EU focus: Euro rallies as ECB interest-rate speculation outweighs Portugal, Spain

Data released
08:28     Germany     PMI (March) flash    60.9    62.0    62.7
08:28     Germany     PMI services (March) flash    60.1    58.4    58.6
08:58     EU(17)     PMI (March) flash    57.7    58.2    59.0
08:58     EU(17)     PMI services (March) flash    56.9    56.3    56.8
09:00     Italy     Consumer confidence (March)    105.2    -    106.3 (106.4)
09:30     UK     Retail sales (February)    -0.8%    -0.5%    1.9%
09:30     UK     Retail sales (February) Y/Y    1.3%    2.4%    5.3%

The euro appreciated against the dollar as speculation that the European Central Bank is poised to raise borrowing costs outweighed concern that the fiscal crisis in the region’s most indebted nations is deepening.
The euro slipped earlier today as Moody’s Investors Service downgraded 30 Spanish banks, and tumbled late yesterday after Portugal’s prime minister resigned. The ECB on March 3 said “strong vigilance” is warranted on inflation.
“The euro shrugs off these negatives because the market is focused on the ECB raising rates,” said Jeremy Hale at Citigroup. “It’s expectations about rates that are driving everything.”
The ECB will announce its next monetary policy decision on April 7. Its refinancing rate is currently at a record low of 1%.
ECB council member Erkki Liikanen today said the bank’s stance ensures that temporary inflation pressures don’t fuel broader wage and price increases.

EUR/USD continues to hold higher afger falling to session lows around $1.4050. Currently rate trades near $1.4145.
GBP/USD fell from $1.6260 tо $1.6142. Bids helped the rate to recover to $1.6180.
USD/JPY holds within the Y80.70/Y81.10 range.

Jobless claims is scheduled to release at 12:30 GMT.
The focus will be on Durable goods orders at 12:30 GMT. Analysts predict orders rose 3.2% in Feb after +1.0% in Jan.