Previous session overview
On Wednesday, the dollar continued to gain on the yen but lost ground versus the euro and more risk-sensitive currencies, as global risk appetites were buoyed by hopes for an upturn in China.
Traders shrugged off the bearish comments in the Fed's Beige Book, which said that economic conditions got even worse in January and February and that the U.S. economy is not expected to pick up before late 2009 or early 2010.
Euro rose strongly from its Asian session low at USD1.2457 to USD1.2663 versus the dollar and from JPY122.40 to JPY125.65 against the yen as traders sought out higher-yielding investments.
The British pound strengthened against the dollar after better than expected data, but those gains were capped ahead of Bank of England's meeting today.
The Japanese Yen held in a tight range until early Europe when JPY99 was broken for the first time in 4 months as investors, worried over Japan's struggling economy.
The Canadian dollar strengthened against the US dollar as oil climbed towards USD43 a barrel.
The Australian dollar enjoyed a firm rise in Asia Thursday on expectations China was close to announcing another round of fiscal stimulus, but poor local data and no sign of fresh China measures pared the commodity currency's gains.
Market expectation
The euro on Thursday is lower against the dollar and yen after more economic data, particularly from Australia, piled on to worry about the global recession. However, dealers doubt any big moves will occur ahead the ECB meeting later. For now, a range of USD1.2580 to USD1.2630 is likely.
EURUSD currently trades around USD1.2510. Bids reported placed from around USD1.2480 through to USD1.2450 (USD1.2457 Weds low USD1.2450 said to hold option barrier interest), with USD1.2440 highlighted from a few directions as pivotal. Main downside stops seen placed below this latter level. ECB rate decision at 1245GMT (expected to cut 50bps).
USDJPY rises briefly to JPY99.54, highest since Nov. 5, as investors try to lift pair to JPY100; still dealers says there are many selling orders in the JPY99.50 to JPY99.99 zone. Pair now trades at JPY99.46. Adds if pair does manage to reach JPY100, could then spike given stops above that level.
Focus today on the BOE rate decision with most forecasters looking for a 50bp cut to 0.50%, with attention on any comments regarding QE. Resistance said to remain in place around USD1.4200, a clear above expected to meet further supply placed from around USD1.4235 and dotted through to USD1.4250. USD1.4270/80 can prove stronger with stops above USD1.4300. Support USD1.4130/20.
Most important events of the day
| 5-Mar | Count. | Event | For | Unit | Imp. | Act. | Cons. | Prev. |
| 0:30 | AU | Building approvals | Jan | % m/m | Low | 1 | -2.9 | |
| 0:30 | AU | Trade Balance | Jan | A$ bn | High | 1.1 | 0.589 | |
| 0:30 | AU | Building approvals | Jan | % y/y | Low | -30.4 | -32.9 | |
| 7:00 | DE | Retail Sales | Jan | % m/m | Med | 0.2 | 0.1 | |
| 7:00 | DE | Retail Sales | Jan | % y/y | Med | -0.7 | -0.3 | |
| 7:45 | FR | ILO Unemployment | Q4 | k | Low | 4 | ||
| 7:50 | FR | PPI | Jan | % m/m | Med | 0.3 | -1.4 | |
| 7:50 | FR | PPI | Jan | % y/y | Med | -0.4 | ||
| 8:00 | ES | Industrial production (wda) | Jan | % y/y | Low | -20.2 | -19.6 | |
| 8:30 | NL | CPI | Feb | % m/m | Low | 0.6 | 0.3 | |
| 8:30 | NL | CPI | Feb | % y/y | Low | 1.8 | 1.9 | |
| 9:00 | GB | Halifax House Price Index (5th-6th) | Feb | % 3m y/y | Low | -17.8 | -17.2 | |
| 9:00 | GB | Halifax House Price Index (5th-6th) | Feb | % m/m | Low | -2 | 1.9 | |
| 9:00 | SE | Riksbank Deputy Governor Oberg to speak on "The current economic situation" in Jonkoping | Low | |||||
| 9:00 | NO | Investment Stats Oil Activity (2009) | Q1 | NOK bn | Low | 145.5 | ||
| 10:00 | EU | GDP 1st Est. | Q4 | % q/q | High | -1.5 | -1.5 | |
| 10:00 | EU | GDP 1st Est. | Q4 | % y/y | High | -1.2 | -1.2 | |
| 12:45 | EU | ECB Interest Rate Announcement, followed by news conference at 13:30 GMT | High | |||||
| 13:30 | US | Initial Claims | 28-Feb | k | Med | 650 | 667 | |
| 13:30 | US | Non Farm Productivity (F) | Q4 | % q/q ann | Low | 1.2 | 3.2 | |
| 13:30 | US | Unit labour costs (F) | Q4 | % q/q ann | Low | 3.8 | 1.8 | |
| 13:30 | CA | Building permits | Jan | % m/m | Med | -5 | -3.9 | |
| 14:00 | CA | BoC Deputy Governor Duguay to speak on "Study of measures to enhance credit availability and the stability of the financial system" in the Standing Committee on Finance | Low | |||||
| 15:00 | US | Factory orders | Jan | % m/m | Low | -3.5 | -3.9 | |
| 15:00 | CA | Ivey PMI | Feb | index | High | 38 | 36.1 | |
| 15:00 | US | Treasury Secretary Geithner to testify before the House Budget Committee on the Treasury Department budget for 2010 | Low | |||||
| 15:00 | US | Fed Board Vice Chairman Kohn scheduled to testify before the Senate Banking Committee on the government's aid to AIG | Low | |||||
| 16:00 | EU | ECB Executive Board Member Tumpel-Gugerell to speak at a conference by the WM group organised in Frankfurt | Low | |||||
| 17:45 | US | Atlanta Fed President Lockhart speaks before the Kennesaw State University Economic Outlook conference on the U.S. economy | Low |
