Forex: Tuesday’s review

Yesterday the euro declined to a two-week low versus the dollar after a report showed the region’s economy contracted last quarter, adding to signs the European debt crisis is hampering global growth. Europe’s gross domestic product shrank 0.3 percent from the third quarter, the region’s statistics office said, confirming an initial estimate published on Feb. 15. Exports fell 0.4 percent and household spending declined 0.4 percent. The ECB will keep its benchmark interest rate t a record low 1 percent on March 8. The euro dropped as Greece struggles to complete a bond exchange with private investors by March 8 in order to receive a 130 billion-euro ($171 billion) bailout.

The yen rose against all its major counterparts and gained for a fifth day against the 17-nation currency as 20 percent of Greece’s private creditors have agreed to debt restructuring. The yen rose against the dollar for a second day as it rebounded from oversold levels for the first time in 13 days. Its 14-day relative strength index advanced above the 30 level, which indicates an asset may have declined too far, too quickly, for the first session since Feb. 16.

Australia’s dollar fell to a five-week low after the central bank left its benchmark rate at 4.25 percent and reiterated it has scope to ease monetary policy if needed. The Reserve Bank of Australia said in a statement that while current settings are “appropriate for the moment,” there is scope for easier policy if demand weakens “materially.”

EUR/USD: yesterday the pair has fallen to a figure, come nearer to $1.3100.

GBP/USD: yesterday the pair has fallen on one and a half figure, touched $1.5700.

USD/JPY: yesterday the pair has fallen, closed day below Y81.00.

On Wednesday US data starts at 1200GMT with the MBA weekly mortgage applications data. This is followed at 1315GMT by the ADP National Employment Report, which has missed the size of the payroll change by a fairly substantial amount in the last few months. At 1330GMT, US Q4 non-farm productivity is expected to be revised up to a 0.9% rate of growth. The weekly EIA weekly crude oil and gasoline stocks data follows at 1530GMT. Late US data sees the 2000GMT release of Treasury Allotments By Class and consumer credit

usage, which is forecast to rise $10.8 billion in January after significant increases in the previous two months that were due in large part to spikes in nonrevolving credit use. Retail sales rose 0.4% in January, while sales were up 0.7% excluding motor vehicle sales.