Fears of devaluation in Latvia

Fears of devaluation in Latvia is putting Swedish bond
yields under pressure at the short end while longer term bonds are being hit by
concern that Friday's US payrolls data will be worse than expected after
Wednesday's ADP data, says Nordea. Swedish 2-year bond yield down one point at
1.21%, 10-year down six points at 3.72%. Swedish krona also fell sharply
against the euro after the Latvia bond auction attracted no bidders. EUR/SEK
trades at 10.8680 from 10.7486 before the auction result.

UK February retail sales

UK February retail sales hit the wires at 0930 GMT Thursday. Monument Securities says this remains an extremely enigmatic series, with anecdotal evidence from the BRC and CBI surveys frequently proving to be a poor guide, largely because neither adequately picks up the pace of internet sales. Because of this, Monument says the likelihood of a print wide of the -0.4% month-month consensus is high. The DJN forecast is -0.4% month-month, +2.5% year-year

EUR has edged higher

EUR has edged higher vs USD in generally quiet foreign exchange trading. The move appears to be largely flow-driven, says one Toronto technical analyst. "There's nothing overt I can really see," he says. Looking further out, EUR seems likely to be able to push higher in a more optimistic market environment, he says. EUR is currently around $1.3596 after pushing up to $1.3605 a few minutes back, from $1.3443 late Tues, and from $1.3653 in more turbulent trading Wed morning, according to EBS. The analyst sees trendline support at $1.3357, and resistance at $1.3788, with a break through there expediting a move into the $1.40 to $1.50 zone. USD is at Y97.20 from Y97.88, GBP is at $1.4540 from $1.4670.

EUR/CZK trades lower

EUR/CZK trades lower at 26.863-26.913 from a high of above 27.60 earlier Tuesday as it begins to look increasingly likely the government will survive today's no-confidence vote, says Patria Finance forex trader Oldrich Myslivec.  Several MPs who cast swing votes have said they'll vote in favor of Prime Minister Mirek Topolanek's government. "So now we're seeing investors close short, speculative positions," the trader says, adding that EUR/CZK to test 26.85 later today.

USD/TWD falls slightly

USD/TWD falls slightly to 33.795 vs 33.800 at both midday, last close on exporter sales near end of month, Taiex's 3.3% gain. "But the pair (would have fallen) more without (U.S. dollar) buying by the central bank," says foreign bank trader. Notes central bank suspected of having bought USD to help export sector, given recent sharp gains in TWD vs U.S. currency. Tips 33.750-33.820 range rest of session with central bank likely to continue to try to prevent a steep TWD rise.

EUR/JPY is moving toward

EUR/JPY is moving toward the top of a band that has held since Oct. '08 and while there is no guarantee this will continue to hold, a sustained break above 130.00 is unlikely this week says Mizuho Corporate Bank's Nicole Elliott. That said for a trading strategy she favors small longs at 126.90 with a stop below 123.75, adding at 127.75 for 128.50 and possibly 130.00. EUR/JPY now at 127.42.

Treasurys pare losses

Treasurys pare losses, with long-dated Tsys moving off session lows in prices, as US stock futures bounce off session highs. Losses in Tsys are also capped ahead of the Fed policy meeting next week as speculation has risen that the Fed may follow the Bank of England to buy Tsys. The 10-year note is down 4/32 to 98 21/32 to yield 3.91% while the 30-year bond is down 11/32 to 97 7/32 to yield 3.65%. S&p futures up 3.