EU Morning Report

Attention turns to today's Non Farm Payrolls report

  • The euro rose yesterday recovering some of its losses after the European Central Bank meeting yesterday. The ECB hiked the rates by 25 basis points to 1.50% in an effort to control the high inflation and maintain price stability. During the press conference that followed, ECB President Jean Claude Trichet said that the central bank decided to suspend the minimum rating requirement threshold for Portuguese government bonds that can be used as collateral. The comment supported the single currency as earlier this week rating agency Moody's cut Portugal's sovereign rating by four notches to Ba2 and kept it in a negative outlook. The phrase strong vigilance was absent but Trichet said that the central bank will monitor price levels very closely indicating that rates may go up again in the following months. Against the dollar, the euro jumped as high as 1.4373 from 1.4221.
  • The US dollar fell against high yielding currencies such as the Australian dollar but firmed against the safe haven Swiss franc and Japanese Yen on heightened risk appetite in the market. ADP Employment Change Data surprised investors after it revealed a rise to 157K from 70K. Focus now turns to the Non Farm Payrolls data released today at 12:30 GMT. Against the Japanese Yen, the dollar rallied to 81.40 from 80.79.
  • The Australian dollar advanced today supported by investors' higher risk appetite. Against the dollar, the Aussie rose to 1.0787 from 1.0688. Sterling slid against the dollar a day after the Bank of England Interest Rate meeting. MPC policymakers kept rates steady at 0.50% and the asset purchasing program unchanged. No statement was released and sterling fell to 1.5938 versus the dollar from 1.6017.
  • Oil prices rose to 99.39 dollars a barrel today from 96.75. Gold edged higher to 1532.36 dollars an ounce from 1522.18. Silver gained 2.5% rising to 36.57 dollars an ounce from 35.68.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4300 with a preference to enter Long positions at 1.4310
  • § The USDJPY pivot point is at 81.00 with a preference to enter Long positions at 81.05
  • § The OIL pivot point is at 97.75 with a preference to enter Long positions at 97.75
  • § The Gold pivot point is at 1523 with a preference to enter Long positions at 1523                     

Today's calendar and market movers:

  • § US Non Farm Payrolls in June is forecast to rise to 90K
  • § US Unemployment Rate in June is forecast to remain unchanged at 9.1%
  • § Canada Unemployment Rate in June is forecast to remain unchanged at 7.4%
  • § Canada Net Change in Employment in June is forecast to fall to 15K

Equity Markets:                                            

US equities were positive on Thursday with the S&P500 trading up 1.05% and the DJIA up 0.74%. The European bourses were also positive with the FTSE trading up 0.86%, the DAX up 0.54% and the CAC up 0.47%. The NIKKEI and the HSI at the time of writing are trading up 0.81% and 1.07% respectively.

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