Good morning

  High Low     High Low
EUR/USD 1.0894 1.0862   USD/ZAR 15.9200 15.6600
GBP/USD 1.3980 1.3911 GBP/ZAR 22.16 21.81
EUR/GBP 0.7825 0.7783 USD/RUB 75.66 73.56
GBP/EUR 1.2849 1.2780 USD/ILS 3.9167 3.8920
USD/JPY 113.13 112.15 S&P 500 1943 1923
GBP/CHF 1.3957 1.3881 Oil (Brent) 37.09 36.26
GBP/AUD 1.9605 1.9384 Gold 1248.0 1236.0

A quieter start to the trading day in Europe with the GBP trading just north of 1.39 handle. No this is not a recovery, rather a small pull back most probably on the back of profit taking.

All eyes on the NFP number this Friday with analysts expecting circa +190K (up from +151K in February). If this number (or close to it) does print, this will make the FED “happier” in that the February number was merely a blip and nothing to worry about. Still we are way off the +290K printed in January, then again that number reflected the increased hiring in December for the holidays. So one should expect the USD to range trade to higher (as we have seen over the past few days) as the currency dips below 1.09 (vs the EUR). If you look at the table you can see just how tight the range was in Asia which tells you how quiet markets were due to a lack of information and event risk today. I expect that to change over the coming hours as Europe begins trading. Already the EURUSD is starting to show signs of heading south as the currency tests the overnight lows.

Interesting news that the Austrians who took out CHF denominated loans (like 50-60% of Hungarians) and thus faced higher repayments after the SNB withdrew the EURCHF peg, are suing the SNB for compensation. A local court in Vienna awarded an Austrian borrower €13k after the investor sustained losses as a result of the de-pegging. The SNB has appealed and the case has now moved to the regional court for review. No doubt if that fails (the SNB’s appeal) they will appeal to a higher court and so on. In terms of the losses in a class action suit, the numbers will be easily visible given the loans and mortgage numbers are known and thus losses can easily be interpreted. Should this go the distance and the SNB lose, expect a pretty tidy sum the SNB will have to pay out and so expect some “move” in EURCHF.

The ZAR has mounted somewhat of a recovery having traded above 16 yesterday. The ZAR is currently trading circa 15.65 to the USD. I do not expect this rally to last long given the impending move in the EUR(USD). Should the USD indeed break higher (sub 1.08) the ZAR will have to react and be sold off. What is also helping the ZAR to some extent is the investors climbing on the carry trade. Be fearful of that trade given what happened the last time. However for now the trend is your friend and investors are sticking to the trade.

Have a good day ahead



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