EU Morning Report

Australia's central bank keeps interest rates unchanged

  • The US dollar strengthened on Monday recovering from a three year low against a basket of currencies on the news that Osama Bin Laden is dead. But its rally failed to last after the ISM Manufacturing data revealed a slower growth comparing to the previous month.  After the dollar's initial reaction to Osama Bin Laden's death, the dollar continues to be under pressure as the Fed maintains its loose monetary policy. Against the Swiss franc, the dollar fell as low as 0.8629 from 0.8696.
  • The euro edged higher against the dollar on Monday supported by solid Purchasing Manager Index Manufacturing data. Comments by Eurogroup President Juncker further supported the single currency after he said that a restructuring of Greek debt is not an option. Against the dollar, the euro rose to 1.4901 from 1.4762. Investors are focusing on the ECB interest rate decision released this week. Consumer Price Index surprised investors by revealing a 2.8% gain in April and speculators argue for further interest rate hikes. Eurozone Producer Price Index data is revealed today at 9:00 GMT.
  • The Japanese yen rose today against its major counterparts supported by a higher risk aversion. Against the dollar, the yen fell as low as 80.90 from 81.68 traded yesterday. The euro and the Australian dollar also ticked lower versus the yen falling as low as 119.77 and 88.15 respectively.
  • The Australian dollar plummeted on Monday after the Reserve Bank of Australia keeps interest rates unchanged at 4.75%. The central bank's less hawkish stance as well as lower commodity prices further weighed on the Aussie. Against the dollar, the Aussie dipped to 1.0887 from a record high at 1.1011 Aussie's neighbor, the Kiwi, also weakened declining to 0.8011 from 0.8119 versus the dollar.
  • Oil prices rallied to 114.80 dollars a barrel from 110.80. Gold plummeted to 1534.25 dollars an ounce from a record high at 1575.21. Silver slid to 43.48 dollars an ounce from 47.35  

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4765 with a preference to enter Long positions at 1.4765
  • § The USDJPY pivot point is at 81.30 with a preference to enter Short positions at 81.30              

Today's calendar and market movers:

  • § UK Purchasing Manager Index Manufacturing in April is forecasted to fall to 56.9
  • § Europe Producer Price Index in March is forecasted to gain 0.6%
  • § US Factory Orders in March is forecasted to gain 1.9%

Equity Markets:                                               

US equities were negative on Monday with the S&P500 trading down -0.18% and the DJIA trading down -0.02%. The European bourses were positive with the FTSE trading up 0.03%, the DAX up 0.18% and the CAC up 0.05%. The NIKKEI and the HSI at the time of writing are trading up 1.57% and 0.18% respectively.

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