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The global capital markets that stabilized yesterday, still seem fragile today.  The yen was sold in Asia for the second consecutive session and gold also continued to post corrective upticks, but there are signs that the animal spirits have not been rekindled.  Japanese government bond yields are higher, ahead of tomorrow’s 20-year bond auction.The arket s been reluctant to extend yesterday’s gains in the euro and Australian and Canadian dollars.  Sterling’s gains have actually been reversed and it has been sold to an eight day low against the dollar and a five week low against the euro.  

The Swedish krona is actually the weakest of the majors today, falling more than 1% in response to the dovish shift by the central bank.  While the Riksbank kept rates steady as widely expected, it lowered its trajectory for interest rates to 0.9% by the end of next year from 1.2%.

Governor Ingves, who has resisted the pressure from the dovish board member, did soften his opposition and new recognizes that a rate cut is more likely than a rate hike.  The krona weakened in response, with the euro rising to near 2-month highs near SEK8.4750.  Stronger resistance is seen near SEK8.50.  

The fundamental source of sterling’s decline may be traced to the mixed employment report and the MPC minutes, where Governor King was out-voted for the third consecutive meeting.  The government’s (ONS) labor report moved in the opposite direction of the ILO report.  According to the government the unemployment rate was revised lower in Feb to 4.6% and that is where it remained in March.  The ILO its measure of unemployment rose to 7.9% from 7.8%.  The government said the claimant count fell by 7k.  The ILO shows employment falling 2k (instead of rising by 60k as the Bloomberg consensus expected).   

2013-04-18 00:47:00

Source: http://silveristhenew.com/2013/04/17/fragile-tone-continues/