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Pound Eyes GDP Revision, Euro Looks to Italian Bond Sale

By , Currency Strategist
27 March 2013 06:36 GMT

The British Pound looks to revised UK GDP figures to guide the outlook for BOE policy. The Euro eyes the outcome of an Italian bond sale to gauge debt crisis jitters.

Talking Points

  • British Pound Looks to 4Q GDP Revision to Guide BOE Expectations
  • Euro Eyes Italian Bond Auction Outcome to Gauge Debt Crisis Worries

Revised fourth-quarter UK GDP figures headline the economic calendar in European hours. Expectations point to confirmation of the earlier estimate that showed output shrank 0.3 percent in the three months through December 2012 compared with the prior quarter. A revision downward stands boost Bank of England stimulus expectations and punish the British Pound, whereas an adjustment higher may offer a lift to the UK unit. We have opted to add to our short GBPUSD position.

Meanwhile, Italy will auction off €7 billion in 5- and 10-year bonds. Traders will look to average yield levels and the bid-to-cover ratio, a measure of demand, to gauge the degree of sovereign risk fears lingering in the market following the questionable Cyprus bailout deal that emerged at the start of the week. A pickup in borrowing costs and/or disappointing uptake stands to weigh on the Euro, and vice versa.

The Japanese Yen underperformed in otherwise quiet overnight trade as stocks advanced in Asia, sapping demand for the regional haven currency. Downward pressure may have been compounded by Bank of Japan Governor Haruhiko Kuroda. The Wall Street Journal reported that the newly-minted central chief was prepared to take steps previously thought too dramatic in an attempt to beat deflation, including a move to buy longer-dated government bonds and removing a self-imposed imposed on the amount of JGBs it purchases.

Asia Session:

GMT

CCY

EVENT

ACT

EXP

PREV

0:00

NZD

NBNZ Business Confidence (MAR)

34.6

-

39.4

0:00

NZD

ANZ Activity Outlook (MAR)

32.4

-

37.6

Euro Session:

GMT

CCY

EVENT

EXP

PREV

IMPACT

7:00

EUR

German Import Price Index (MoM) (FEB)

0.2%

0.1%

Low

7:00

EUR

German Import Price Index (YoY) (FEB)

-1.6%

-0.8%

Low

7:00

EUR

German GfK Consumer Confidence Survey (APR)

5.9

5.9

Low

7:00

CHF

UBS Consumption Indicator (FEB)

-

1.18

Low

7:45

EUR

French Gross Domestic Product (QoQ) (4Q F)

-0.3%

-0.3%

Medium

7:45

EUR

French Gross Domestic Product (YoY) (4Q F)

-0.3%

-0.3%

Medium

8:00

CHF

KOF Swiss Leading Indicator (MAR)

1.04

1.03

Medium

9:30

GBP

Gross Domestic Product (QoQ) (4Q F)

-0.3%

-0.3%

High

9:30

GBP

Gross Domestic Product (YoY) (4Q F)

0.3%

0.3%

High

9:30

GBP

Total Business Investment (QoQ) (4Q F)

-1.2%

-1.2%

Low

9:30

GBP

Total Business Investment (YoY) (4Q F)

-

0.4%

Low

9:30

GBP

Current Account (£) (4Q)

-12.5B

-12.8B

Low

10:00

EUR

Euro-Zone Economic Confidence (MAR)

90.5

91.1

Low

10:00

EUR

Euro-Zone Business Climate Indicator (MAR)

-0.79

-0.73

Low

10:00

EUR

Euro-Zone Consumer Confidence (MAR F)

-23.5

-23.5

Medium

10:00

EUR

Euro-Zone Services Confidence (MAR)

-6.5

-5.4

Low

10:00

EUR

Euro-Zone Industrial Confidence (MAR)

-12

-11.2

Low

10:00

EUR

Italy to Sell €7B in 5-, 10-year Bonds

-

-

Low

Critical Levels:

CCY

SUPPORT

RESISTANCE

EURUSD

1.2799

1.2891

GBPUSD

1.5128

1.5199

--- Written by Ilya Spivak, Currency Strategist for Dailyfx.com

To contact Ilya, e-mail ispivak@dailyfx.com. Follow Ilya on Twitter at @IlyaSpivak

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27 March 2013 06:36 GMT