Euro Rebounds Continues for Now

 
Snapshot: 

        -Euro rebound continues; 10-year Treasury yield at 1.875%; stock futures flat; oil futures, gold flat
        -Watch for: Durable goods orders; speech by Fed's Charles Evans
        News: Retired Fed Official Fisher Concerned About Emerging-Market Debt; German Business Confidence Rises Again; RBA Warns Some Banks Will Face Attitude Adjustment
        The euro climbed against the dollar in early European trade Wednesday, but it was unclear whether the rally will hold, given the currency markets' recent run of unpredictable moves.
        Currencies have been especially jumpy since last week, when the U.S. Federal Reserve surprised investors by indicating it is in no rush to raise interest rates.
        The euro has bounced back sharply against the buck in recent days amid some sharp swings. The single currency climbed 0.5% in early European trade to $1.0966, well above its recent 12-year low of under $1.05.
        But the failure to settle decisively above $1.10 shows investors are still nervous that further declines could be in store, according to Commerzbank strategist Esther Reichelt.
        "Clearly euro-dollar investors now want to wait and see new data confirming that the positive momentum of the U.S. economy remains unaffected," she said.
        The euro also gained against the yen and the British pound.
        The rebound for the currency has come amid some improving economic data in the eurozone. Business activity expanded faster than expected in March, figures on Tuesday showed. Investors were awaiting German business confidence data later Wednesday.
        Still, the impact of a stronger economy on the currency market is likely to be limited given the European Central Bank's massive bond-buying program is already in place, said strategists at BNP Paribas.
        U.S. CPI data on Tuesday helped the dollar to stabilize, which in turn weighed on stocks. Stan Shamu, market strategist at IG, said many are waiting to see how long before the dollar can "remain at bay before resuming its run."
        "It's almost as if the U.S. dollar is a sleeping giant at the moment, and we probably won't be seeing much volatility in equities either until it awakes," said Shamu in a note.
        10-year U.S. Treasury yields slipped to a 7-week low of 1.875% as buyers emerged in European trade, with the current spread over Bunds deemed attractive.
        "There was continued talk at least, although not a lot of new flow yet from what our desk has seen, of buying Treasurys versus Bunds on what seems to have been increasing recognition this week of how cheap the former look to the latter," according to Morgan Stanley.
        The 10-year Treasury/Bund spread was last trading at 166 basis points, near the middle of this year's 135 basis points-190 basis points range. Ahead, the Treasury is scheduled to sell $35 billion new 5-year Treasurys and $13 billion 2-year floating rate notes.
        U.S. stock futures stuck to a tight range, hinting at another low-volume day, with the data calendar thin and the influential dollar locked in ranges.
        Futures for the Dow Jones Industrial Average rose 1 point to 17,949, while those for the S&P 500 index inched up 0.35 point to 2,085.25. Futures for the Nasdaq-100 were up 2 points to 4,431.
        Durable-goods orders for February are due at 8.30am ET and Chicago Fed President Charles Evans will give a speech in London on monetary policy and the economy at 6.30am ET.
        In commodities markets, Brent crude oil rose 0.1% to $55.14 a barrel. Gold was up 0.1% at $1,192.40 an ounce.
        Retired Fed Official Fisher Concerned About Emerging-Market Debt
        A recently retired Federal Reserve official said Wednesday financial markets would see a correction when it is least expected and that he was worried about emerging-market debt.
        German Business Confidence Rises Again
        German business confidence rose in March for the fifth straight month, reaching its highest level since July 2014, the closely watched Ifo survey showed.
        RBA Warns Some Banks Will Face Attitude Adjustment
        Some Australian banks will soon require "behavioural adjustment" to tighten loose mortgage lending, which is overheating house prices and stoking the threat of instability within the economy.
        Brazil's Central Bank to Reduce Forex Intervention
        Brazil's central bank said Tuesday night that it won't renew its foreign-exchange swap auction program, a decision that lessens the monetary authority's intervention in the currency market.
        Write to paul.larkins@wsj.com
        (END) Dow Jones Newswires

        March 25, 2015 06:18 ET (10:18 GMT)

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