Morning Forex Fundamental

EUR

'After the strong gains through the first quarter, it's very reasonable that trading is soft' - Michael Droescher Joergensen, an equity strategist at Nykredit Bank A/S

European stocks closed lower for a third straight day on Thursday

Impact High

European stocks tumbled on Thursday, led by banks, after Standard & Poor's said Greece may have to restructure its debt again.

The Stoxx Europe 600 Index erased 1.27 per cent to 260.74. Germany's DAX Index tumbled 1.77 per cent and France's CAC 40 Index retreated 1.43 per cent. The U.K.'s FTSE 100 Index dropped 1.15 per cent to 5,742.03.

'After the strong gains through the first quarter, it's very reasonable that trading is soft as investors consider their positions in the wake of some soft data recently,' said Michael Droescher Joergensen, an equity strategist at Nykredit Bank A/S in Copenhagen.

'There has been massive uncertainty in the markets concerning the euro-zone debt crisis, coupled with concerns over global growth, with much of the macro data coming from the U.S. doing little to allay investor fears,' said Stuart Jamieson, senior dealer at Tradenext.

USD

'The labor market is still improving at a modest pace' - Russell Price, senior economist at Ameriprise Financial Inc.

U.S. jobless claims decline less than economists forecast

Impact High

The number of Americans claiming for unemployment benefits declined to 359 thousand in the week ended March 24 from the week before, said the Department of Labor on Thursday.

'The labor market is still improving at a modest pace,' said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. 'Across almost all sectors, companies have shed as many workers as they possibly can. Now, they're responding to the modest improvements in demand.'

Also Thursday, the Commerce Department said the U.S. economy grew three per cent in the last quarter of 2011, the same as previously estimated.

'Businesses are going to remain very cautious about hiring permanent staff and investing in new equipment,' said Mark Vitner, a senior economist at Wells Fargo Securities LLC in Charlotte, North Carolina.

'It probably raises a caution flag that growth has not ratcheted up as many people hoped it had.'

GBP

'[Nationwide Building Society data] confirms that the housing market remains depressed' - David Tinsley, chief U.K. economist at BNP Paribas SA and a former Bank of England official

U.K. house prices post largest decline in almost a year

Impact Medium

House prices in the U.K. edged lower 1 per cent to 163,327 pounds in March, the largest annual fall since June 2011, Nationwide Building Society data showed on Thursday.

'In our view the challenging economic backdrop is likely to continue to act as a drag, with house prices moving sideways or modestly lower over the next 12 months,' said Robert Gardner, Nationwide's chief economist.

'U.K. data releases this morning were in the round somewhat disappointing,' said David Tinsley, chief U.K. economist at BNP Paribas SA and a former Bank of England official.

Today's data 'confirms that the housing market remains depressed by any historical comparison' and signals the economy is going to have 'a rougher road in the second quarter.'

CHF

'The market is in consolidation mode' - Trung-Tin Nguyen, a hedge-fund manager at TTN AG

Swiss stocks retreated for a third day on Thursday

Impact: Medium

Swiss stocks fell for a third consecutive day on Thursday after a report showed U.S. jobless claims fell less than expected.

The Swiss blue-chip index SMI, a measure of the largest and most actively traded companies, fell 1.19%, or 74.17 points, to 6,176.26. The broader Swiss Performance Index erased 1.14%, or 65.49 points, to 5,661.16.

'The macro data has been mixed; it's very ambivalent at the moment,' said Trung-Tin Nguyen, a hedge-fund manager at TTN AG in Zurich.

'The market is in consolidation mode, hence there's a slight bias to emphasize the negative. Momentum is declining, but still, pressure for asset managers to invest tends to increase.'

JPY

'The market is in a correction phase amid worries it has risen too much' - Naoki Fujiwara, fund manager at Shinkin Asset Management Co

Japanese stocks edged lower for a second day on Thursday

Impact: Medium

Japanese stocks fell for a second day after a report showed orders for U.S. durable goods rose less than economists forecast.

The Nikkei 225 erased 0.67%, or 67.78, to 10,114.79. The broader Topix fell 0.77%, or 6.69, to 857.74.

'U.S. data is pouring cold water on the rally,' said Naoki Fujiwara, fund manager at Shinkin Asset Management Co. in Tokyo.

'The market is in a correction phase amid worries it has risen too much.'

'With all the good news being factored in, we are coming to a tougher period and markets are vulnerable to any bad news,' said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors Ltd.

'We are starting to see data come out on the softer side of what's expected. On its own, the durable goods data is still consistent with the economic growth in the U.S.'

Press Review

Europe

Greece pushed through the bond swap offer averting the immediate threat of an uncontrolled default and opening the way for a second rescue package.

Experts claim Spain has never been so close to default and Greece, Ireland and Portugal may need additional financial aid.

Spanish government to unveil 'very austere' budget

http://www.bbc.co.uk/news/business-17557172

The Spanish government is due to unveil what is expected to be one of the toughest budgets in its recent history.

UK is back in recession, OECD says

http://www.guardian.co.uk/business/2012/mar/29/uk-back-in-recession-oecd

The UK is heading back into recession and will be among the slowest of the world's largest economies to recover in the first half of this year, according to a study by the Paris-based thinktank, the OECD

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%.

Upbeat data point to a robust recovery of world's largest economy.

Inflation key as Fed looks ahead

http://www.reuters.com/article/2012/03/29/us-usa-fed-idUSBRE82S1CL20120329

Containing inflation will be critical when the time finally comes for the U.S. Federal Reserve to reverse its ultra loose monetary policy, two top Fed officials said on Thursday.

Recovery Pushes U.S. States to Most BEES Gains Since 2010

http://www.bloomberg.com/news/2012-03-30/recovery-pushes-u-s-states-to-most-bees-gains-since-2010.html

More than two-thirds of U.S. state economies strengthened during the last three months of 2011, the widest advance in more than year, illustrating the spread of a recovery fueled by manufacturing and energy production.

Asia & Pacific

China is suffering a major economic slowdown, as growth flags in the country's real estate, construction, steel, and other sectors.

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. Investors were extremely surprised when Japanese economy swung back to a trade surplus in February after a record deficit in January.

China, oil, pressure global stock-fund investors

http://www.marketwatch.com/story/china-oil-pressure-global-stock-fund-investors-2012-03-30?link=MW_home_latest_news

Economic trouble isn't over, over there, but buyers of international stocks are clearly over the shock that plagued both developed and emerging markets in 2011.

Japan OKs Tax Hike, Heads Into Political Showdown

http://www.cnbc.com/id/46899854

Japan's government on Friday approved a plan to double the sales tax by 2015 to fund swelling social security costs in the world's fastest aging nation, setting the stage for a showdown that could split the ruling party and deepen policy paralysis.