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Action Economics morning alert

Canadian Press, The Canadian Press
0 Comments| February 1, 2013

(Action Economics) - 06:52 EST European Fixed Income Update: Bund and Gilt futures are down on the day, with Bunds outperforming, after headline CPI inflation unexpectedly fell back to the ECB's 2% limit for price stability. This pushed Bund futures briefly into positive territory, although the upward revision to the manufacturing PMI coupled with a stabilisation in unemployment pushed futures back into the Red. U.K. PMI numbers were also encouraging and the Swiss PMI jumped above the 50 point mark in January. So signs of a broad based stabilisation at the start of the year. This has helped stock markets to move higher, although Spanish and Italian markets are underperforming and down on the day, with local yields also down. In the cash market the 10-year Bund yield is up 0.2 bp at 1.68% and the Gilt yield up 1.4 bp at 2.11%. Meanwhile the Italian 10-year was down 2.9 bp and the Spanish down 2.1 bp. By comparison the DAX gained 0.21% and the FTSE 100 0.43% as of 11:33GMT.

06:45 EST European Midday FX Update: There were heavy flows in Asia and Europe. EUR strength and JPY weakness set the tone in Asia after specs pushed through barriers in EUR-USD, EUR-JPY and USD-JPY after another set of weak Japanese data releases. China PMI data included a two-year high for the HSBC flash reading. The official release dipped, but the new orders index advanced, which was good enough for specs. In Europe, eurozone PMI was revised up and the German headline jumped, leaving it just shy of 50.00, which emboldened EUR longs. The ECB's LTRO repayment announcement was a bit lower than expected at EUR 3.48 bln, but this did not deter EUR bulls. Other good movers included very heavy GBP sell-interest related to a big buy order in EUR-GBP and a contraction in U.K. PMI, but it still remains in expansionary territory. AUD finally broke through corporate support after very heavy macro fund demand in EUR-AUD. See FX Trader page.

© The Canadian Press, 2013

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