May 10 11:40 GMT
The euro continued to slide in Europe to 1.2980 from 1.3050 (-70 points) against the firm dollar, which received a boost from the strong dollar-yen buying trend after breaking the 100 level.
Germany’s seasonally adjusted trade surplus remained broadly stable at E17.6 billion in March after E17.7 billion in February. Imports fell 6.9% m/m and exports were down 4.2% m/m. Bunds are trading sharply lower following the lead of the weaker US Treasuries and better demand in the equities market. Bunds touched a low of 145.38, with the 10-year yield at 1.31%. The G-7 two-day meeting begins today in London. UK Chancellor George Osborne warns that the global recovery cannot be taken for granted and central banks should consider additional monetary policy to promote recovery.
The Japanese Yen continued to decline against the dollar which moved to a four-year high of 101.70 from 100.85 (+85 points) in the European session after the Ministry of Finance report that showed Japanese investors increased holdings of foreign denominated bonds in the past two weeks in pursuit of higher yields over domestic bonds. The focus of the G-7 meeting will be the yen’s steep decline which raised concern within the G7 community of a potential currency war. The U.S. Treasury Secretary Jack Lew said that Japan had “growth issues” but its attempts to stimulate its economy need to stay within the bounds of international foreign exchange agreements.”
The Swiss Franc fell by almost 100 points in Europe to the high of 1.2460 against the euro from 1.2362 (+98 points) as stocks climbed.The Swiss National Bank set a cap of 1.2000 per euro against the franc in September 2011 to defend the Swiss economy against deflation and a recession. In an interview last week, SNB Vice President Jean-Pierre Danthine said the cap on the Swiss Franc remained essential and a change in policy in the short term was unlikely.