The market rebounded today on news that EU leaders pledged they would back Greece. The S&P 500 Index rallied 10 point to 1078 and the Dow moved up 106 points to solidly reclaim the 10,000 level. Euro-zone countries have pledged to support Greece through its debt crisis, but don’t need to provide financial support right now, according to European Council President Herman Van Rompuy in a statement made after a summit of European Union leaders. The Euro initially rallied early in the trading day on the back of this news, but was not able to hold on to gain as the trading session progressed. An unexpectedly hawkish Riksbank statement that brought forward the timing of the first rate hike (rates left unchanged at 0.25% as expected) has helped send the Swedish Krona to multi-month highs against the euro.
The Australian Dollar surged after Australian employers added the most workers in more than three years in January. The number of people employed rose 52,700 from December, more than three times the 15,000 median estimate of economist surveyed. The jobless rate fell to an 11-month low of 5.3 percent from 5.5 percent, the statistics bureau said in Sydney today.
Chinese inflation data may have captured headlines today, but it is important to note that new Yuan loans surged in January, supporting the PBOC’s recent decision to tweak bill rates and tighten reserve requirements for some banks. New Yuan loans more than tripled to CNY1290 bln in January from CNY3798 bln in December likely reflecting a surge in borrowing ahead of perceived tightening later this year. The market had expected a jump in new lending and today’s data release was only slightly higher than the expected CNY1.375.0 bln. January CPI moderated to a 1.5% y/y pace from 1.9% in December and vs. 2.1% expected) while PPI rose 4.3% y/y (vs. 3.5% expected and up from 1.7% in December) but, like yesterday’s trade data, the numbers are distorted by the Lunar New Year holiday. That holiday fell in January in 2009 but falls in February this year.
The PBOC is continuing to ensure that there is plenty of liquidity in the system ahead of the lunar holiday which begins Monday rather than tweaking the fixed rate. Notably, the Chinese equity market gained only marginally today after falling 8.9% on the year.