EU Morning Report

Aussie fell after the Reserve Bank of Australia rate decision

  • The euro retreated from its recent highs as the market digested the news that Greece received the bailout funds for the next quarterly installment. Also, rating agency Standard & Poor's said that a debt rollover plan for Greece puts the country at risk as it may cut the country's rating to a selective default. Versus the greenback, the euro dipped to 1.4465 from 1.4567 traded yesterday. The single currency remains supported by interest rate hike expectations as hawkish comments by ECB policymakers signaled that a rate hike will be decided at the European Central Bank Interest Rate meeting on Thursday. Consumer Price Index reinforced expectations after it revealed that inflation remains elevated gaining 2.7% in June, which is a well above target figure.
  • The US dollar firmed against its major counterparts as investors' risk appetite started to fade. There was no US economic data due to the Independence Day holiday. Factory Orders are expected today from the US at 14 GMT. Against the Japanese yen, the dollar edged as high as 81.10 from 80.53.
  • The Australian dollar fell today after the Reserve Bank of Australia decided to keep interest rates unchanged at 4.75% and gave no indication of further rate hikes. The central bank emphasized on concerns over the sluggishness of the economy as well as the global recovery. Rating agency Moody's warned China about the high debt levels of the country triggering speculation of another rate hike in China. Against the dollar, the Aussie dipped to 1.0663 from 1.0774. Sterling remains under pressure ahead of the BoE Interest rate meeting. The prospect of additional quantitative easing is alive as the UK economy is struggling to escape recession. Versus the dollar sterling dipped to 1.6029 from 1.6140.
  • Oil prices fell to 94.57 dollars a barrel today from 95.46. Gold edged higher to 1497.90 dollars an ounce from 1489.26. Silver also ticked higher at 34.28 dollars an ounce from 33.90.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4450 with a preference to enter Long positions at 1.4460
  • § The USDJPY pivot point is at 80.70 with a preference to enter Long positions at 80.70
  • § The OIL pivot point is at 93.45 with a preference to enter Long positions at 93.45
  • § The Gold pivot point is at 1499 with a preference to enter Short positions at 1499                        

Today's calendar and market movers:

  • § Europe Purchasing Manager Index Services in June is forecast to fall to 54.2
  • § UK Purchasing Manager Index Services in June is forecast to fall to 53.5
  • § Europe Retail Sales in May is forecast to fall 0.1%
  • § US Factory Orders in May is forecast to gain 1%

Equity Markets:                                            

The European bourses were mixed on Monday with the FTSE trading up 0.46%, the DAX up 0.32% and the CAC down -0.11%. The NIKKEI and the HSI at the time of writing are trading up 0.05% and down -0.03% respectively. The equity market was closed in the US due to Independence Day holiday.

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