EU Morning Report 

Aussie falls after RBA keeps its monetary policy unchanged

  • The euro edged lower against the dollar stepping off recent highs ahead of Thursday's interest rate decision. Investors expect the European Central Bank to raise rates by 25 basis points on Thursday but expectations appear to be already priced in. Eurozone Investor Confidence data in April fell more than expected and Producer Price Index gained 0.8% in February. Last week, Consumer Price Index revealed a 2.6% gain in March adding more on the view that the European Central Bank will raise the interest rates on Thursday. The single currency broke below the 1.42 level edging as low as 1.4172 dollars from 1.4249.
  • The US dollar appears stronger against its major counterparts following Fed Chairman Ben Bernanke speech on Monday. Bernanke said the higher inflation is due to the rising commodity prices and if higher inflation persists the Fed may have to respond to that. Focus now turns to the FOMC minutes released later today at 18:00 GMT.
  • Against the Japanese Yen, the dollar rose to trade above the 84 level climbing to 84.47 from 83.85. 
  • The Australian dollar plummeted against the dollar after the Reserve Bank of Australia decided to keep interest rates unchanged at 4.75%. Further weighing on the Aussie was data revealing the country's Trade Balance dropped unexpectedly to a deficit in February. The pair slipped to 1.0324 from 1.0416 traded yesterday. The Kiwi also rose versus the dollar hitting 0.7698 up from 0.7580. Sterling dropped against the stronger dollar falling to 1.6089 from 1.6175.
  • Oil prices remained elevated supported by the Libya unrest jumping to 108.77 dollars a barrel. Gold rose to 1438.96 dollars an ounce from 1429.35. Silver also ticked higher hitting a record high at 38.76 dollars an ounce.

Currency to watch out for: GBPUSD & USDJPY  

  • § The GBPUSD pivot point is at 1.6100 with a preference to enter Long positions at 1.6110
  • § The USDJPY pivot point is at 84.70 with a preference to enter Short positions at 84.65               

Today's calendar and market movers:

  • § Europe Purchasing Manager Index Services in March is forecasted to rise to 56.9
  • § UK Purchasing Manager Index Services in March is forecasted to fall to 52.5
  • § Europe Retail Sales in February is forecasted to gain 0.1%
  • § US ISM Non-Manufacturing in March is forecasted to fall to 59.5

Equity Markets: 

US equities were positive on Monday with the S&P500 trading up 0.03% and the DJIA trading up 0.19%. The European bourses are mixed with the FTSE trading up 0.12%, the DAX down -0.06% and the CAC down -0.29%. The NIKKEI and the HSI at the time of writing are trading down -1.1% and up 1.46% respectively.

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