EU Morning Report

Australian dollar falls on disappointing jobs data

  • The euro remains under pressure on uncertainty over Greece's debt problems. Worries over Greece's debt crisis escalate as talks that Greece may need another rescue package continue. Against the stronger dollar, the euro dipped below the 1.42 level at 1.4172 from 1.4422. The euro also plunged against the sterling falling as low as 0.8672 from 0.8810.
  • The US dollar strengthened against a basket of currencies as a lower risk appetite prompted demand for the safe haven currency. Data revealed the US deficit grew to 48.2B in March. Against the Swiss franc, the greenback got a boost and traded as high as 0.8883 from 0.8783. Against the Japanese yen, the dollar rose today to trade at 81.33 from 80.61 traded yesterday. Investors are expecting the US Initial Jobless Claims and Retail Sales data today.
  • The Australian dollar plummeted today on disappointing employment data. Australia's employment change unexpectedly dropped 22.1K, which is the biggest fall in almost two years. After the jobs data, expectations for an interest rate hike in the following months started to fade. The Aussie edged as low as 1.0586 from 1.0888.
  • Sterling rallied yesterday after the Bank of England Quarterly Inflation revealed a higher inflation forecast for 2011. Prices are expected to go as high as 5% in 2011 and stay above the 2% target in 2012. The report also showed the central bank's growth forecast which is expected to slowdown and the GDP was revised lower at 2.2%. Even though he did not say when the central bank will start tightening their policy, BoE Governor Mervyn King said that there will be a need for a rate hike at some point. Against the dollar, the sterling jumped as high as 1.6517 from 1.6344 but then surrendered all of its gains and fell to 1.6322 as risk aversion hit the market.  
  • Oil prices shed 6.8% falling to 97.51 dollars a barrel from 104.57. Gold also plunged 2% to 1494.98 dollars an ounce from 1526.44. Silver hit 33.90 dollars an ounce from 39.48, a decline of 14%.  

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4275 with a preference to enter Short positions at 1.4275
  • § The USDJPY pivot point is at 80.75 with a preference to enter Long positions at 80.85               

Today's calendar and market movers:

  • § US Producer Price Index in April is forecasted to gain 0.6%
  • § US Retail Sales in April is forecasted to gain 0.6%
  • § US Initial Jobless Claims is forecasted to fall to 430K

Equity Markets:                                              

US equities were negative on Wednesday with the S&P500 trading down -1.11% and the DJIA down -1.02%. The European bourses were mixed with the FTSE trading down -0.71%, the DAX down -0.09% and the CAC up 0.14%. The NIKKEI and the HSI at the time of writing are trading down -1.5% and -0.88% respectively. 

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