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European Morning Wrap: Betta Day For The Euro Zone Peripheries

|Includes: FXB, Invesco CurrencyShares Euro Trust ETF (FXE), FXY
  • Earthquake off the West coast of Northern Sumatra, 8.7 magnitude. Indian ocean-wide tsunami watch in effect
  • ECB's Coeure: Market conditions normalised after LTRO operations, particularly in sovereign debt and repo market
  • More Coeure: Situation of recent days shows normalisation fragile
  • Spanish/German 10 year govt bond yield spread narrows to 405 bps from early 424
  • Italian/German 10 year govt bond yield spread narrows to 372 bps from early 395
  • Spain's IBEX up +1.9%, Italy's FTSE MIB up +2.25%
  • Italian auction results
  • Bank of Italy: Higher yields at short-term bill auction reflect return of tensions on euro zone sovereign bond markets
  • German auction results
  • Spain February wda industrial output -5.1% y/y. Whilst only fractionally weaker than Reuter's median forecast of 5.0%. still exceedingly poor
  • French govt spokeswoman: France considers fears about Spain's economic health to be excessive
  • German FinMin spokesman: Regret markets not taken into account Spanish reforms. Welcomes fact Spanish govt has emphasized its' commitment to reforms
  • Greek bank plan announcement could be delayed, Imerisia says
  • Japan FinMin Azumi: Sees signs of economic rebound
  • Cannabis-growing plan for Catalan town fails to reach vote threshold - Guardian

Better day for the euro zone peripheries (see govt bond yield spreads vs Germany/stock market levels above) has helped support the single currency.

EUR/USD (NYSEARCA:FXE) up at 1.3135 from early 1.3095 having been as high as 1.3156 at one stage. It's hardly been a fluent move, indeed it's been extremely choppy. Having rallied early, helped in no small part by decent buying from a large US custodial, the single currency suffered a mid-morning swoon post disappointing German auction result which saw us dip back briefly below 1.3100. However as periphery stocks extended their rallies and as periphery/German bond spreads narrowed further, so the euro got it's mojo back.

USD/JPY (NYSEARCA:FXY) effectively unchanged at 80.80. Talk of Kampo on the bid down at 80.50/60 helped hold dip to 80.57.

Cable (NYSEARCA:FXB) up at 1.5915 from early 1.5875. Talk of buy orders clustered now up at 1.5950/65.