Overnight Headlines
- US Dollar Gains vs Euro, Pound on Safety Demand as Stocks Decline
- New Zealand Dollar Outperforms on Rising Payouts for Dairy Farmers
- UK House Prices Surge in February, Overall Trend Still Disappointing
Critical Levels
| CCY | SUPPORT | RESISTANCE |
| EURUSD | 1.3574 | 1.3745 |
| GBPUSD | 1.6165 | 1.6328 |
The Euro and the British Pound declined, falling as much as 0.3 and 0.2 percent respectively against the US Dollar as stocks sold off in overnight trade, boosting safety-seeking demand for the benchmark currency. We remain short EURUSD.
Asia Session: What Happened
| CCY | GMT | EVENT | ACT | EXP | PREV |
| JPY | 15:00 | Cabinet Office Monthly Economic Report | - | - | - |
| NZD | 21:30 | Performance Services Index (JAN) | 50.8 | - | 52.1 (R-) |
| GBP | 0:01 | Rightmove House Prices (MoM) (FEB) | 3.1% | - | 0.3% |
| GBP | 0:01 | Rightmove House Prices (YoY) (FEB) | 0.3% | - | 0.4% |
| NZD | 2:00 | Credit Card Spending (MoM) (JAN) | 3.8% | - | -1.7% (R-) |
| NZD | 2:00 | Credit Card Spending (YoY) (JAN) | 5.6% | - | 2.1% (R+) |
| JPY | 4:30 | All Industry Activity Index (MoM) (DEC) | -0.2% | - | -0.2% (R-) |
The New Zealand Dollar outperformed in overnight trade, overlooking mixed economic data and a selloff across Asian stock exchanges, amid speculation that Fonterra Cooperative Group Ltd – the world’s largest dairy exporter – may raise its payout to farmers after milk powder prices hit a 31-month high. Higher payouts promise to boost hiring and spending in New Zealand’s top export industry, adding fuel to the sluggish economic recovery. The currency rose 0.5 percent on average against its major counterparts.
The New ZealandPerformance of Services Index slid to 50.8 in January, showing the non-manufacturing sector expanded at the slowest pace in 15 months. Meanwhile, Credit Card Spending soared 5.6 percent from the preceding year, showing the fastest annual growth rate since May 2008. The MSCI Asia Pacific regional benchmark index fell as downward pressure from last week’s Chinese RRR increase was compounded by spreading tensions in the Middle East, with uprisings spreading to Libya, Bahrain and Iran.
UK House Prices surged in February, rising 3.1 percent from the previous month according to report from Righmove Plc, an online listing of for-sale properties. The increase is the largest in four months. Looking past month-to-month volatility however, the trend in house prices remains troubling. Indeed, the same report showed prices added just 0.3 percent from a year before, putting the annualized growth rate at the slowest in 16 months.
Euro Session: What to Expect
| CCY | GMT | EVENT | EXP | PREV | IMPACT |
| CHF | 8:00 | Money Supply M3 (YoY) (JAN) | - | 6.6% | Low |
| EUR | 8:00 | French PMI Manufacturing (FEB P) | 55.3 | 54.9 | Low |
| EUR | 8:00 | French PMI Services (FEB P) | 58.0 | 57.8 | Low |
| EUR | 8:30 | German PMI Manufacturing (FEB A) | 60.3 | 60.5 | Medium |
| EUR | 8:30 | German PMI Services (FEB A) | 60.2 | 60.3 | Medium |
| EUR | 9:00 | German IFO - Business Climate (FEB) | 110.3 | 110.3 | Medium |
| EUR | 9:00 | German IFO - Current Assessment (FEB) | 113 | 112.8 | Medium |
| EUR | 9:00 | German IFO – Expectations (FEB) | 107.5 | 107.8 | Medium |
| EUR | 9:00 | Euro-Zone PMI Composite (FEB A) | 56.9 | 57.0 | Medium |
| EUR | 9:00 | Euro-Zone PMI Manufacturing (FEB A) | 57.2 | 57.3 | Medium |
| EUR | 9:00 | Euro-Zone PMI Services (FEB A) | 55.9 | 55.9 | Medium |
Risk sentiment is likely to remain a key catalyst for currency markets in European hours as investors continue to fret about mounting tensions sweeping the Middle East and North Africa. Stock index futures ticked lower and stocks sold off in Asia after Saif al-Islam Qaddafi, the son of Libyan leader Muammar Qaddafi, spoke out on state-run television warning of an impending civil war as Tunisian- and Egyptian-style protests were met with a harsh response from security forces. Libya is the world’s 12th-largest oil exporter.
On the data front, Germany’s IFO Survey of business confidence is expected to show sentiment soured a bit, with the closely-watched “Expectations” index down to 107.5 in February having hit a record-high 107.8 in the previous month. Meanwhile, February’s preliminary Euro Zone Purchasing Manager Index figures are set to reveal region-wide economic activity decelerated for the first time since October, driven by a slowdown in manufacturing-sector growth.
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