Oversold risk sentiments recover mildly today as markets are calming down from nuclear crisis in Japan and got some help from a relatively more upbeat Fed statement. DOW managed to pared most of the intraday losses and closed just down -1.15% overnight. Japanese Nikkei also recovered after yesterday's record selloff and is back above 9000 level. Dollar is weak in general against Euro, Swissy and Yen even though it's maintaining gains against Aussie and Loonie. In particular, USD/CHF remains soft after making new record low at 0.9140 yesterday while USD/JPY is still on the way to 80 psychological level.
As 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.
Euro was firm against dollar but failed to stand firm above 1.4 psychological level so far. EUR/USD retreats mildly in Asia today on news that Moody's downgraded Portugal rating by two notches to A3. The rating agency noted that while the EFSF may lead to a "reduction in financing costs", there are still uncertainties on whether the Portuguese government is able to "re-access the capital markets and on what terms".
On the data front, UK job data will be a focus in European session. The pound is the relatively weaker European major, in particular against Euro. ECB has already signaled a hike in April even though recent events in Japan raised some uncertainties on it. BoE hike, on the other hand, is even more uncertain. UK claimant count is expected to rise 1.3k in February. Other data to be released include Eurozone CPI final and Swiss ZEW. From US, new residential construction, PPI and current account will be featured.
GBP/CHF's fall from 1.5689 extended further to as low as 1.4687 yesterday and remains week. Corrective rebound from 1.4399 has completed with three waves up to 1.5689 already and fall from there should now extend for a retest on 1.4399 low in near term. We'll stay bearish in the cross as long as 1.4889 resistance holds.
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