Currency Briefing - what you need to know for Fri March 9, 2012

The SGD-USD pair is expected to see some more volatility amidst risk sentiment fluctuation.

IG Markets Singapore said:

The US dollar still sits above the $1.25 handle against the Singapore dollar, despite an improvement in risk appetite across the region.

A Greek debt swap looks like it will achieve a 95% participation rate when figures are released tonight. This has taken the pressure off traders worried that it could have slipped into a messy default.

This relief has had a positive effect not just in Europe and on Wall Street but across Asia as another hurdle to global economic recovery is knocked down.

The greenback had broken through the $1.26 level this week as sentiment went south, over worries over Greece and a slower-than-expected growth prospects for China.

This has now eased back to $1.2526 as traders feel more upbeat. This could get another boost tonight from positive US employment numbers on non-farms payroll. But current support lies at $1.2520.

The currency pair is likely to see some more volatility as risk sentiment fluctuates with some important central bank meetings on the horizon.

RBS meanwhile noted (for 8 March 2012 trading):

Risk oriented assets and the EUR surged today on the back of reports suggesting that the Greek PSI will have a strong take-up. US labor data, the final tally for Greek private sector involvement (PSI) and Chinese macro data for February bring the week to a close.

RBS and consensus estimates point to a third consecutive nonfarm payrolls print above +200k. The key data overnight may be Chinese CPI, which consensus expects to fall to below 3.5% y/y, potentially giving the PBOC increased policy flexibility and benefitting the global growth oriented currencies.

A strong NFP print should also be a positive for global growth oriented currencies, but not necessarily a negative for the USD. We see signs that stronger US data may begin to benefit the USD, particularly against the currencies whose central banks are expanding the balance sheet such as the EUR, GBP, and JPY, as expectations for future QE by the Fed continue to decline.

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