Morning Forex Fundamental

EUR

'Ifo index provides further evidence that the economic contraction at the end of last year was only a brief stopover' - Carsten Brzeski, senior economist at ING Group

German business confidence improves further in February

Impact High

German business confidence improved more than expected in February, defying fears that the euro zone's largest economy has slipped into recession. Ifo business climate index, which is based on a survey of 7,000 executives, rose to 109.6 points from 108.3 points in January.

'Did anyone say recession?' said Carsten Brzeski, senior economist at ING Group in Brussels. 'Today's Ifo index provides further evidence that the economic contraction at the end of last year was only a brief stopover.'

Germany's Bundesbank on February 20 said that the economic outlook has 'improved perceptibly,' even though 'risks relating to the sovereign-debt crisis remain.'

'The outlook for the German economy has significantly brightened over the last few weeks,' said Christian Melzer, an economist at DekaBank in Frankfurt. 'We can now thoroughly imagine the scenario that we won't see a technical recession.'

USD

'[Unemployment claims] are in line with recent U.S. data showing a gradually improving economic backdrop' - Omer Esiner, a market analyst at Commonwealth Foreign Exchange

Unemployment claims hold at four-year low

Impact High

The number of Americans claiming for unemployment benefits remained unchanged at 351,000 thousand in the week ended February 18 from the week before, said the Department of Labor on Thursday.

'The strength we've had in the last few months is continuing,' said Guy Berger, an economist at RBS Securities Inc. in Stamford, Connecticut.

'Barring any surprises, February looks like another good month for payroll growth.'

'It's broadly in line with recent U.S. data showing a gradually improving economic backdrop,' said Omer Esiner, a market analyst at Commonwealth Foreign Exchange in Washington

GBP

'Beyond March, the mortgage market is likely to click back into its default mode of flat' - William Hunter of Hunter Wealth Management

BBA: U.K. mortgage approvals rise in January

Impact: High

The number of approved mortgages rose to 38.1 thousand in January, the highest in two years, from 36.6 thousand in December, shows the data published by the British Banker's Association on Thursday.

'January saw the high street banks approve more mortgages for house purchase than of late, despite low household confidence, as some people try to complete transactions before the stamp duty holiday ends in March,' BBA statistics director David Dooks said.

'Demand for unsecured personal borrowing remains low as consumers continue to repay debt.'

'Beyond March, the mortgage market is likely to click back into its default mode of flat. Welcome though this boost is, by definition it is finite,' said William Hunter of Hunter Wealth Management.

CHF

'It's not surprising to see a sideways movement [in stocks] right now, because we had a decent run in the last five to six weeks' - Konstantin Giantiroglou, head of investment advisory at Neue Aargauer Bank AG

Swiss stocks edged higher on Thursday

Impact: Medium

Swiss stocks rose slightly on Thursday after German business climate improved unexpectedly.

The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies edged higher 0.14%, or 8.55 points, to 6,200.97. The broader Swiss Performance Index rose 0.08%, or 4.21 points, to 5,613.33.

'It's not surprising to see a sideways movement right now, because we had a decent run in the last five to six weeks,' said Konstantin Giantiroglou, head of investment advisory at Neue Aargauer Bank AG in Brugg, Switzerland.

'Company news at Swiss Re, like the other insurance companies that reported last week, has generally been good. The big factor is how people now digest the Greek news and whether the whole euro zone problem will flare up again.'

JPY

'A weaker yen lifts sentiment, but investors remain cautious about a possible rebound' - Kazuyuki Terao, chief investment officer of RCM Japan Co

Japanese stocks edged higher on Thursday on weak yen

Impact Medium

Japanese stocks rose for a second day on Thursday as the Yen declined to its lowest versus the Greenback in seven months, boosting the outlook for exporters.

The Nikkei 225 advanced 0.44%, or 41.57 points, to 9,595.57. The broader Topix edged higher 0.48%, or 3.95, to 829.35.

'The yen continues to have a big impact on stocks,' said Kazuyuki Terao, chief investment officer of RCM Japan Co.

'A weaker yen lifts sentiment, but investors remain cautious about a possible rebound.'

Press Review

Europe

Euro area finance ministers approved a 130 billion euro bailout for Greece on February 20.

A gauge of euro area services and manufacturing output declined in February, a sign the region may be heading towards a recession.

Greek Parliament Approves Debt Swap Law

http://www.cnbc.com/id/46494040

The Greek parliament passed on Thursday legislation to launch a debt swap for private bondholders which is at the core of the 130- billion-euro bailout agreed with euro zone partners this week.

EU says eurozone economy to shrink in 2012

http://www.marketwatch.com/story/german-ifo-index-jump-defies-recession-worries-2012-02-23?link=MW_latest_news

A widely-followed measure of German business confidence jumped more than expected in February, defying fears that Europe's largest economy and the debt-troubled euro zone have slipped into recession.

USA

Ben Bernanke on February 8 reiterated the Federal Reserve's plan to keep borrowing costs near record lows until at least late 2014, despite rapid decline in unemployment rate to 8.3%.

Iranian oil embargo, triggered by the US, was approved by the EU January 23.

Jobless claims hold steady at 4-year low

http://www.reuters.com/article/2012/02/24/us-usa-economy-idUSTRE7BM0AB20120224

The number of Americans filing new claims for jobless benefits last week held at the lowest level since the early days of the 2007-2009 recession, signaling that the battered labor market is healing.

To close tax loopholes, Obama would open new ones

http://finance.yahoo.com/news/close-tax-loopholes-obama-open-080301616.html

To close tax loopholes, Obama would open new ones to benefit some companies over others

Asia & Pacific

China's year-on-year foreign direct investment fell 0.3% in January to $10 billion.

Japan has published first annual trade deficit since 1980 putting into question how long the country can rely on exports to serve a huge public debt.

Yen Drops as Volatility at Three-Year Low Spurs Demand for Higher Yields

http://www.bloomberg.com/news/2012-02-23/euro-touches-10-week-high-versus-dollar.html

The yen declined versus all its major peers as foreign-exchange volatility at its lowest in more than three years prompted investors to buy higher-yielding currencies.

Asia markets edge higher in choppy session

http://www.marketwatch.com/story/asian-stocks-fall-led-by-south-korea-2012-02-22?link=MW_popular

Asia markets traded modestly higher in a choppy session on Friday, with some energy shares supported as oil prices continued to rise, while recent strength limited sharper gains