Friday Update…. No-Fly Zone and No-Buy Zone

Two important stories overnight. Firstly the United Nations on an agreement for a No-Fly zone in Libya which may just have happened in time. However, it remains to be seen how this will operate and whether this will lead to more protracted conflict.
The other news was the announcement from the Japanese Finance Minister that the G7 had agreed to concerted intervention to halt the rise of the Japanese currency.

The BOJ has already intervened to the tune of an estimated US$35 Billion and the Japanese Yen is back to last weeks levels, JPY/USD 81.80 and EUR//JPY 115. There was also rumors that the ECB bought EUR/JPY through a French Bank but I would be a little surprised by intervention other than against the US$.Japanese equities closed almost 3% higher and European markets have opened better This will obviously not be the end of the story but I think it might be dangerous this time to back against the Central Banks and traders for sure will be wary of getting caught long of Yen. The EUR/USD seems to have established a footing at last over 1.40 currently 1.4070 and a close above the former level should see progress to the 1.4250 level. The Swiss franc which hit an all time high of 89.35 against the US dollar yesterday looks likely to bear more weight as a safe haven currency with the Yen being restrained adding to the headache for the Swiss National Bank.
Sterling has struggled to keep up with the Euro recently weakening to 87.30 this morning.
No further developments on the Nuclear power problems in Japan but if that is resolved without any more major problems then a further relief rally in Japanese stocks might be seen.
Elsewhere Bahrain may become more of a market focus and Oil is close to 2% up this morning. Other commodities too should rally eventually.
Still not sure mind you how you keep the flies out of Libya

Tuesday Update.. Equities Good Bye or Good Buy

With fears of a major Nuclear disaster ,Japanese equities collapsed overnight. Off almost 15% at one point the market closed over 10% down and European markets are nearly 2% lower.
Goldman´s have called the markets´risk on´ at the moment well this will be a test for sure. It may be down to Wall Street this week to eventually turn things around.
Strangely the volatility seems to be confined to equities while forex markets have been amazingly stable. The Japanese Yen is a little stronger against most currencies but hardly fireworks. With JPY/USD steady around 81.50 the sell off in EUR/USD now at 1.3930 has left JPY/EUR lower at 113.50.
With Oil lower and also Gold doing nothing much, it all makes for a pretty confusing picture. Certainly yesterday the consensus view on Japanese stocks was that there would be no major sell off, well think again. All I would say is that P/E valuations were fair not excessive so they are getting cheap but may yet get cheaper still.So looking at forex markets today I don’t see anything predictable to go for. There were rumours that the BOJ (Bank of Japan) checked prices today which pushed USD/JPY up 70 pips at one point but nothing done. I do believe they would intervene if the Yen strengthens and that should put support on USD/JPY. As far as the Euro is concerned the Euro pact has hardly been greeted with a wave of euphoria. While peripheral bond markets have improved ,it is not by much. For the currency to push on a stronger performance will be needed and as such the jury is still out at the moment.
Fortunately for Bahrain news is focused elsewhere but Saudi and other Arab troops on the streets there could yet prove a massive mistake and potentially even bigger market factor.
The Canadian dollar sold off on mad cow in Alberta, nothing to do with commodities