The euro fell sharply against the dollar, while leaving out below $ 1.28, which was the first time in more than four months, as the rescue program for Cyprus and the political stalemate in Italy eroded demand for assets in the region. In addition, the pressure on the currency has had an auction to sell bonds in Italy. Note that Italy has placed new BTP bonds due in June 2018 in the amount of 3.910 billion euros against the plan at a level of 4.3 billion euros. with yields at around 3.65% and the ratio of applications to cover at 1.22.

The single European currency also weakened against most other major currencies after the Swiss bank Pictet & Cie. said the crisis in Cyprus "tarnished" the attractiveness of the region. Note also that the Government of Cyprus is preparing to take aggressive measures to curb capital flight from the country, issued a decree on the control of movement of capital. This decree will be valid for 7 days, beginning on Thursday, and will cease all non-cash transactions in other countries. Cyprus will prohibit the withdrawal of cash from other countries to the tune of more than € 3,000 per person per trip, or an equivalent amount in another currency. Cyprus will also introduce a limit on all transactions using credit cards to 5,000 euros per person per month. Customers of the bank will be able to pay by check, but they can not cash them. They can not withdraw money from time deposits earlier than specified in the contract expire date. This decree requires the unprecedented response. Rules on capital control will apply to all banks in the country, not only to those who are involved in the rescue of Cyprus

In addition, the markets growing concern over the threat of a downgrade of Italy. Investors are awaiting tomorrow's resumption of the Cyprus banks and Bersani talks with Italian President Napolitano on progress in forming a coalition.

The pound rose to a two-month high against the euro, as the financial crisis in Cyprus and the political problems in Italy stimulated demand for the currency of the UK as a safe-haven.

However, in relation to the dollar, the British pound fell, helped by the data provided by the United Kingdom. National Bureau of Statistics reported that in 2012, GDP grew by 0.2% compared to the previous year, after rising by 1.0% in 2011. Earlier Bureau estimated the growth in 2012 of 0.3%. In the 4th quarter GDP fell by 0.3% compared with the previous month, as previously reported. The growth in the services sector offset a sharp decline in production in the factories, as well as oil and gas companies in the North Sea. Quarterly growth in the service sector, which accounts for about three quarters of GDP, slowed to zero, while industrial production fell by 2.1%, compared with the previous quarter, which was the most significant reduction since 2009. Production in the mining industry fell by a record 10.7%. The weakening of the economy at the end of last year has given rise to fears that the UK expects third recession in five years.

Pending home sales in the U.S. saw a modest decrease in the month of February, according to a report released by the National Association of Realtors on Wednesday, although pending sales remain near their highest level in almost three years.

NAR said its pending home sales index edged down by 0.4 percent to 104.8 in February after jumping 3.8 percent to 105.2 in January. Economists had been expecting the index to dip by 0.7 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

The modest drop in pending home sales in February came after the index reached its highest level since April of 2010 in January.

Despite the monthly decrease, NAR noted that pending home sales are up by 8.4 percent compared to the February of 2012, representing the 22nd straight month of year-over-year growth.

EUR/USD $1.2750, $1.2800, $1.2850, $1.2875, $1.2900, $1.2925, $1.2950, $1.3040

USD/JPY Y93.50, Y94.00, Y94.45, Y95.00

EUR/JPY Y121.50, Y121.85, Y124.00

GBP/USD $1.5100, $1.5240

EUR/CHF Chf1.2150

AUD/USD $1.0400, $1.0450, $1.0500

Canadian monthly consumer price index rose at the strongest pace since 1991 with gasoline and vehicle costs leading widespread gains, and the core measure posted the highest reading in records dating to 1964.

The stronger-than-expected inflation data suggests the central bank will hold on to its mildly hawkish bias at the April policy decision.

The headline or all-items consumer price index accelerated to 1.2%--the largest monthly gain since January 1991--from 0.1% in January as gasoline prices rose the most since May 2008 and vehicle costs rebounded as manufacturers offered fewer rebates, Statistics Canada said Thursday. That, together with higher prices in all other index components except for clothing and footwear, lifted the annual rate to a four-month high of 1.2% from 0.5% previously.

