OVERVIEW

Republicans and democrats couldn’t come to an agreement about deficit reduction. That’s why the mechanism of automatic spending cut has been launched. From now on Americans will have to limit their expenditures by $85 billion monthly. The lion share of the cuts will affect the Pentagon budget that will trigger freeze of a lot of military projects. Moreover there might be difficulties with financing the military fleet. On the other hand there will be some improvement of financial figures. To be more specific: improvement of exaggerated deficit and debt level. The interesting fact is that Americans were actively criticizing the EU last year for tough economy measures that turned into recession. Now they are basically doing the same thing. Overall in Europe spending cuts constituted 4.1% of the GDP, while in the US already by 2014 the same figure will reach 4.8%. Thus the US economy might easily slide into deep recession. It can simply neutralize the effectiveness of the program. In Europe, Italy is currently in focus. It looks like the situation is developing to new election. In spite of claims of the polititians about the necessity to find some compromise, it doesn’t look like they really intend to do so. In every party they assume that during next elections they will be able to gain more votes and strengthen their positions.

CURRENCIES

EUR/USD

In general the start of sequester in the US is accepted relatively calmly by the markets. The Euro could even renew the local minimum. At the moment, a correction is not entirely ruled out, as there is no important news anticipated. In the midterm markets will be following the resolution of the political crisis in Italy. In case there are new elections, the Euro will depreciate further.

USD/JPY

The US dollar appreciated against the Yen last week. There is an important level at 94. If it is broken, it will be a solid proof of the trend strength. Otherwise the pair might undergo some downward correction. Anyway the bias remains bullish.

GBP/USD

The Pound looks weak and thus retains its bullish bias. Most likely it is in a period of short consolidation. After this, analysts expect the resumption of the decline. There is a resistance near 1.52. If the Pound manages to reach that level it may be a sign of a trend reversal. At the same time it might be a false signal: a short correction before continuation of the prior trend.

MARKET DATA

Monday, March 4

12:00am    NZD        ANZ Commodity Prices m/m
12:30am    AUD        Building Approvals m/m
                AUD        ANZ Job Advertisements m/m
                AUD        Company Operating Profits q/q
8:00am    EUR            Spanish Unemployment Change
All Day    EUR            Eurogroup Meetings
9:30am    EUR            Sentix Investor Confidence
                GBP        Construction PMI

Tuesday, March 5

12:01am    GBP        BRC Retail Sales Monitor y/y
12:30am    AUD        Retail Sales m/m
                AUD        Current Account
1:30am    JPY        Average Cash Earnings y/y
3:30am    AUD        Cash Rate
                AUD        RBA Rate Statement
                 GBP        Halifax HPI m/m
8:15am    EUR        Spanish Services PMI
8:45am    EUR            Italian Services PMI
9:00am    EUR        Final Services PMI
All Day    EUR        ECOFIN Meetings
9:30am    GBP            Services PMI
10:00am    EUR        Retail Sales m/m
3:00pm    USD        ISM Non-Manufacturing PMI

Wednesday, March 6

12:01am    GBP        BRC Shop Price Index y/y
12:30am    AUD        GDP q/q
9:45am    GBP            BOE Gov King Speaks
10:00am    EUR        Revised GDP q/q
1:15pm    USD        ADP Non-Farm Employment Change
2:00pm    CAD        BOC Rate Statement
                CAD        Overnight Rate
3:00pm    CAD        Ivey PMI

Thursday, March 7

12:30am    AUD          Trade Balance
Tentative    JPY         Monetary Policy Statement
Tentative    JPY          Overnight Call Rate
5:00am    JPY          Leading Indicators
Tentative    JPY          BOJ Press Conference
6:45am    CHF         Unemployment Rate
7:45am    EUR         French Trade Balance
8:00am    CHF         Foreign Currency Reserves
9:00am    CHF       SNB Chairman Jordan Speaks
Tentative    EUR       Spanish 10-y Bond Auction
Tentative    EUR       French 10-y Bond Auction
11:00am    EUR       German Factory Orders m/m
12:00pm    GBP       Asset Purchase Facility
                GBP       Official Bank Rate
Tentative    GBP       MPC Rate Statement
12:30pm    USD       Challenger Job Cuts y/y
12:45pm    EUR       Minimum Bid Rate
1:30pm    CAD       Building Permits m/m
                CAD       Trade Balance
                EUR       ECB Press Conference
                USD       Trade Balance
                USD        Unemployment Claims

Friday, March 8

Tentative    CNY    Trade Balance
5:00am    JPY    BOJ Monthly Report
                JPY    Economy Watchers Sentiment
7:45am    EUR    French Gov Budget Balance
8:15am    CHF    CPI m/m
Tentative    GBP    Consumer Inflation Expectations
11:00am    EUR    German Industrial Production m/m
1:15pm    CAD    Housing Starts
1:30pm    CAD    Employment Change
                CAD  Unemployment Rate
                CAD    Labor Productivity q/q
                USD    Non-Farm Employment Change
                USD    Unemployment Rate








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Regards,

The TraderWorld Analyst Team