Euro Steadies Despite Disappointing German Data, onto ADP

Greece getting closer to PSI deal; Swiss unemployment unchanged; German factory orders dropped. Focus shifts to ADP; Canadian building permits and later to RBNZ rate decision. Ashraf will be on CNBC Arabia at 13:15 GMT, 17:15 Dubai time, explaining the double-edged sword of QE3 expectations & US jobs data.

USD trades little changed since the beginning of the London session. European equities are gaining about 0.3% to 0.7% and the relative strength winners are AUD and NZD.

AUD declined to 1.0509 during the Asian session on the back of slower Q4 GDP growth that declined to 0.4% from 0.8% q/q and to 2.3% from 2.6% y/y. It has since recovered all its losses and currently trades around 1.0580 on reports that China will boost imports of energy and raw materials.

MNI reported that Greece is getting closer to the PSI deal as six largest Greek banks agreed to participate in the debt swap. The participation of some pension funds still remains in question while others already confirmed they will not participate. Greek government expects participation around 75% but rumors that appeared yesterday point to a smaller number. 66.6% participation is required to allow the collective action clauses that would force all bond holders to participate. The bond swap is a precondition for the bailout.

On the data front, Swiss unemployment rate remained steady and in line with expectation at 3.4% in February (3.1% s. a.) and German factory orders dropped 2.7% in January from 1.6% m/m which translates to a 4.9% decline y/y. Foreign orders that dropped 5.5% m/m were the most significant factor behind the fall. Despite the disappointment, EURUSD holds steady around 1.3140.

Germany sold EUR 3.312 bln (EUR 4 bln target) worth of 5 year bond. The average yield declined to 0.79% from 0.91% and cover remained unchanged at 1.8.

The NY session will begin at 8:15 am ET with ADP report which is seen higher in February at 204K from previous 170K.

Canadian building permits are due at 8:30 am and are seen lower in January at -3.1% from previous 11.1%.

Later in the session at 3 pm RBNZ will announce their cash rate decision and provide a statement. It is widely expected that rates will remain unchanged at 2.5%.

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Patik Urban