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.

USD/TWD ends essentially flat

USD/TWD ends essentially flat at 34.495 vs last close at 34.494, as weakness in early session on 3.0% gain by local stocks offset by firmer USD/SGD, suspected central bank support for USD, says local bank trader. "The central bank was actually on both sides today, so the pair will remain stable," she says; tips pair in 34.400-34.600 band Monday, adds central bank will likely want to keep TWD weaker as month-, quarter-end approach to aid exporters.

Forex traders are awaiting the U.S. retail sales

Forex traders are awaiting the U.S. retail sales report at 8.30 a.m. EDT. For now, the dollar is higher versus euro and pound on renewed market pessimism, supporting flows to the safe haven U.S. currency. Thu morning, EUR/USD was at 1.2788 from 1.2854 late Wed, and USD/JPY was at 96.61 from 97.27, according to EBS. EUR/JPY was at 123.55 from 125.10. GBP/USD was at 1.3775 from 1.3884, and USD/CHF was at 1.1570 from 1.1522 Wed.

China's February trade data underscore

China's February trade data underscore view that its status as a source of regional currency stability is under pressure, says HSBC's Asian FX strategist Richard Yetsenga; "along with the normalisation in China's trade account and catch-up with weak exports elsewhere in the region, China is also facing a sharp decline in FDI flows this year and the early signs of some re-dollarisation by Chinese savers. While we expect China to persist with keeping the spot exchange rate in a narrow range for now, the calls for depreciation onshore are likely to only gather momentum." Now that JPY has begun to weaken, CNY is strongest trade-weighted currency in world, he says; "these forces should be increasingly reflected in a higher dollar/yuan NDF curve and also further declines in China's FX reserves. In sum, the market will worry incresingly about China's role as an anchor for the region." Likes 1-year USD/CNY NDFs

The correlation between UK banking stocks and sterling

The correlation between UK banking stocks and sterling seems to be working well again Tuesday. The majors UK banks are up between 5% and 10%, GBP/USD is some 3/4 cent off the day's lows despite dire manufacturing data and the pound is a little stronger against the euro at 0.9188 from its 0.9212 low. GBP/USD trades at 1.3845.

USD/PKR ends up

USD/PKR ends up at 80.72 vs 80.69 on higher oil payments. "The market received fresh orders from banks, which propelled the dollar to 80.80, but selling from exporters helped some recovery," says a dealer. "Pair to remain in a tight band unless some funds arrive from donor agencies," says an analyst, Adds currency to remain under pressure throughout the week as some $200 million worth of oil and interest payments are due.

The Brazilian real closed slightly weaker

The Brazilian real closed slightly weaker against the U.S. dollar Friday following the release of weak economic data at home and abroad.   The real ended at BRL2.3820 per dollar in trading on the Brazilian Mercantile & Futures Exchange, or BM&F, weaker than Thursday's close at  BRL2.3800.   Data released Friday did nothing to improve market mood, which remains tense amid waves of bad news coming from the U.S. and Europe.   Early Friday, much awaited economic data from the U.S. showed that unemployment soared to 8.1% in February, from 7.6% in the previous month. Although in line with expectations, the data showed the U.S. employment situation remains bleak.   Meanwhile, in Brazil, industrial production data showed signs of recovery in January but still came in lower than expectations. Brazil's industrial production rose 2.3% in January, compared to December, the Brazilian Census Bureau, or IBGE, said. Analysts polled by the local Estado news agency had forecast a rise of 8.0% in January.   Brazil's Central Bank remained on the sidelines, declining to intervene in local currency markets to stem the real's fall as it did last year.   Weak industrial production data reinforced ideas that the central bank will make a deep cut in the benchmark Selic interest rate when it meets next week. A Dow Jones Newswires survey of analysts came up with a median forecast of a 100 basis point cut from the current level of 12.75%.   Local interest rate futures contracts fell on ideas of a sharp cut.   The rate on the most actively traded futures contract, April, slid to 11.72% from 11.82%. The contracts reflect investors' expectations for interest rates at future dates.   The interbank overnight rate was 12.62%, even with Thursday's close.