Forex - GBP/USD pushes higher after U.S. data, gains limited

The pound pushed higher against the U.S. dollar on Wednesday, after the release of positive U.S. data, although gains were limited by sustained concerns over the outlook for growth in the U.K. 

GBP/USD hit 1.5188 during U.S. morning trade, the session high; the pair subsequently consolidated at 1.5169, rising 0.28%. 

Cable was likely to find near-term support at 1.5068, Monday’s low and the pair’s lowest since July 2010 and resistance at 1.5275, the high of February 21.

The U.S. Commerce Department said durable goods orders dropped 5.2% in January, compared to expectations for a decline of 4.4%.

Core durable goods orders, which exclude volatile transportation items, rose 1.9% last month, compared to expectations for a 0.2% increase. 

Meanwhile, the U.S. National Association of Realtors said its pending home sales index rose by 4.5% in January, beating expectations for a 1.5% gain. 

In the U.K., the Office for National Statistics earlier said the economy contracted 0.3% in the three months to December, in line with initial estimates and economists’ forecasts.

The economy expanded by 0.3% year-on-year, better than initial estimates of flat output.

The weak data reinforced concerns over the threat of a triple-dip recession, after ratings agency Moody’s downgraded the U.K.’s triple-A rating by one notch last week, citing a weak outlook for growth and a rising debt burden.

Meanwhile, expectations for further monetary easing by the Bank of England remained intact after the minutes of the central bank’s February meeting indicated that policymakers are moving closer to another round of asset purchases.

Overall market sentiment remained subdued amid fears that inconclusive Italian election results could result in a prolonged period of political instability and stoke fresh concerns over the crisis in the euro zone.

Sterling was steady against the euro, with EUR/GBP edging up 0.05% to 0.8643. 

Also Wednesday, an auction of Italian five and 10-year Italian government bonds met with solid investor demand on Wednesday, but saw borrowing costs rise sharply, with the yield on 10-year bonds climbing to a four month high.

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EUR/USD higher after Italian bond auction

The euro was higher against the dollar on Wednesday after an auction of Italian five and 10-year government bonds met with solid investor demand, but saw borrowing costs rise sharply.

EUR/USD hit 1.3122 during European afternoon trade, the pair’s highest since Monday; the pair subsequently consolidated at 1.3105, gaining 0.33%.

The pair was likely to find support at 1.3017, Tuesday’s low and a seven-week low and resistance at 1.3070.

Italy sold the full targeted amount of EUR6.5 billion two days after Italian elections ended with no party in control of the Senate, raising the prospect of a prolonged period of political instability and potentially reigniting the crisis in the euro zone.

The yield on Italian 10-year bonds rose to 4.83%, up from 4.17% at a similar auction last month, while the yield on five-year bonds climbed to 3.59% from 2.94% in January.

Sentiment on the euro remained subdued as investors awaited political developments in Italy, amid concerns over whether a government can be formed.

Investors were also looking ahead to a second day of Congressional testimony by Federal Reserve Chairman Ben Bernanke later in the trading day. Bernanke defended the bank's easing program on Tuesday, saying that the benefits outweighed the possible costs.

Elsewhere, the euro was higher against the pound, with EUR/GBP rising 0.23% and was little changed against the yen, with EUR/JPY dipping 0.03% to 120.10.

Earlier Wednesday, official data confirmed that the U.K.’s economy contracted by 0.3% in the fourth quarter, in line with initial estimates and economists’ forecasts.

The U.S. was to publish official data on durable goods orders and pending home sales later Wednesday, while European Central Bank President Mario Draghi was to speak an event in Germany.

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Copper futures decline as investors await Italy bond auction, U.S. data

Copper futures were lower during European morning hours on Wednesday, as investors awaited the results of an Italian government bond auction later in the day

On the Comex division of the New York Mercantile Exchange, copper futures for May delivery traded at USD3.573 a pound during European morning trade, down 0.3% on the day.

New York-traded copper prices fell by as much as 0.4% earlier in the day to hit a session low of USD3.595 a pound. Comex copper prices rose to a one-week high of USD3.525 earlier in the session.

Investors were looking ahead to an auction of Italian five- and ten-year government bonds later in the session after the country’s general election resulted in a deadlock.

Italian election’s ended with no party or coalition in control of the Senate, raising the threat of a prolonged period of political instability and potentially reigniting the crisis in the euro zone.

Italian 10-bond yields rose to the highest level since December on Tuesday, climbing to 4.91% from 4.37% on Monday, while the yield on Spanish 10-year bonds rose to 5.5% from 5.1% on Monday.

Copper traders were also worried about impending sharp automatic U.S. spending cuts of USD85 billion, known as sequestration, due to take effect on March 1 unless Congress and the White House find a way to reach an agreement.

Prices remained supported after Federal Reserve Chairman Ben Bernanke defended the central bank's easing program in testimony to the Senate on Tuesday and amid indications the U.S. economic recovery is gathering momentum.

Later Wednesday, the U.S. was to publish official data on durable goods orders and pending home sales, while Ben Bernanke was to testify on monetary policy for a second day. 

Elsewhere on the Comex, gold for April delivery dipped 0.45% to trade at USD1,608.20 a troy ounce, while silver for May delivery shed 0.5% to trade at USD29.17 a troy ounce.

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Dollar slips vs. euro, yen ahead of Italian bond auction

The dollar slipped lower against the euro and the yen on Wednesday as markets stabilized in the wake of inconclusive Italian election results and investors awaited an auction of Italian bonds later in the session.

During European morning trade, the dollar eased back from seven-week highs against the euro, with EUR/USD edging up 0.11% to 1.3076.

Italian election’s ended with no party or coalition in control of the Senate, raising the threat of a prolonged period of political instability and potentially reigniting the crisis in the euro zone.

Investors were looking ahead to an auction of Italian 10 and five-year government bonds later in the session after the yield on Italian 10-year bonds rose to the highest level since December on Tuesday.

Elsewhere, the dollar slipped lower against the yen, with USD/JPY down 0.32% to 91.68.

Federal Reserve Chairman Ben Bernanke defended the bank's easing program on Tuesday, saying that the benefits outweighed the possible costs. The comments came in testimony to the Senate on monetary policy.

The greenback was little changed close to 31-month highs against the pound, with GBP/USD edging up 0.07% to 1.5137.

Elsewhere, the greenback edged lower against the Swiss franc, withUSD/CHF dipping 0.08% to 0.9311.

The greenback was mixed against its Canadian, Australian and New Zealand counterparts, with USD/CAD inching up 0.05% to 1.0263,AUD/USD falling 0.35% to 1.0192 and NZD/USD slipping 0.16% to 0.8234.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, slipped 0.09% to 81.83.

Later Wednesday, the U.S. was to publish official data on durable goods orders and pending home sales, while Ben Bernanke was to testify on monetary policy for a second day. In addition, European Central Bank President Mario Draghi was to speak an event in Germany.

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