EU Morning Report

Better than expected Durable Goods Orders lift the dollar

  • The US dollar rebounded against its major counterparts yesterday after significantly better than expected Durable Goods Orders. Following the positive data from the US, speculators argue that the Fed Chairman Ben Bernanke may not go as far as announcing a third round of quantitative easing at tomorrow Jackson Hole meeting. Against the Japanese yen, the dollar gained 0.9% rising to 77.17 today from 76.46. On Tuesday, the Japanese Finance Minister Yoshihiko Noda announced that a 100 billion dollars credit line will be offered to companies to help them recover from the strong yen.
  • The euro edged lower against the dollar yesterday but advanced against the sterling and Swiss franc. Eurozone Industrial New Orders figures were worse than expected as well as the German IFO Business Climate Index. The pair rose to 1.4481 from 1.4379 but later it sharply fell to 1.4388. Today, the pair is trading higher at 1.4432 on talks the European Central Bank is buying Italian and Spanish debt as well as a recovery in world equities. Versus the Swiss franc, the single currency is trading higher hitting 1.1490 from 1.1371. Against the sterling, the single currency gained 1% jumping to 0.8813 from 0.8727.  
  • The British pound plummeted yesterday after dovish comments by the Bank of England's Martin Weale. He said that the central bank's growth forecasts may be too optimistic and that the UK economy risks of sliding back into recession. Against the greenback, sterling dipped to 1.6351 from 1.6533.
  • Oil prices rebounded to 86.54 dollars a barrel from 84.55 but later dipped to 84.69. Gold suffered heavy losses yesterday shedding 6.7% after a sharp fall to 1729.32 dollars an ounce from 1853.78. Silver also fell for the second straight day yesterday falling to 39.06 dollars an ounce from 42.42.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4375 with a preference to enter Long positions at 1.4385
  • § The USDJPY pivot point is at 76.70 with a preference to enter Long positions at 76.75
  • § The OIL pivot point is at 86.60 with a preference to enter Short positions at 86.60
  • § The Gold pivot point is at 1720 with a preference to enter Long positions at 1730                           

Today's calendar and market movers:

  • § US Initial Jobless Claims is forecast to fall to 405K

Equity Markets:                                              

US equities were positive on Wednesday with the S&P500 trading up 1.31% and the DJIA up 1.29%. The European bourses were also positive with the FTSE trading up 1.49%, the DAX up 2.69% and the CAC up 1.79%. The NIKKEI and the HSI at the time of writing are trading up 1.54% and 1.08% respectively.

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