Dollar recovers mildly as markets are awaiting a second month of strong job data from US. It’s expected that Non-farm payroll report will show 190k expansion in the US job markets in March. Unemployment rate is expected to be unchanged at 8.9%. February’s job growth was at 192k and if both figures meet expectations, that would produce the best two-month stretch since recession began. Solid job data would produce likely trigger some more hawkish comments from Fed officials later which affect market’s expectation of timing of Fed’s stimulus exits. At this moment, it would be hard for dollar to stage a sustainable rebound against Euro yet as ECB rate expectations are still firm. However, yen would possibly extend its weakness on risk appetite and rate views should today’s NFP beat expectations.

Japan tankan survey should index for large manufacturers improved climbed to 6 in Q1 while non-manufacturing index rose to 3. But BoJ said that the report does not fully reflect the impact of the historical natural disaster as about 70% of companies replied to the survey by March 11. The Bank of Japan will release additional data Monday that breaks out the disaster’s impact on the tankan. Markets are speculating that poor results should be shown on Monday’s data, and that would possibly increase the chances of additional easing at the BoJ meeting later next week.

In the Eurozone, the stress test result for the 4 Irish banks called for capital injection of 24B euro. Moreover, the Irish Finance Minister announced that the government will merge EBS into Allied Irish Bank while Bank of Ireland will reduce the size of its balance sheet, mainly by selling offshore assets. Elsewhere, Portugal reported a budget deficit of 8.6% of GDP in 2010, missing the target of 7.3% and increasing the likelihood of a bailout. Peripheral and German yield spreads widened further.

Looking ahead, Swiss retail sales is expected to drop -1.3% yoy in February, SVME PMI is expected to droop to 62.3 in March. Eurozone PMI manufacturing is expected to be finalized at 57.7. Unemployment rate is expected to be unchanged at 9.8% in February. UK PMI manufacturing will be closely watched and is expected to remain strong at 60.9 in March. From US, in additional to non-farm payroll, construction spending and ISM manufacturing will be released.

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