Big Week Begins Off Slowly

The US dollar is mixed to start the new week.  The G7 intervention has been successful insofar as the yen volatility has fallen sharply.  It had neared 17% last week and is now near 12.5%.  Japanese markets were closed on Monday and there has been no intervention. 

German and French ruling parties were weakened in the local elections.  The EU Summit on March 24-25 is the main highlight, but the flash PMIs will be out first and it wouldn't be surprising to see some moderation in the pace of activity.    The EU Summit looks to stop far shy of what the market needs for closure, but may very well see a package of Portugal.  Although the premium over Germany narrowed in recent days, yields from 4-years out are above 7%. 

The euro has been capped near $1.4200, but it does not appear particularly strong and the high from last November near $1.4280 beckons.  On the downside, support has been found on a pullback toward $1.4150.    There was a big reversal of sterling futures positions, with the net specualtive position falling from long 33.9k contracts to short 225.  This was the firs tnet short position since mid-Jan.   Net long speculative positions nearly doubled form 16.6k to 30.2k.  Recall that this was for the week through March 15 and did not reflect the impact of the intervention, which likely saw some wahsing out of these late yen longs.   Separately note that there was amodest rise in net Swiss franc longs to 27.6k from 23.6k  and a drop in net long Canadain dollar positions to 56k from 77.5k. 

Short-term traders might want to look to sell into a bounce in euros against the Swedish krona back toward SEK8.90-SEK8.92.  Hawks from the Riksbank will speak later in the week.