EU session review: Euro appreciates before ECB rates meeting

Data released:
08:30     UK     Industrial production (February)    -1.2%    0.4%    0.5%
08:30     UK     Industrial production (February) Y/Y    2.4%    4.3%    4.4%
08:30     UK     Manufacturing output (February)    0.0%    0.6%    1.0%
08:30     UK     Manufacturing output (Ferbuary) Y/Y    4.9%    5.8%    6.8%
09:00     EU(16)     GDP (Q4) final         0.3%    0.3%
09:00     EU(16)     GDP (Q4) final Y/Y         2.0%    2.0%
10:00     Germany     Manufacturing orders (February) seasonally adjusted    2.4%    1.3%    3.1 (2.9)%
10:00     Germany     Manufacturing orders (February) not seasonally adjusted, workday adjusted Y/Y    20.1%         16.5 (16.0)%

The euro rallied to a more than 14- month high versus the dollar before the European Central Bank meets tomorrow to decide on interest rates. The ECB will raise its main rate by 25 basis points from a record low 1% tomorrow, according to surveyed economists.
“The rise we’re seeing in the euro is very much interest- rate driven,” said Sarah Hewin, a senior economist at Standard Chartered Plc. “Markets are increasingly shifting from the view of a one-and-done rate hike at the next meeting, to one that sees more rate hikes further out.”
Europe’s currency has gained 6.9% against the dollar this year as stronger economic growth in Germany and accelerating inflation boosted expectations that policy makers in the 17-member bloc will need to raise interest rates. ECB President Jean-Claude Trichet signaled on March 3 that policy makers may raise the benchmark rate at their next meeting to curb consumer-price inflation, which reached a two-year high of 2.6% in March.
“The ECB will likely hike rates tomorrow,” said Tsutomu Soma at Okasan Securities Co.. “The bias is for the euro” to strengthen.
Gross domestic product in the euro area expanded 0.3% in the fourth quarter from the previous three months, a report today showed. The reading was in line with the median estimate of economists. German factory orders jumped a more-than-forecast 2.4% in February from a month earlier when they increased 3.1%. Economists had forecast a 0.5% gain.
The yen slumped against the dollar on speculation Japan will hold its current monetary policy to support the economy. Japan’s central bank will keep its target rate at zero to 0.1% at the end of its meeting tomorrow.

EUR/USD slowly rose from $1.4270 in EU to highs on $1.4315. But rate failed to hold above and back under $1.4300.

GBP/USD fell from $1.6364 to the session lows around $1.6262 following the poor UK IP data. Later rate recovered to $1.6315.

USD/JPY recovered from Y84.80 to Y83.20.

There is no major data left for today.