EU Morning Report

Dollar appears firmer as oil prices ease

  • The US dollar appears firmer on Tuesday's currency markets ahead of the Fed Chairman Ben Bernanke's speech before the Senate Banking Committee later today. Speculators expect Bernanke to continue being cautious about the US economy and the high unemployment. Investors are focusing on Bernanke's words hoping to get a clear view on the central bank's plans regarding the interest rates and the Quantitative Easing program. The euro fell against the stronger dollar today. On Monday data revealed January's Consumer Price Index in Europe fell more than the market expected but it is still above the central bank's target of 2%. The euro is trading below the 1.38 level falling as low as 1.3784 today after hitting a one month high at 1.3854 on Monday. Investors expect Europe's Manufacturing PMI and unemployment rate released later today.
  • The Australian dollar edged lower after the Reserve Bank of Australia decided to keep the country's interest rates unchanged at 4.75%. The statement that followed said that inflation is expected to stay within the central bank's target and there is no rush to raise the rates at this point. The lack of a bullish tone in RBA's statement disappointed investors and weighed on the Aussie. Against the dollar, the Aussie fell as low as 1.0148 from an eight week high at 1.0201. Later the Aussie recovered some of its losses supported by data showing the country's retail sales increased more than the market expected in January. The pair jumped as high as 1.0178 and the pair was last traded at 1.0165.
  • Against the Japanese Yen, the dollar advanced today climbing as high as 82.22 from 81.72.  
  • The US dollar is under pressure against the Canadian dollar weighed by the rising oil prices. The pair plummeted to 0.9705 from 0.9788 traded yesterday. Eyes turn on Canada's interest rate decision later today and speculators expect the rates to remain unchanged at 1%.
  • Oil eased on reports saying that oil supplies from Libya resume and Saudi Arabia increased its oil exports. Oil fell as low as 96.32 dollars a barrel. Gold prices rose today supported by the Middle East unrest. The precious metal rose to 1415.24 dollars an ounce today.

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3760 with a preference to enter into Long positions at 1.3770
  • § The USDJPY pivot point is at 82.00 with a preference to enter Short positions at 81.95            

Today's calendar and market movers:

  • § Europe unemployment rate in January is forecasted to rise at 10%
  • § Canada Interest Rate Decision is forecasted to keep interest rates unchanged at 1% 

Equity Markets:

US equities were positive on Monday with the S&P500 trading up 0.56% and the DJIA trading up 0.79%. The European bourses are mixed with the FTSE trading down 0.12%, the DAX up 1.21% and the CAC up 0.98%. The NIKKEI and the HSI at the time of writing are trading up 1.22% and up 0.06% respectively. 

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