The consensus call was for prices to grow 0.7% on monthly basis and an annual gain of 0.8%, according to a report from Royal Bank of Canada.

Core CPI, which strips out volatile components including some food and energy costs, accelerated to 0.8% on a monthly basis from 0.1%, and was up 1.4% year-on-year--the fastest since August 2012--from 1.0% in January.

The consensus call was for this measure to rise 0.3% month-on-month and 1.0% year-on-year.

On a seasonally adjusted basis, the monthly all-items CPI grew 0.7%, the most since June 2008, and the core measure rose 0.4% from 0.1% previously.

07:00 Switzerland UBS Consumption Indicator February 1.18 1.26

07:00 Germany Gfk Consumer Confidence Survey April 5.9 5.9 5.9

07:45 France GDP, q/q (Finally) Quarter IV -0.3% -0.3% -0.3%

07:45 France GDP, Y/Y (Finally) Quarter IV -0.3% -0.3% -0.3%

08:00 Switzerland KOF Leading Indicator January 1.03 1.07 0.99

09:30 United Kingdom Current account, bln Quarter IV -15.1 -12.4 -14.0

09:30 United Kingdom GDP, q/q (Finally) Quarter IV -0.3% -0.3% -0.3%

09:30 United Kingdom GDP, y/y (Finally) Quarter IV +0.3% +0.3% +0.2%

10:00 Eurozone Economic sentiment index March 91.1 90.5 90.0

10:00 Eurozone Business climate indicator March -0.73 -0.77 -0.86

The euro fell to less than $1.28 for the first time in more than four months as a bailout for Cyprus and a political deadlock in Italy undermined demand for the region’s assets.

Europe’s shared currency weakened against most of its major peers after Swiss bank Pictet & Cie. said the Cyprus crisis has “tarnished” the region’s attractiveness. It extended its decline as Italy sold five- and 10-year bonds.

Cyprus may announce what type of capital controls it plans to implement today as its leaders seek to prevent cash outflows when the nation’s banks reopen tomorrow. Lenders have been closed since a plan by the European Union to force losses on some bondholders and depositors in exchange for a 10 billion- euro bailout. European governments vowed that the tax on bank accounts won’t set a precedent for future rescues.

An index of executive and consumer sentiment decreased to 90 from 91.1 in February, the European Commission in Brussels said today. Economists had forecast a drop to 90.5, according to the estimates.

The pound rose to a six-week high against the euro as a funding crisis in Cyprus and a political deadlock in Italy spurred demand for U.K. assets as a haven from Europe’s debt turmoil. Sterling trimmed a quarterly decline versus the common currency even as an Office for National Statistics report confirmed the U.K. economy shrank in the fourth quarter, putting the nation on course for a triple-dip recession. European governments vowed the tax on bank accounts to finance Cyprus’s aid package won’t be a precedent for future rescues. U.K. government bonds advanced, with 10-year securities gaining for a fifth day.

EUR / USD: during the European session the pair fell to a new low of $ 1.2761

GBP / USD: during the European session the pair fell to a new low of $ 1.5094

At 12:30 GMT, Canada will release the consumer price index, the main consumer price index from the Bank of Canada in February. At 14:00 GMT the U.S. will change in the volume of outstanding home sales for February, at 14:30 GMT, there are data on stocks of crude oil from the Department of Energy. At 15:00 GMT a speech FOMC member Charles Evans, and 15:30 GMT to make a speech FOMC member Eric Rosengren. At 21:45 GMT New Zealand will publish the change in volume of building permits issued in February. Finish the day at 23:50 GMT Japanese data on Retail Sales for February.

EUR/USD

Offers $1.2930/50, $1.2920, $1.2880/90, $1.2820/25

Bids $1.2780, $1.2750, $1.2735/25

GBP/USD

Offers $1.5315/30, $1.5300, $1.5280, $1.5240/50, $1.5220/25, $1.5200/10

Bids $1.5100/090, $1.5070, $1.5050-40

AUD/USD

Offers $1.0550, $1.0520/30, $1.0500, $1.0485/90, $1.0465/70

Bids $1.0420/15, $1.0410/00, $1.0385/80, $1.0365/60, $1.0350

USD/JPY

Offers Y95.95/00, Y95.80/85, Y95.50, Y95.10/15, Y94.95/00, Y94.90

Bids Y94.20, Y94.00, Y93.85/80, Y93.55/50

EUR/GBP

Offers stg0.8615/20, stg0.8600/05, stg0.8570/80, stg0.8555/65, stg0.8535/40, stg0.8510, stg0.8495/500

