lightweight set of scheduled releases, opening the door for risk sentiment to remain the dominant driver of currency markets in European trade.

Indeed, all eyes are likely to be focused on the outcome of a Greek bond auction as the debt-ridden southern European nation plans to sell 1.2 billion euro in 26- and 52-week bills in a bid to finance its gaping public deficit – the largest in the EU – after the region’s policymakers pledged $45 billion euro to an IMF-assisted rescue package to be activated should Athens fail to get what it needs from the market.

The UK Trade Balance deficit is set to narrow to -7.4 billion pounds in February, with import readings likely to have tracked lower as the British Pound sank 3.7 percent against a trade-weighted average of its top counterparts, marking the largest decline in 15 months and weighing on UK consumers’ purchasing power of foreign goods.

For real time news and analysis, please visit

To receive future articles by email, please contact Ilya at