Daily Market Analysis: Currency Report

 U.S. mortgage applications were up last week, erasing a modest decline the week before, industry data showed Wednesday. The Mortgage Bankers Association's benchmark index of mortgage applications rose 7.5 percent in the week ending February, following a drop of 2.9 percent.

Canada's seasonally adjusted rate of housing starts edged down slightly in January, official data showed Wednesday. The seasonally adjusted annual rate of housing starts was 197,900 units in January, according to Canada Mortgage and Housing Corporation (CMHC). This is down from 199,900 units in December 2011.

Machinery orders received by Japanese manufacturers in December plunged more than expected by economists as strong yen gains and global economic slowdown damped export outlook. Data released by the Cabinet Office on Thursday revealed that total orders placed with Japan's private sector, excluding volatile orders for ships and those from electric power companies, declined 7.1 percent in December from the previous month.

Greek Finance Minister Evangelos Venizelos said there is still uncertainty on the terms of a 130 billion-euro ($172 billion) rescue package for Greece ahead of a meeting of euro area finance ministers today. “There are issues outstanding that must be resolved by the time the euro group meets,” Venizelos told reporters in Athens today after a meeting with Prime Minister Lucas Papademos and European Union and International Monetary Fund officials, as reported in an article published by Bloomberg today.

An auction of German five-year federal notes drew strong bids on Wednesday. The sale of Germany's 0.75 percent 5-year Federal Notes, or Bobls, attracted bids totaling EUR 5.871 billion against the EUR 4 billion target set for the auction, Bundesbank said. The country raised EUR 3.293 billion from the sale of the debt maturing in February 2017.

EUR/USD: The pair fluctuated within the levels of 1.3287-1.3214 (73pips) Wednesday, as investors adopted a wait and see approach on the pair. Investors were cautious given the uncertainties surrounding the agreement in the Greek issue. Today, the pair is trading higher just above the key level of 1.3300 at 1.3301 at the time of writing in Asia and seems that trading will remain volatile on speculations ahead of a meeting of euro area finance ministers today, where the head of the IMF will be participating in it. Markets will also pay particular attention at the ECB Press Conference at 13:30 GMT, where markets will be keen on language hinting at a need for monetary measures to counter the region’s sovereign debt crisis and on the interest rate decision in the euro zone at 12:45 GMT. If the Greek debt deal is struck today, the pair might go beyond the 1.3400 level. The support level is at 1.3248 and the resistance level may be at 1.3376. It is also advisable to keep an eye on the figures on the initial jobless claims in the U.S (13:30 GMT), which might affect the movement on the pair.
EUR/USD: " title="EUR/USD: " width="613" height="295">GBP/USD: The pair climbed higher this morning in Asia ahead of BoE meeting today. GBP/USD is trading at 1.5844 at the time of writing and seems that the pair will continue its upward trend to test the resistance level of 1.5865 as markets are expecting the Bank of England to expand quantitative easing at Thursday’s MPC policy decision. The pair might also get further supports to push higher if the Greek debt deal is struck today. However, investors are recommended to pay a particular attention to the figures of the initial jobless claims in the U.S which will be released at 13:30 GMT as the figures will surely affect the direction of the pair.  The support level is just above the Key level of 1.5800 at 1.5803. Prudence recommended.
GBP/USD:" title="GBP/USD:" width="613" height="295">Oil: Crude oil futures rose in Asian trading Thursday, bolstered by U.S. government supply data as well as by hopes Greece will pull through its debt crisis. The commodity is trading higher at $99.02 a barrel in Asia at the time of writing and will most probably fluctuate within the resistance level of $99.87 a barrel and the support level of $98.07 a barrel as markets are awaiting the outcomes of the meeting of euro area finance ministers today. Positive outcome from the meeting will push the price of oil higher today.
DAX: European stocks closed lower Wednesday, as Greek fears continue to weigh on risk appetite. Today, the index is trading slightly higher 6790.50points in Asia at the time of writing and will most probably continue to trade within the resistance level of 6832.64points and support level of 6686.22points as the markets are awaiting the latest developments in the Euro zone and the meeting of the meeting of euro area finance ministers today to take position on the index. Trading is expected to be sticky in the first half of the trading session.