On Friday, European markets advanced after Greece announced that its private creditors agreed to a debt swap. In addition, better-than-expected payroll and jobs data from the US also lifted the market sentiment. Most of the industry groups rallied in the broad-based DJ STOXX 600 index. Real Estate, Retailers and Transport & Logistics were among the best performing sectors. Linde surged after its fourth-quarter earnings topped the analysts’ estimates. London Stock Exchange soared as the company agreed to buy a majority stake in LCH.Clearnet to expand its post-trade services. Ericsson, Novartis and BHP Billiton were among the top gainers in the blue-chip DJ STOXX 50 index, while ING Groep, BP and Vodafone were among the top losers for the day.

On Thursday, European stocks advanced as the deadline for Greece’s debt swap approached and Germany’s industrial output increased more than economists’ estimates. Most of the industry groups rallied in the broad-based DJ STOXX 600 index. Automobiles & Parts, Industrial Goods & Services and Basic Resources were among the best performing sectors. EADS surged after doubling its dividend payout and predicting an increase in earnings in 2012. Aviva advanced after reporting its operating profits that topped the analysts’ estimates. Deutsche Post soared after the company said that profit in 2012 will increase as growth in global trades helps the company’s businesses. Daimler, Deutsche Bank and ING Groep were among the top gainers in the blue-chip DJ STOXX 50 index for the day.

On Friday, Asian stocks rose as Greece struck a deal with creditors to help Europe contain its debt crisis. Within the region, India and Japan were among the top gainers, while Thailand and Singapore markets were among the losers. We remain cautiously optimistic on Asia since valuations are still attractive and the macroeconomic improvement is likely to continue. We expect the Eurozone debt crisis to linger, the US recovery to stay on course, and the Chinese economy to manage a soft landing guided by additional, selective policy easing. Given a brighter global economic outlook and falling inflation, Asian governments have been easing monetary and fiscal policies, in turn benefiting risky assets. We believe Asian markets are poised for further gains, though we are closely monitoring the rising oil prices, which could pose a serious threat.

On Thursday, all the Asian markets rallied after Japan’s GDP for the fourth quarter of 2011 came above the government’s forecast. The economy contracted by 0.7% where as earlier the government estimated the economy to contract by 2.3%. While Japan rallied the most on the better than estimated GDP growth; Singapore, domestic China, Hong Kong and Thailand too gained on further positive news from the US and Europe. A private report in the US indicated that the hiring in the country has increased, signaling improving employment. Greece debt restructuring efforts paid off further as increased number of investors have now agreed to the restructure the nation’s debt. China would be reporting inflation and industrial production numbers this week. Consensus forecasts both of these to moderate and thereby paving way for further policy relaxation in the country.

The decision by the Greek government to call for a collective action clause (CAC) has not given any significant stress to the European bond markets. Spanish, Italian and German bond yields were little changed on Friday. The drop of EURUSD on the day is closely related to US data and a broad USD rally. It can hardly be explained by European factors.

The US dollar gained on a solid labour market report and a deteriorating trade balance. The surprising rise of the trade deficit, which might well hurt the dollar in the long run, had a short-term positive impulse on the greenback. It signals that the US consumer keeps a solid demand, despite rising energy prices. That and the strength in the labour market can be considered as a success for the Fed's expansive policy and therefore may support the US dollar further in the coming weeks.

Swedish industrial production saw a strong pick up in January, after having falling strongly in November and been flat in December. The m/m figure increased 3.6% (consensus +0.2%) and the y/y figure by +2.1% (cons. +0.7). Compared to the negative production data, from other European countries, this underlines again the stronger growth we see in Sweden compared to the Eurozone in 2012. This supports our call that the SEK will profit from the improving PMI's and risk sentiment in general.

Australia's February employment data disappointed markets, with a loss of 15,400 full time jobs, against expectations of a 5,000 jobs gain. Unemployment rate also ticked up to 5.2% from 5.1% previously. The AUDUSD sold off briefly, but managed to keep above the psychological support level of 1.05. Recovering risk sentiment subsequently led the Aussie higher, while market keenly awaits the outcome of Greek PSI participation.

Since reaching a post-revaluation low of 6.2919 last week, the USDCNY daily reference rate was guided higher throughout this week. Besides broader USD strength, we believe it is also a signal by the People's Bank of China to introduce more volatility, after Governor Zhou Xiaochuan suggested on Monday about the possibility to widen USDCNY trading band. Nonetheless, investors' appetite for CNY seems intact, with the offshore CNH and NDF markets still trading at a slight premium to the onshore CNY.

The Swiss National Bank released on Monday the accountability report for 2011. The chronic of monetary events and implementation of monetary policy shows that the SNB used 17.8 bn Swiss francs for direct currency intervention. This is roughly twice the amount, which we and most market participants had expected. Moreover the text makes not clear, if the SNB intervened only on September 6 or also later. The higher intervention amount is not worrisome, but doesn't help to bring EURCHF higher soon.

Besides the ECB, also the Bank of England (BoE) and the Bank of Canada (BoC) had their regular central bank meetings today. The BoE kept policy rates as well as its asset purchase program unchanged, as expected. The Bank of Canada also kept policy rates unchanged, but turned more positive on the outlook for Canada and the global economy. Overall the pound remains our favourite currency for the time being among G10 and also the CAD stay's one of our favourites.

Investigations on the financial market trades of the board members of the Swiss National Bank found no new transactions which breached the regulations. This clears the path for the election of the third member of the Governing Board and the President of the SNB. The Swiss National Bank also reported that forex reserves fell further. The decline is line with the trend of the past months and is caused by maturing swap operations. Franc remains little changed investors await SNB meeting next week.