[B]Market Review - 27/03/2013[/B] [I][B]21:46GMT[/B][/I]
[B]Euro drops to fresh 4-month low on Italian political deadlock and Cyprus concerns[/B]
The single currency continued its recent losing streak and dropped to a fresh 4-month low against the dollar on Wednesday as a political deadlock in Italy and ongoing crisis in Cyprus weighed on the currency.
Although euro gained initial respite in Asian morning, price came under renewed selling pressure at Asian midday and price resumed its recent decline in European morning as demand fell at a sale of Italy’s bonds. Intra-day decline accelerated and the single currency fell below 1.2800 and eventually to a fresh 4-month low at 1.2750 in New York morning as the lack of progress in forming a new government in Italy and continued concerns over Cyprus increased risk aversion. Later, the pair briefly recovered to 1.2790 before trading narrowly.
Italy sold a total of 3.9 billion euros of 5-year bonds at a yield of 3.65%, up from 3.59% at a previous auction.
The British pound traded narrowly in Asia and briefly recovered to 1.5181 in European morning before penetrating previous day’s low at 1.5135 after an Office for National Statistics report confirmed the U.K. economy shrank in Q4, putting the nation on course for another recession. Cable eventually hit session low of 1.5092 in New York morning before staging a short-covering rebound to 1.5133 ahead of NY close.
U.K. GDP Q/Q and Y/Y for Q4 came in at -0.3% and 0.2% respectively.
Versus the Japanese yen, although the greenback rose to session high at 94.91 ahead of European opening on speculation that BoJ Governor Haruhiko Kuroda will add to stimulus measures in the bank’s next meeting, price tumbled in European session and hit an intra-day low at 94.02 in New York morning on yen’s broad-based strength. However, price pared intra-day losses and rebounded to 94.53 before stabilising in New York afternoon.
In other news, Italy centre-left leader Pier Luigi Bersani said he ‘intends to report outcome of political talks to President Napolitano by Thursday.’
On the data front, EU economic sentiment and consumer confidence came in at weaker-than-expected at 90.0 and -23.5 vs forecasts of 90.5 and -23.0 respectively.
[B]Data to be released on Thursday :[/B]
Japan’s retail sales, U.K. Gfk consumer confidence, German retail sales and unemployment rate, Canada’s GDP, U.S. GDP, jobless claims and Chicago PMI.