Key Swedish bank stocks have extended

Key Swedish bank stocks have extended their losses since
Latvia suffered a failed bond auction Wednesday, ramping up speculation of an
imminent devaluation of the lat. Shares in Swedbank (SWED-A.SK) are down 16% to
SEK37.90, with SEB (SEB-A.SK) down 8.3% at SEK30.90 as analysts expect further
capital raising to protect from losses.

USD/TWD ends down

USD/TWD ends down at 33.820 vs last close at 33.888, tracking weaker USD/KRW, gains in local stocks, foreign funds inflows, but pair ends off lows on suspected central bank support, says local bank trader, adds market's reaction to rate decision in central bank's quarterly policy meeting (due shortly) will likely be muted;  "whether they cut rates or not, the result is the same, market rates are near zero." Exporters' USD selling to cap any USD gains above 33.850 tomorrow, support tipped at 33.750.

Despite weak demand

Despite weak demand on the $34 bln five-year note sales that spurred broad-selling in Tsys Wednesday afternoon, it doesnt mean US auctions will be poor going forward. It may actually bolster demand for Thursday's $24 bln seven-year note sales because investors who bid on the 5-yr auction may sell the note to buy seven-year notes, says Jeff Feigenwinter, head of Treasury trading at BNP Paribas. With the Fed bond buying program in place, 10-year note's yield will be capped below 3% in the short term, he says

UBS says its new equity flows

UBS says its new equity flows model for currencies suggests going long CHF/SEK. The trade will be held for the next three days with no stop losses and no taking profits. The model looks at cross-border equity flows from the bank's clients and follows or fades the currency crosses - a strategy with 8% annual returns over the past seven years. Trade was entered at 7.1651. Pair is now at 7.1721.

The euro hit a five-month high against the yen

The euro hit a five-month high against the yen in Asia Monday as players' risk appetite recovered on a U.S. plan to remove banks' toxic assets from their books.   A Wall Street Journal report during the weekend on the so-called "bad bank" plan raised appetite for riskier currencies such as the euro, sending it to Y131.97, the highest since Oct. 21, dealers said. Although it lost some of its gains later in the day, it remained substantially higher compared with New York's Friday closing of Y130.15.   Attention now shifts to details of the plan, expected to be announced by Treasury Secretary Timothy Geithner at around 1245 GMT, especially over the purchase price and speed of clearing toxic assets, traders said.   "A positive surprise (about the plan) could bolster sentiment (further) and lift" riskier currencies, said Tsutomu Soma, a senior trader at Okasan Securities.   But "if the plan lacks fresh factors, that will be negative for" those currencies, said Saburo Matsumoto, a senior foreign exchange manager at Sumitomo Trust and Banking.   The euro also got a boost from higher Japanese stocks, with the benchmark Nikkei 225 Average up more than 3% midday, which prompted non-Japanese short-term investors to buy the riskier currencies with yen, traders said.   Meanwhile, the single currency rose about one cent versus the dollar to a high of $1.3685.   Traders say the European currency could rise to Y135.00 this week as the area's higher interest rates, compared with those of the U.S. and Japan, may encourage investors to purchase the currency.   The dollar, meanwhile, rose versus the yen to Y96.16, compared with Y95.90 in New York Friday.   The U.S. unit rallied versus the yen because investors bought the pair to take advantage of the dollar's dive last week to as low as Y93.55, traders said.   However, the U.S. unit faces risks of falling against the Japanese currency, possibly to Y93.50, its lowest in a month, dealers said. If the U.S. long-term interest rate keeps falling due to the Federal Reserve's monetary easing announcement last week, players may start dumping the currency because of narrowing U.S.-Japan interest rate differentials, they said.   The yen may also be supported by Japanese institutional investors, dealers said, because they will likely bring substantial profits earned on overseas assets home toward the March 31 fiscal-year end.   Traders are also focused on U.S. existing home sales data for February, due at 1400 GMT.

yuan slightly lower against the U.S. currency

A higher central parity rate and the dollar's gains in Asia pushed the yuan slightly lower against the U.S. currency Monday.   Dealers said the yuan is likely to keep consolidating between CNY6.8340 and CNY6.8420 in coming sessions in the absence of trading cues.   On the over-the-counter market, the dollar was at CNY6.8386, up from Friday's close of CNY6.8380. It traded between CNY6.8377 and CNY6.8389.   The dollar-yuan central parity rate was set at 6.8349, up from 6.8334 Friday.   "Investors are still worrying about the domestic economy after China released the February economic data last week," said a Shanghai-based dealer at a foreign bank.   "Due to weaker external demand, there is also decreasing need for companies to settle accounts," which leads to a drop in demand for the local currency, she added.   China's February exports fell 25.7% from a year earlier to US$64.9 billion, and imports dropped 24.1% to US$60.1 billion. In addition, the country's industrial production growth also weakened last month while consumer prices fell for the first time in over six years, raising concerns of deflation.   At 0820 GMT, the dollar was at Y98..17, up from Y98.06 late Friday in New York.   Despite Monday's higher parity rate, the market expects the yuan to stay in a tight range against the dollar.   "The market is expected to stay calm in the following sessions as China reiterated its steady yuan policy and failed to release any new stimulus measures during the National People's Congress last week," said a Shanghai-based dealer at a foreign bank.   Commerce Ministry spokesman Yao Jian said Monday "the yuan's exchange rate has remained basically stable recently and will have an important bearing on facilitating global economic recovery and the stabilization of China's foreign trade environment."

This revisit of EUR/CHF

This revisit of EUR/CHF notes that the euro is near a potential interim top. It's trading now near the intraday high of CHF1.5406, and so is crowding long-term target resistance at CHF1.5430 resistance. Intraday longs should be stopped now at CHF1.5370. A decisive move above CHF1.5430 would be going for initial resistance in the CHF1.5456-CHF1.5463 band. If trades are stopped below CHF1.5370 expect a dip to CHF1.5337.