USD/HKD likely to stay

USD/HKD likely to stay close to lower limit of trading band this week on continued capital inflows, says trader at Chinese bank. Pair last at 7.7500 vs 7.7501 yesterday. "The fall of the U.S. dollar against major currencies overnight after comments from U.S. Treasury Secretary Timothy Geithner fuels market uncertainties about the U.S. dollar's status and prompts investors to shift funds into the Hong Kong dollar"; adds more interventions by HKMA likely today. Notes HKMA intervened in FX market again during Asia and NY trade Wednesday by selling total of HK$12.01 billion. Tips pair in 7.7500-7.7505 in near term.

Correct: Treasury's five-year note came in at a yield of 1.849%, compared with the 1.798% on the when-issued paper just before the auction. The bid-to-cover ratio is 2.02, compared with 2.21 for the previous auction in February and the average of 2.18 from the past 10 auctions. (Item timed 1:02 p.m. stated the coupon, not the 5-yr yield)

Broad standards for compensation

Broad standards for compensation practices would help improve systemic stability, Treasury's Geithner tells House committee. "I do think it's appropriate for the country to put in place strong standards to govern compensation pratice across the financial community as a whole, because as we've seen those can have systemic consequences creating a more fragile and unstable system," Geithner says in response to question. "It's a difficult balance. The government should not be proscribing detailed regulations to govern amounts of compensation and their distribution," he says. However, "we have to hold to broad standards and again make sure that we're not encouraging short term risk taking at the expense of long term stability," Geithner says.

Supermarket sales

Supermarket sales plunged 5.4% year on year to Y952.6 billion in February, the third straight month of decline and the first time in 18 years that the figure fell below Y1 trillion, the Nikkei reported Monday, citing the Japan Chain Stores Association.

OPEC decided to leave output unchanged

Contributing to the feel good factor that prevails early Monday, helping the euro higher,  is the sharp drop in crude oil prices after OPEC decided to leave output unchanged, rather introduce fresh cuts. Crude fell $2 a barrel as the cartel said it would adhere to previous production levels more strictly instead. "The outcome was relatively good news for oil consumers and highlights a less aggressive shift in the aim of getting prices back up to the $70-$80 range desired by many OPEC members," says Calyon.

Though things appear to be getting better

Though things appear to be getting better across the markets, one portfolio manager says he isn't going to fall victim to the same trick twice. "It's shocking to me that we have a massive equity rally because Citi and BofA say things are better.  Remember pre-Lehman bankruptcy when all the CEOs said the crisis was mostly done? HOW can people believe these guys?"

Risk aversion edges down

Risk aversion edges down a little more, with the UBS Risk Index at 0.66 compared with 0.68 Thursday. The bank says this is the lowest level since early January, with the fall driven by decreasing equity volatility, tightening emerging market and high yielder spreads and a better performance by stocks over bonds.

After falling off

After falling off a cliff this morning GBP/USD has found a few buyers around 1.3730 which was not far off Wednesday's European low. Almost all of the pressure on the rate is coming from EUR/GBP buying with the cross trading up to 92.96 from the day's low of 0.9212. GBP/USD now trades at 1.3760 with resistance seen at 1.3825, EUR/GBP trades at 0.9273 with resistance coming in at 0.9325.

EUR/JPY slides to 125.24

EUR/JPY slides to 125.24 from earlier high of 125.73 on selling by Japan exporters for regular settlement, says trader at Japan securities house; says there was "substantial selling below 125.50." But adds pair unlikely to slide below 125.00 as ongoing Japan political uncertainty may prompt non-Japan investors to sell JPY. Tips EUR/JPY in 125.00-125.60 range, but if breaches first support at 125.00, next target 124.71. Says EUR/JPY fall weighing on EUR/USD. EUR/USD penned in 1.2675-1.2730 range, last 1.2703.

USD/JPY is consolidating between 97.00 and 99.50

USD/JPY is consolidating between 97.00 and 99.50 in what might turn out to be an interim high, says Mizuho Corporate Bank's Nicole Elliott. While the rate holds below the psychological 100.00 level, Elliott says a move down toward the 93.00 area is favored and for a trading strategy she suggests selling at 98.50 with a stop well above 99.75, adding to shorts on a sustained break of 97.00 to target 96.00 and 95.00. USD/JPY now at 98.40.

The USD is higher as Japan's current account comes

The USD is higher as Japan's current account comes in with a fall into deficit Monday and the Nikkei falls to a 26-year low. Reports of positive growth data from China help to lift risk appetite and the EUR a little, but sentiment overall remains negative. The USD is up at Y98.53 while the EUR is down at $1.2613. The GBP is down at $1.3659 as the market dislikes the UK government's GBP250 bn loan guarantee for Lloyds.

Mexico's peso strengthened against the dollar

Mexico's peso strengthened against the dollar Friday as the expectedly large job loss last month put pressure on the U.S.. currency.   The peso was quoted in Mexico closing at MXN15.2320 to the dollar, after settling Thursday at MXN15.3945.   A Mexico City currency trader said the peso started to gain early in the day following the U.S. employment report, which showed a decline of 651,000 jobs last month.   February's big job loss, which pushed unemployment up to 8.1%, bodes poorly for both the U.S. and Mexican economies, and stocks fell on both sides of the border.   But the peso took advantage, recouping ground lost the previous session in another global bout of risk aversion.   The peso also is expected to find some support in adjustments to be made starting Monday in the Bank of Mexico's daily dollar auctions.   The central bank will auction $100 million each day, and reduce to $300 million from $400 million the amount it sells only when the peso is 2% weaker from the previous session. The central bank also keeps open the option of unscheduled direct interventions.   "We believe that this could have a significant impact in the USD/MXN market having, in our view, a much lower probability of reaching levels above 16 pesos per dollar in the medium-term, despite the high degree of global markets risk aversion," UBS Pactual said in a report.   The currency trader said the modified auctions should be positive for peso as it "gives the market more certainty that the Bank of Mexico doesn't want to see the currency getting any weaker."   The weakening currency, which reached a record intraday low near MXN15.50 on Monday, has limited the central bank's ability to cut interest rates in the face of the economic downturn, because of the passthrough effect on consumer prices.   Citigroup unit Banamex welcomed the change in the auctions, having argued that the predictability of the central bank actions in the exchange market encouraged participants to take long dollar positions, since the risk was one-sided in their favor.