NEW YORK (BBH FX Strategy) -- The dollar is posting modest gains against most of the major and emerging-market currencies to start what is likely to be among the most important weeks in the first quarter, with numerous central banks meeting, first-tier economic data and the deadline for the Private Sector Involvement in Greece.
The yen is bucking the trend, recovering from its preweekend losses helped by cross-rate gains. Global equity markets are lower, with the MSCI Asia Pacific Index losing almost 1%.
Chinese Premier Wen Jiabao cut China's GDP target this year to 7.5%, and the sub-50 reading on the official service sector PMI (48.4 from 52.9) is taking a toll on regional bourses and sending the yuan to a four-week low against the greenback.
European equities have followed suit, as a downward revision from the flash service PMI (48.8 from 49.4 flash reading and 50.4 in January) and concerns of light participation in the PSI weighed on prices.
The Dow Jones Stoxx 600 is off nearly two-thirds of a percent near mid-day in London, with basic materials and the financial sector the heaviest sectors with only health care advancing. Given the disappointing data and equity losses, and pullback in gold and oil prices, one would have expected a greater reaction in the debt markets than the largely flat reading from the core and modest losses in the European periphery.
