Archived IMT (2010.03.25)

GOVERNMENTS TO THE RESCUE and RENEWED SURGE OF RISK APPETITE deals a fresh blow to JPY and erases some USD gains due to (1) $9.5 billion injection in struggling Dubai World by Dubai Govt; (2) Talk of a 20 billion IMF rescue package to Greece (3) stronger than expected 2.1% increase in UK Feb retail sales. These dynamics drive equities across the board, including a fresh 19-month high in the FTSE-100 above 5700. EURUSD gains to $1.3366 from $1.3280, but is underperforming GBPUSD which regained the $1.4990 level earlier from $1.4855. Euros interim resistance stands at $1.3410, but any subsequent gains are seen capped at $1.3450. Statements from JC Trichet indicating the ECB will extend its emergency collateral rules beyond 2010 may be positive for risk appetite but negative for euro market interest rates and for the German-US yield differential. Surging global bond yields also weighing on JPY (boosting yen crosses). Nonetheless, gold remains below 1100 and the risk-friendly AUDUSD has yet to regain 0.9155.