ECB Rates on Focus

FX markets remained tightly range-bound for most of the Asia session, as investors direct their attention to the upcoming ECB press conference. The ECB will likely leave the main refinancing rate unchanged at 1% in March, although delivering a more hawkish tone in the press conference and the accompanying statement. German Chancellor Merkel and Portuguese Prime Minister Socrates met and Socrates reiterated that Portugal does not need external help. Socrates said the March 11 summit aims to boost confidence for market participants and Merkel remained non-committal on possible reductions or alterations to current bailout packages for Ireland and Greece.

In the US, yesterday’s latest Fed Beige Book was a bit more optimistic and the ADP employment data beat consensus, rising +217k in Feb. Fed’s Beige book released yesterday showed all twelve districts reported modest expansion in January and early part of February, with Chicago as the only district that reported slightly weaker conditions. Most districts acknowledged high and rising commodities prices and rising input prices for manufacturers and retailers and there are also plans to passing the costs through to consumers.