Asian session: The yen and dollar weakened
The yen and dollar weakened versus most of their major counterparts before reports that economists said will show U.S. factory output and European consumer confidence increased, damping demand for safer assets.
The yen declined toward a two-week low versus the euro as Asian stocks rose on optimism the data will add to evidence the global recovery is gaining momentum.
U.S. industrial production gained 0.5 percent in January from December, rising for a third month, according to a survey before today’s Federal Reserve report.
The pound appreciated for a third day versus the dollar on speculation the Bank of England will today signal concern that consumer prices will rise at a faster pace. Australia’s dollar strengthened after a report showed an index of leading economic indicators increased.
The pound approached a six-month high versus the yen after a U.K. report yesterday showed consumer prices rose an annual 4 percent last month, the fastest since November 2008.
EUR/USD: the pair shown high in the field of $1.3560.
GBP/USD: the pair become stronger in around $1.6180.
USD/JPY: the pair bargained within the limits of Y83.60-Y83.80.
The UK calendar kicks off at 0930GMT, with the release of the UK employment data. The claimant count rate is seen at 4.5%, with jobless clains down 3,000 on the month. ILO undemployment is seen unchanged at 7.9%. The Bank of England inflation report is out at 1030GMT. The reports looks set to back the case for monetary tightening with
inflation shown overshooting the BOE's target on flat Bank Rate and with an equal chance of it being above or below target if markets' implied rate hike expectations are met. Implied market rate expectations have risen sharply since the November report. In the 15 day average used by the BOE they were pricing in a May hike and at least one more hike this
year, and yet BOE Governor Mervyn King revealed in a letter Tuesday the report would show the chances of CPI being above/below target in 2 to 3 years time were roughly equal - the same as in Nov.
US data starts at midday., with the Feb 11 MBA mortgage application index. The main releases are at 1330GMT, with the release of the Producer price data and housing start numbers. The pace of housing starts is expected to rise to 540,000 in January after falling 4.3% in the previous month. Permits, which surged 15.3% in December on special factors, are expected to fall sharply in January. Producer prices are expected to jump 0.8% in January. Both food and energy prices are expected to rise. The core PPI is expected to rise 0.2%, as the power to
pass on higher input prices remained weak.
January Industrial production data is expected at 1415GMT. It are expected to rise 0.5% in January. Factory payrolls jumped 49,000 in the month, while auto production jobs rose 20,000. The factory workweek rose 0.1 to 40.5 hours, while the ISM production index rose to 63.5. Capacity utilization is forecast to rise to 76.3%. Treasury Secretary
Tim Geithner testifies about the Budget proposal on the Hill Weds. At 1500GMT, he is before the Senate Finance Committee, while at 1900GMT, he appears before the House Budget Committee. At 1530GMT, the EIA Crude Oil Stocks data is released. Also on traders radar screens will be the 1900GMT release of the Fed's January 26 FOMC meeting minutes.