More US Housing Data Ahead

UK government borrowing significantly higher in February; 2 MPC members voted for more QE; Portuguese auction. Market turns to existing home sales, Bernanke's testimony, Canadian leading indicators and later in the session to NZ GDP.

The greenback is slightly higher against all majors in the ongoing session. European equities are mixed in -0.3% to 0.2% range and NZD with AUD are the weakest again.

GBPUSD sold of sharply after the UK government borrowing rose significantly more than expected. Public sector net borrowing excluding interventions, which is the preferred measure, rose in February to GBP 15.2 bln from previous nearly GBP 8 bln surplus. This was the highest level of borrowing during February since the records began and nearly twice as much as analysts expected.

MPC minutes from 3/7 and 8 meeting revealed that all members voted to keep rates unchanged but two members, Adam Posen and David Miles, voted to expand QE by GBP 25 bln. GBPUSD sold off from 1.5920 to 1.5842 but has since regained some of its losses.

Portugal which has been in focus recently due to a worrying comments by PIMCO chief El-Erian sold EUR 1.992 bln worth of 4 and 12 month bills today (EUR 2 bln target). Both average yields declined and bid to cover improved.

FED chairman Bernanke's testimony on the European debt crisis before the House Committee will start at 9:30 am but impact is expected to be limited as the text of the speech was already released. Higher volatility could come from the Q&A session that follows afterwards.

US data is limited today to existing home sales due at 10:00 am that are expected to rise in February to 4.61M from previous 4.57M.

By the end of the session at 5:45 pm New Zealand will release its Q4 GDP figures that are anticipated to decline to 0.6% from 0.8% q/q but rise to 2.2% from 1.9% y/y.

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