Key News

• China's premier expressed concern Friday about its massive holdings of Treasuries and other U.S. debt, appealing to Washington to safeguard their value, and said Beijing is ready to expand its stimulus if the economy worsens. (AP)

• The Swiss National Bank moved to weaken the Swiss franc on Thursday, the first time a big central bank has intervened in the foreign exchange markets since Japan sought to weaken the yen in 2004. (FT)
• Canadian employment fell for the fourth consecutive month in February (-83,000), bringing total losses since the peak of last October to 295,000 (-1.7%). The February employment decrease pushed the unemployment rate up 0.5 percentage points to 7.7%. (Statistics Canada)
• Japan injected cash into three banks on Friday, its first such payouts in the current crisis, as the central bank warned the recession was worsening and the government promised a new stimulus plan within weeks. (WSJ)
• The wealth of American families plunged nearly 18% in 2008, erasing years of sharp gains on housing and stocks and marking the biggest loss since the Federal Reserve began keeping track after World War II. (WSJ)

Key Reports (WSJ):
8:30 a.m. Jan Trade Balance: Expected: -37.0B. Previous: -39.93B.
8:30 a.m. Feb Import Prices: Expected: -0.8%. Previous: -1.1%.
10:00 a.m. Mid-Mar Reuters/U Mich Sentiment Index: Expected: 56. Previous: 56.2.

Quotable

"The problem is that conditions in the world economy today are what mathematicians call 'path-dependent'. In a period of normal growth, it doesn't matter whether there are some bumps in the road -- for example, changes in government policy or delays in important announcements, such as the agreement to insure Lloyds Banking Group's toxic assets. Like a cyclist with plenty of momentum, the economy just keeps on going. But when it is unstable, even a small change in external conditions can have a hugely amplified effect. Imagine a pencil balanced on its tip, for example; the tiniest wisp of a draft will determine which way it falls.

"It is this path-dependence that explains why real-world economists -- as opposed to the Delphic oracles who merely repeat the same bullish or bearish pronouncements -- have been lurching around so much in recent months. To see what I mean, consider the growth projections published on November 25 by the Organisation for Economic Co-operation and Development (OECD), the world's pre-eminent forecasting institution. The OECD predicted that in the fourth quarter of 2008, GDP would fall by 2.8 per cent annualised in the US, by 2.1 per cent in Britain and by 1.0 per cent in the eurozone, Germany and Japan. Last week we learnt the actual figures: US GDP fell by 6.2 per cent annualised, Britain by 6 per cent, the eurozone by 6 per cent, Germany by 8.2 per cent and Japan by 12.8 per cent."

                              Anatole Kalesky

FX Trading - Still about that risk aversion versus risk appetite theme
In currency trading today, ebb and flow from risk appetite to risk aversion still seems the key driver. 

We get a couple of key numbers this morning at 8:30 a.m. EST...stay tuned.

Have a great weekend.