British Pound Extends Advance Ahead of Final GDP Report
Key Overnight Developments
• New Zealand’s Home-Building Rises Almost Three Times Expectations
• Japan’s Industrial Production Falls for First Time in a Year
• Asia/Pacific Shares Rally Following U.S. Consumer Confidence Increasing
The Euro added as much as 0.54 percent against the greenback ahead of the opening bell in Europe, with the pair looking to test the upper trend line of the descending channel following the recent decline from the fourth wave, while the British Pound added 0.60 percent against the greenback. We remain short EURUSD at 1.4881 and GBPUSD at 1.5765.
Asia Session Highlights
Home building approvals in New Zealand rose for the first time in three months during the month of February, with the number of permits climbing 5.9% from the previous month’s decline, signaling that residential construction will help fuel economic recovery this year. The increase was almost three times economists’ forecasts of 2.0% as the number of approvals excluding apartments rallied to the highest level since May 2008, Statistics New Zealand in Wellington said today. Looking ahead, economic growth is expected to accelerate in the first quarter on the back of record low interest rates and a recovering global economy, Reserve Bank Governor Alan Bollard publicized earlier this month.
Moreover, the preliminary reading for Japan’s industrial production in February pushed 0.9% lower, exceeding expectations of -0.5%, while the unemployment rate held at 4.9%, the lowest level since March 2009, following two monthly declines and underscoring an uneven economic recovery that has yet to end deflation. On the other hand, household spending retreated 0.5% in February, posting the first decline in seven months.
Euro Session: What to Expect
UK Gross Domestic Product headlines the economic docket during the European session, with forecasts calling for a final reading of 0.3% in the fourth quarter, and a better than expected reading would ease some uncertainty about U.K. economic prospects. A main reason for the projected increase is largely due to consumer spending accelerating 0.4%, marking the largest gain since the first quarter of 2008, while government spending surged 1.2%. Ahead of the GDP report, the British extended its two-day advance, with the pair looking to test the 20-day SMA (1.5055) for resistance. It is also noteworthy that a retracement from this level is very probably amid a dismal report as our speculative sentiment index signals for further declines in the pound. Meanwhile, Germany’s import price index is expected to tick higher, rising 0.4% in February from the previous month, while U.K.’s nationwide house prices are surveyed to soar an annualized 8.2% during the same month.
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Written by Michael Wright, DailyFX Research
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.