- Claimant Count Change + MPC Meeting Minutes (GB, 10:30 GMT)
- German 10-Year Bund Auction (Ger, 11:30 GMT)
- FOMC Statement + Interest Rate Decision (U.S, 19:00 GMT)
- Fed Chairman Bernanke Speaks (U.S, 19:30 GMT)
Builders began work on more houses in February and permits for future construction climbed to the highest level in almost five years, pointing to a sustained rebound that will help power the U.S. expansion. Housing starts climbed by 0.8 percent last month to a 917,000 annualized pace, the Commerce Department reported yesterday in Washington. Permits rose 4.6 percent to a 946,000 rate, the most since June 2008.
European policy makers must weigh how far to push Cyprus after lawmakers in the Mediterranean nation rejected an unprecedented levy on bank deposits, throwing into limbo a rescue package designed to keep it in the euro. Luxembourg Finance Minister Luc Frieden called for the 17 euro-area finance ministers to reconvene “as soon as possible” to cobble together a new package. The European Central Bank, whose Governing Council meets today in Frankfurt, will also have to decide whether to give Cyprus more time or consider cutting off liquidity to the country’s banks.
Chancellor of the Exchequer George Osborne delivers his annual budget to Parliament today amid calls by the opposition Labour Party and even his own Cabinet colleagues to spur an economy at risk of falling into a third recession in five years. Britain has recovered only half of the output lost in 2008-2009, and the country forfeited its top credit rating at Moody’s Investors Service on Feb. 22. Other news it that a poll by ComRes Ltd. for ITV News showed 44 percent of voters want George Osborne to be replaced. Almost half of those questioned in a poll said, with a similar number urging him to ease his austerity program as the economy struggles to grow.
EUR/USD: The euro dropped to a four months against the dollar after the Cypriot parliament voted down a bank-deposit levy needed to secure a bailout, risking renewed tumult in the currency bloc and after U.S Housing Starts and Building Permits climbed the highest in level in almost five years, sustaining the U.S expansion. Today the pair was trading flat at 1.28692 at the time of writing as investors jumped to the sidelines, awaiting some data and news from the Eurozone to get some visibility. In the European session ahead, market participants will monitor the German PPI (YoY) (Forecast: 1.5% - Previous: 1.7%). A higher than expected reading should be taken as bullish for the EUR, while a lower than expected reading should be taken as bearish for the EUR. The country will also hold a 10-Year Bund Auction, which will give an indication of the government debt situation. The key risk events for the pair will come on the American session when the U.S will release the FOMC Statement and Interest Rate Decision. In addition, the Fed Chairman Bernanke will make a speech. There are speculations on the market that policy makers will decide to keep buying bonds to support economic growth and keep the interest rate unchanged. All these news and data coupled with the latest developments in Cyprus, regarding the financial crisis will bring volatility on the market. Investors should stay focus. The resistance level is at 1.29686 and the support level is at 1.28203.
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GBP/USD: The GBP/USD traded slightly lower yesterday after the Cypriot parliament voted down a bank-deposit levy needed to secure a bailout, risking renewed tumult in the currency bloc, overshadowing positive data from the UK. The pair was trading in the narrow range of 26pips at the time of writing ahead of a series of important data in both the UK and the U.S. Today, the UK will release its Average Earnings Index +Bonus (Forecast: 1.5% - Previous: 1.4%), the Claimant Count Change (Forecast: -5.0K – Previous: -12.5K) and the MPC Meeting Minutes. If better than expected data are release it will be bullish for the GBP. Later in the day, the U.S will release the FOMC Statement and Interest Rate Decision. In addition, the Fed Chairman Bernanke will make a speech. There are speculations on the market that policy makers will decide to keep buying bonds to support economic growth and keep the interest rate unchanged. Market sentiments remain fragile on the GBP on a loss of confidence in the economic policies of U.K. Prime Minister David Cameron. When Cameron and Osborne took office in May 2010, they predicted the economy would grow more than 5 percent over the next two years, a budget deficit equal to 11 percent of gross domestic product would fall to 2 percent by April 2015 and the U.K. would keep its top credit rating. Instead, output rose 1.1 percent, the deficit is still 8 percent of GDP and analysts say Fitch Ratings and Standard & Poor’s will follow Moody’s in downgrading Britain’s credit score after today’s budget. Investors should be very prudent on the pair. A wait and see approach will be a good strategy. All the news and data in UK and US coupled with the latest developments in Cyprus, regarding the financial crisis will bring volatility on the market. The resistance level is at 1.51743 and the support level is at 1.49937.
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Oil (WTI): Oil prices dipped in U.S. trading on Tuesday as Cyprus addressed a multilateral proposal to levy taxes on the country's bank depositors, a measure that has rattled markets worldwide and sent investors avoiding growth-sensitive energy commodities and snapping up safe-haven dollar positions. The commodity was trading slightly higher today at 92.360 at the time of writing on market corrections after the Commerce Department said U.S. housing starts increased 0.8% last month a to seasonally-adjusted rate of 917,000. Permits to build new homes rose 4.6% to 946,000 units, the best rate since June 2008. Markets sentiments remain weak as the Cypriot parliament rejected an unprecedented levy on bank deposits aimed at raising 5.8 billion euros ($7.5 billion) in return for 10 billion euros in external aid. The European Union accounted for 16 percent of the world’s oil demand in 2011, according to BP Plc (BP/)’s Statistical Review of World Energy. In addition, an Energy Department report today may show total U.S. crude supplies increased 2 million barrels last week to 386 million barrels, the highest level since July, according to the median estimate of 11 analysts surveyed by Bloomberg News. Investors should wait for data and news from the Eurozone, the U.S and China to better assess the trend of the commodity. The resistance level is at 93.171 and the support level is at 91.731.