Bids stg0.8450, stg0.8445/40, stg0.8410/00

EUR/JPY

Offers Y122.55/60, Y122.00, Y121.50/55, Y121.20

Bids Y120.50, Y120.00, Y119.50

Italy sold E3.91bln 5-yr BTP vs target E3.0bln-E4.0bln

- E3.91bln of new 3.50% June 2018 BTP; avg yield 3.65% (3.59%), cover 1.22

Italy sold E3bln 10-yr BTP vs target E2.0bln-E3.0bln

- E3.0bln of 4.50% May 2023 BTP; avg yield 4.66% (4.83%), cover 1.33 (1.65).

EUR/USD $1.2750, $1.2850, $1.2875, $1.2900, $1.2925, $1.2950, $1.3040

USD/JPY Y93.50, Y94.00, Y94.45, Y95.00

EUR/JPY Y121.50, Y121.85, Y124.00

GBP/USD $1.5100, $1.5240

EUR/CHF Chf1.2150

AUD/USD $1.0400, $1.0450, $1.0500

The euro hit a four-month low against the dollar, amid contradictory statements of officials on the eurozone rescue program of Cyprus and its possible extension to other troubled economies in the region. Note that the largest Bank of Cyprus and Laiki will be closed until Thursday. In addition, it was reported that Bank of Cyprus will go through restructuring, and Laiki will be closed, and its healthy assets will be transferred to a competitor. The European Central Bank on Monday pledged to provide liquidity Cypriot banks have accumulated 68 billion euros of deposits. Without this measure, banks face immediate bankruptcy because of the expected mass withdrawals from the accounts.

Meanwhile, many investors are worried that the euro zone officials will continue to rescue troubled banks by depositors, as happened in Cyprus. Pressure on the euro was words of the chairman of Eurogroup Yerona Disselbluma that the plan of salvation of Cyprus a model for combating banking crises in the future. Disselblum also said that uninsured deposits should contribute to the salvation of Cyprus. ECB Kéré Disselblyumu said  that he did not agree with him and agreed on Cyprus is not a new model for Europe, adding that there is no reason to think that the French banks, the same problem as that of Cyprus. He also noted that the Cyprus problem only shows that the ECB should be independent supervisory body for banks in Europe.

Japan's currency fell against most of its 16 major counterparts, helped by comments Governor of the Bank of Japan Kuroda, who noted that the close cooperation between the government and the Bank of Japan will help to "smoothly" to achieve 2% inflation. Meanwhile, he added that the task of government - to stimulate economic growth, employment in the medium and long term. At the same time, he said that the price trends are influenced by various factors, such as fiscal policy of the government, the promotion of growth. In addition, he said the government would try to reach a level of 2% inflation for two years at any cost

The pound fell to balance report sales CBI Britain. Research trends CBI distributive trade in Britain reflected the drop in sales to 0 in the March 8 against the previous forecast of 11. However, expectations in April rose from 8% to 15% (with a maximum of December). Meanwhile, market sentiment influenced British Finance Minister comments Osborne, who made it clear that salvation holders of insured deposits in Cyprus - is a bad idea. He also noted that the final plan should not include saving the owners of insured deposits. In addition, he believes that the salvation of Cyprus was not well thought out, and it will leave Cyprus with sustainable debt. Osborne added that Cyprus is experiencing a sharp decline in GDP, and for all it would be better if the euro zone more quickly solved their problems.

00:00 New Zealand ANZ Business Confidence January 39.4 34.6

00:30 Australia RBA Financial Stability Review March

Japan’s currency slid for a second day as Kuroda prepared to appear before parliament tomorrow, after telling lawmakers yesterday he aims for 2 percent annual inflation in two years. He said the BOJ may scrap the so-called banknote rule of keeping its bond holdings at less than the value of banknotes outstanding, and policy makers will discuss purchasing more debt with longer maturities. The BOJ currently buys government notes maturing in three years or less through its 76 trillion-yen ($801 billion) asset-purchase program.

