FOREX TRADING

Sunrise Market Commentary

• More details on Greek support package put bonds under pressure
  Friday, the bund came under pressure on expectations a more detailed Greek rescue package would be made public soon. Over the weekend, authorities did publish a huge €40-46B package that will go some way to ease investors’ concerns about the country. Return of risk appetite should weigh on the bunds.
• Euro rebounds on new Greek rescue plan
  On Friday, a short covering move helped EUR/USD to recoup a big part of the week losses as markets anticipated a new EU initiative to support Greece. A new plan was announced over the weekend. This triggered additional euro gains this morning. However, it is highly doubtful that the current development will mark a major U-turn for the EUR/USD cross rate in a longer term perspective. (more…)

It has been another relatively quiet week of trading, with little economic data or corporate news to provide fuel for the next big move in markets. Volumes moved back into line with three-month moving averages as traders returned from the holiday weekend basking in the afterglow of data showing jobs growth released by the US government as markets were closed last Friday. A spate of risk aversion weighed down markets mid week, as yet another round of uncertainty over Greece’s finances drove investors to take shelter in Treasuries, the dollar and gold. Despite the trouble in Europe, there was no shortage of positive news to buoy sentiment: the March ISM non-manufacturing index hit its highest level since May 2006 on Monday, while the new orders sub-index hit its highest level since August 2005. Strong March same-stores sales figures and excellent y/y comps for February Nevada casino revenue shed a positive light on consumer sentiment. The upward momentum in crude has been checked, with the contract bumping up against the $86 handle after a two-month rally up from around $71. Gold made fresh YTD highs briefly thanks to the Greece situation and ended the week at around $1,161. Hawks and doves on the FOMC continued to illustrate the state of the exit strategy at the Fed. On Wednesday , chief dissenter Hoenig said rates at 1% could still be considered "highly accommodative," while later in the week Tarullo and Lacker took a more dovish stance, with Lacker insisting that rate increases are still "over the horizon." In Washington, Former Fed Chairman Alan Greenspan made a spectacle of himself before Congress, deflecting all blame for the economic crisis and claiming that he was right "70% of the time" during his stewardship of the US economy. For the week stocks posted modest gains: the Nasdaq rose 2.2%, the S&P500 climbed 1.4%, and : the DJIA added 0.7%, briefly hitting 11,000 for the first time since Sept 2008 just before the close on Friday.

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Highlights

• Trading the potential jump in risk appetite
• Greece needs budget reform to win back confidence
• UK politics/economics may be turning favourable for GBP

Trading the potential jump in risk appetite

The 1Q earnings season kicks off next week and if the last reporting season is any indication, it should have significant implications for risk appetite. 4Q earnings were viewed as constructive for the markets as they showed the first semblance of organic growth. In other words, all of the earnings were not based on cost cutting alone but also a smart pickup in top-line activity. While cost cutting did dominate and helped overall earnings beat expectations by more than 5% in 4Q, sales figures also impressed to the upside by nearly 2%.

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