EU Morning Report 

Attention turns to the EU leaders meeting

  • The euro edged higher on rising hopes that the EU leaders will find an agreement on the eurozone debt crisis during their meeting in Brussels today. French President Sarkozy and German Chancellor Merkel met yesterday and agreed on a joint proposal for Greece bailout which further boosted optimism. The announcement of a concrete plan to tackle Greece's debt problems in order to avoid a catastrophic default may support the euro. Against the dollar, the single currency got a boost and jumped as high as 1.4273 from 1.4133. Versus the safe haven Swiss franc, the euro rose to 1.1748 recovering from 1.1605.
  • The US dollar remains soft against a basket of currencies as the debt ceiling problem still remains a concern. The US risks of losing its AAA rating if a plan is not decided before the August 2 deadline. Investors' attention now turns to the Initial Jobless Claims released today at 12:30 GMT. Against the Japanese yen, the dollar dipped to 78.61 from 79.31.
  • Sterling rose yesterday after the Bank of England meeting minutes were released. The minutes, as expected showed that two out of the nine MPC members voted for an interest rate hike. The tone was dovish and the members agreed that there is no need for monetary tightening at this point indicating that rates will remain at ultra low levels for the following months. The UK is still struggling to escape recession and a loose monetary policy boosts growth. Against the greenback, sterling rose to 1.6192 from 1.6068.
  • The Australian dollar plummeted after a report from China showed that industrial activity slowed by more than expected. Australia is China's largest trade partner and a slowdown of China's economy could shake demand for Australia's commodities. Against the dollar, the Aussie declined to 1.0703 from 1.0772. 
  • Oil prices fell to 96.90 dollars a barrel today from 99.35. Gold edged higher to 1603.53 dollars an ounce from 1580.95. Silver also ticked higher to 40.26 dollars an ounce from 38.18.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4200 with a preference to enter Long positions at 1.4210
  • § The USDJPY pivot point is at 79.00 with a preference to enter Short positions at 78.90
  • § The OIL pivot point is at 97.40 with a preference to enter Long positions at 97.40
  • § The Gold pivot point is at 1590 with a preference to enter Long positions at 1590                          

Today's calendar and market movers:

  • § UK Retail Sales in June is forecast to gain 0.5%
  • § US Initial Jobless Claims is forecast to rise to 410K 

Equity Markets:                                                

US equities were negative on Wednesday with the S&P500 trading down -0.07% and the DJIA down -0.12%. The European bourses were positive with the FTSE trading up 1.10%, the DAX up 0.40% and the CAC up 1.61%. The NIKKEI and the HSI at the time of writing are trading down -0.08% and -0.23% respectively.

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