Former BOJ Deputy Governor Kazumasa Iwata joined economists in predicting that Kuroda will fail to meet his price-increase goal.

The euro traded within 0.2 percent of a four-month low versus the dollar as concerns debt-crisis contagion will spread sapped confidence in the 17-nation currency bloc. It will continue to decline as the bailout package for Cyprus fans concern about the safety of bank deposits in the region, Redeker said in an interview yesterday in Sydney. Under the terms of an agreement struck March 25, senior Cypriot bank bond holders will take losses and uninsured depositors will be largely wiped out.

The euro remained lower for a second day after dropping 1.1 percent on March 25 ahead of data today set to confirm consumer confidence in the region stayed depressed in March. The initial reading from the European Commission in Brussels was minus 23.5, amid signs the economy is struggling to pull out of recession.

The final figures for French gross domestic product will probably confirm a 0.3 percent contraction in the fourth quarter, the biggest in almost four years, according to the median forecast of economists in a Bloomberg News survey.

Italy auctions as much as 4 billion euros ($5.1 billion) of notes maturing in 2018, and up to 3 billion euros of 10-year bonds today. The euro area’s fourth-biggest economy sold 2.8 billion euros of 2014 zero-coupon bonds this week at a yield of 1.746 percent, the highest since Dec. 27.

EUR / USD: during the Asian session the pair fell to $1.2835.

GBP / USD: during the Asian session the pair fell to $1.5145.

USD / JPY: during the Asian session, the pair rose to Y94.90.

There is a full calendar Wednesday, with data on both sides of the Atlantic, along with a full schedule of Central Bank speakers. At 0700GMT, German February import prices data will be released, followed by German April consumer climate numbers at 0710GMT. French data at 0745GMT sees the release of fourth quarter 2012 detailed GDP data. Spanish data is expected at 0800GMT, with the release of March flash HICP numbers and the February retail sales. Italian January retail sales numbers will be released at 0900GMT, along with January industrial orders data.

(pare/closed(00:00 GMT +02:00)/change, %)

EUR/USD $1,2855 +0,06%

GBP/USD $1,5157 -0,09%

USD/CHF Chf0,9483 -0,04%

USD/JPY Y94,53 +0,38%

EUR/JPY Y121,52 +0,44%

GBP/JPY Y143,26 +0,29%

AUD/USD $1,0480 +0,26%

NZD/USD $0,8388 +0,45%

00:00 New Zealand ANZ Business Confidence January 39.4 34.6

00:30 Australia RBA Financial Stability Review March

07:00 Switzerland UBS Consumption Indicator February 1.18

07:00 Germany Gfk Consumer Confidence Survey April 5.9 5.9

07:45 France GDP, q/q (Finally) Quarter IV -0.3% -0.3%

07:45 France GDP, Y/Y (Finally) Quarter IV -0.3% -0.3%

08:00 Switzerland KOF Leading Indicator January 1.03 1.07

09:30 United Kingdom Current account, bln Quarter IV -12.8 -12.4

09:30 United Kingdom GDP, q/q (Finally) Quarter IV -0.3% -0.3%

09:30 United Kingdom GDP, y/y (Finally) Quarter IV +0.3% +0.3%

10:00 Eurozone Economic sentiment index March 91.1 90.5

10:00 Eurozone Business climate indicator March -0.73 -0.77

12:30 Canada Consumer Price Index m / m February +0.1% +0.6%

12:30 Canada Consumer price index, y/y February +0.5% +0.8%

12:30 Canada Bank of Canada Consumer Price Index Core, m/m February +0.1% +0.3%

12:30 Canada Bank of Canada Consumer Price Index Core, y/y February +1.0% +0.9%

14:00 U.S. Pending Home Sales (MoM) February +4.5% -0.4%

14:30 U.S. Crude Oil Inventories March -1.3

15:00 U.S. FOMC Member Charles Evans Speaks March

15:30 U.S. FOMC Member Rosengren Speaks March

16:15 U.S. FOMC Member Pianalto Speaks March

21:45 New Zealand Building Permits, m/m February -0.4% +3.0%