Hemorrhaging Resumes

The dollar is in a relatively narrow range against the yen(~JPY107.25-JPY107.95). The week's low was set closer to JPY107, where a $1.4 bln option is set to expire today. Yesterday's rejection of the JPY108.70 area left a bearish shoot star candlestick in its wake, but follow-through selling has been minimal. A break of JPY107 could signal a test on the JPY106.50 area. There is a $1.4 bln expiring option at JPY107.50 and a $2 bln option at JPY108.00. For the past three sessions, the Australian dollar (FXA) has been knocking on the $0.6200 area but was unable to close above it. It is pulling back today, reaching almost $0.6050.Support is seen near $0.6000 but the (38.2%) retracement of the bounce that began from near $0.5500 on March 19 is found near $0.5945. The Chinese yuan (CYB) had been in a narrow range for the past two sessions but widened today as the dollar rose to a five-day high near CNY7.1065. For two weeks now, the dollar has been in a range between CNY7.05 and CNY7.1250.


Italy and the Netherlands are extending their shutdowns, as the manufacturing PMIs give a sense of the economic hit. Italy's PMI fell to a record low of 40.3 from 48.7. Unexpectedly the Dutch manufacturing PMI eased to 50.5 from 52.9. However, that was the pocket of good news. Germany's manufacturing PMI was revised to 45.4 from 45.7 of the flash report and 48.0 in February. It has not been above 50 since December 2018. France's PMI edged up to 43.2 from the flash report of 42.9. It was just below 50 in February. Rounding off the large EMU members, Spain's manufacturing PMI fell to 45.7 from 50.4. The aggregate EMU reading fell to 44.5 from 49.2 in February. The flash estimated was 44.8. 

Germany reported a 1.2% jump in February retail sales. The median forecast in the Bloomberg survey anticipated a 0.1% rise after a 1% rise in February. And sticking with the counter-intuitive meme, Italy reported a small decline in February unemployment (9.7% from 9.8%), while economists had forecast an increase. We would not make much of these reports as the underlying theme is one of a deep contraction.  

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Read more by Marc on his site Marc to Market.

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