Coming up Today (All Times GMT)
- Oil - Crude Oil Inventories (15:30)
- AUD - Unemployment Rate (00:30)
Today's key event will be the €1 billion bond issuance that will be auctioned by Portugal. The country is trying to convince the market that it can access refinancing as a stand-alone issuer. But the road looks bumpy, as shown yesterday by the Bank of Portugal revised projections. According to updated forecast, Portuguese GDP should contract by 1.3% in 2011 due to fiscal consolidation, and this prospect could undermine its ability to attract investors. Monday, the ECB intervened to calm the sharp increase of Portugal's interest rate premium, with the effect of stabilizing the euro just above the $1.2900 level. Today, the European currency is expected to react following the result of the auction, which will have implications for Spain and Italy - two countries that are also planning to issue debt this week.
EURUSD Support/Resistance: 1.2940/1.3020
Nearing $1.5650, the GBPUSD pair is currently challenging the upper band of the horizontal trading channel, in which it has been moving since mid December. The pound is currently supported by the rising inflation expectations, which have convinced some market participants to price more interest rate tightening for this year. Against the euro, the pound sterling is trading at its highest level since mid September, just above the £0.8300 support line. So far, the euro-debt crisis has directed money flows out of the euro and supported the resilience of the pound. The question is now to know if the euro crisis will continue to keep the EURGBP under pressure.
GBPUSD Support/Resistance: 1.5585/1.5665
EURGBP Support/Resistance: 0.8300/0.8340