The pair rose sharply on Wednesday trading as the improvement in the sentiment after successful European bond auctions upbeat fundamentals damped demand on the dollar and haven currencies.
Spainauctioned a total of 4.88 billion euros of bonds in 12 and 18 months maturity, where the yields recorded drop and demand was higher, whileGreecesold 1.625 billion euros of 91-day bills in an auction that saw a decline in yield to 4.64% compared with 4.68% in December’s 20 auction.
Also, The EFSF sold 1.5 billion euros, meeting target after demand was nearly triple the amount tendered of 4.66 billion.
Fortunately, the upbeat bond selling managed to eclipse the grim impact of the S&P downgrade to a number of euro area economies, including the top-ratedFranceandAustria, over the weekend and the EFSF on Monday.
Regarding fundamentals, German business confidence, ZEW survey economic sentiment gauge, edged up to -21.6 in January compared with both previous reading of -53.8.
On the other hand, Chinese growth figures showed better-than-estimated expansion of 8.9% expansion in the three months ended December 31 compared with forecasts of 8.7%.
In the U.K., data released on Tuesday showed that inflation eased on the year ended December to 4.2% from 4.8% which is the lowest since June 2011, moving in line with the BoE’s latest inflation forecasts.
On Wednesday, the UK Jobs report for December will be the focus at 09:30 GMT. The economy is expected to have lost another 10,000 jobs after 3,000 thousand the previous month and the claimant count rate to hold at 5.0%. The ILO Unemployment rate for the three months to November is expected to hold at 8.3% while the average weekly earnings to hold at an annual 2.0% while excluding bonuses to tick slightly higher to 1.9% from 1.8%.
As for the United States a busy day starts at 13:30 GMT with the Producer Price Index for December where it is expected to ease on the month to 0.1% after 0.3% and on the year expected at 5.1% from 5.7%; excluding food and energy the index is expected steady at 0.1% and on the year to slow to 2.8% after 2.9%.
At 14:00 GMT the TIC flows for November are due after the total Net TIC Flows in October declined in October with total selling of $48.8 billion.
At 14:15 GMT the December Industrial Production index is expected with 0.5% rebound from the previous month’s 0.2% drop and capacity utilization to tick higher to 78.1% from 77.8%.
The data will probably affect the pair’s movement, yet the pair may be more affected by the general sentiment which will focus on auctions fromPortugalandGermany.
Originally posted here
