Forex: Tuesday’s review

Yesterday the dollar rose against most of its major counterparts as concern increased that China’s economic growth outlook has cooled, spurring demand for the currency of the world’s largest economy. The U.S. currency strengthened after BHP Billiton Ltd. (BHP) said China’s steel production is slowing, boosting concern about the nation’s growth outlook. BHP, whose biggest customer is China, is re-evaluating spending plans amid slowing Chinese growth, the Australian Financial Review reported, citing comments by Chairman Jacques Nasser to investors. China’s Premier Wen Jiabao this month announced an economic growth target of 7.5 percent for this year, down from an annual 8 percent over the past seven years. Steel output growth in China, the biggest producer, may slow to 4 percent this year, the China Iron and Steel Association said March 6. Housing starts in the U.S. fell in February from a three- year high, showing the recovery in the residential real estate market will take time to develop.

The euro fell against the dollar after earlier briefly erasing losses. The euro rose 0.2 percent to 83.49 pence, after declining to 82.84 pence yesterday, the weakest since Feb. 16. The last time the currency dropped below 82.21 pence was Sept. 10, 2010. The euro fell against the greenback and pound as concern mounted about European economic growth. The Netherlands increased its 2013 budget deficit forecast to 4.5 percent of gross domestic product from a previous estimate of 4.6 percent. The German Federal Statistics Office said that producer prices climbed 0.4 percent from January, when they gained 0.6 percent.

The pound strengthened against most of its 16 major peers after U.K. data showed inflation slowed less than economist estimates in February. Consumer prices rose 3.4 percent from a year earlier, compared with the 3.3 percent median estimate.

EUR/USD: yesterday in first half of day the pair fell, however restored the losses later.

GBP/USD: yesterday the pair was under pressure.

USD/JPY: yesterday the pair gain, closed day above Y83.50.

There is a big focus on the UK for Wednesday, starting at 0930GMT when the minutes of the latest Bank of England MPC meeting are released  at the same time as the UK Public Sector Finances. US data starts at 1100GMT with the weekly MBA weekly mortgage applications data. At 1330GMT, Treasury Secretary Tim Geithner & Fed Chairman Ben Bernanke testify to the House Committee on Oversight on "Europe's Sovereign Debt Crisis: Causes, Consequences for the United States and Lessons Learned." US data continues at 1400GMT with NAR Existing Home Sales, which is expected to rise to a 4.62 million annual rate after a solid 4.3% jump in January. While sales have been roughly flat over the last year, home supply has plunged, pulling down the months supply. While this combination should lift prices, it appears that sellers have been willing to cut prices to make sales in many cases. The weekly EIA Crude Oil Stocks data is then due, at 1430GMT.