• US CPI rises 0.5%/0.2% core in February; headline firmer than expected
  • US jobless claims fall to 385,000 from 401,000 the prior week; 4 wk week avg 386,250
  • US industrial production falls 0.1% in February; weaker than expected
  • Philly Fed index rises to 43.4 in March from 35.9 in February, highest
  • Nikkei: G7 finance ministers “will tolerate” Japanese intervention to weaken JPY; will not intervene in concerted fashion
  • ECB supports allowing ESM flexibility
  • SNB Chairman Hildebrand: Swiss economy will slow as CHF strength hurts exports
  • Libya to declare truce on Sunday to allow rebels to surrender; UNSC dithers on military action
  • US 10-year note yields rise 0.5% to 3.25%
  • S&P 500 rises 1.3% to 1274
  • Oil rises $3.50 to $101.50

USD/JPY was relatively well behaved today as the market prepares for intervention from the BOJ and perhaps friends. Early in the US afternoon the Nikkei reported that the G7 had given Japan the green light to intervene but early signs were that the intervention would be solo, not coordinated among the who group. USD/JPY rallied briefly to 79.35 on the initial headline but fell back as the market realized the BOJ may have to go it alone.

Shorts afraid of pre-weekend intervention have had plenty of time to cover and have no-one to blame but themselves if they get caught short.

All this telegraphing of intervention has given the market plenty of time to prepare. 79.75/80.00/80.25 is the first area of resistance followed by 81.75, the old trend support broken yesterday. A move above 81.75 would take the immediate downside pressure off USD/JPY; anything short of that will leave the buck very vulnerable.

EUR/USD spent the US session consolidating in the low 1.40s. Macro hedge funds were large buyers of EUR/USD on dips into the low 1.3990s Rallies were sold into by sovereigns in the 1.3940s. We end the day at 1.4025.

Cable firmed into the 1.6160s on several occasions after holding 1.5980 overnight on Chinese buying. We end the day in the 1.6130s amid talk the UK could launch air strikes against Libya on short-notice once A UN security council resolution is agreed.

Somewhat improved risk appetites (after last nights purge) helped AUD and CAD recoup some lost ground. AUD ends at 0.9805, CAD at 0.9860.

USD/CHF got acquainted with its new neighborhood below 0.9000. It ends at 0.8985. Its lonely there on top of the hill…

..EUR/CHF closes at 1.2605.