Thursday, 28 February 2013

EXCLUSIVE IAFT ANALYTICS / Italian 5- and 10-year Bond Auction in Focus Today

Yesterday, the markets continued to "digest" the Italian elections' results. The euro was under pressure, but the support on the way to the 30th figure failed to constrain the bears' onslaught. In his speech, Ben Bernanke said nothing new in general. The head of the U.S. Federal Reserve continues to promote the Asset Purchase Program, but noted that "the QE increase may cause the loss of the Fed's confidence to roll the measures back, but very low interest rates could harm the financial stability." However there was not any special markets' special reaction to the speech. The stock markets' reduction was changed into its increase, the USD/JPY is trying to determine the direction, and the euro is consolidating in the formed range.

Planned for today: 13:30 — UK. GDP (QoQ);
14:00 — Eurozone. Euro-Zone Consumer Confidence;
17:30 — USA. Durable Goods Orders;
19:00 — USA. Pending Home Sales (MoM);
19:30 — USA. Crude Oil Inventories.

The GDP data for the UK will be of interest today. The pound recently was clearly not in favor with investors and dropped under the pressure of various factors, including the negative macroeconomic statistics as well. Today's GDP may give the British pound a chance to rehabilitate. Therefore, if the GDP is at least at the zero level, and the best for it to demonstrate a positive idex, then we can expect the correction in the British currency. If the index is the same (that is, 0.3%) or below, the pressure on the pound will continue. 

Also the Italian bond auction is going to be held today, where Italy is planning to sell five-year bonds for the amount from 1.75 to 2.5 billion euros, and 10-year-old — for the amount of 3 to 4 billion euros. After the elections, this auction will be serve an indicator of the investor's confidence. If the papers continue to be in demand and their yield decreases, the euro will have an incentive to increase. Otherwise, it would face another wave of sales.


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