EU Morning Report

Dollar falls ahead of today's FOMC meeting

  • The US dollar plummeted against its major counterparts ahead of the Fed interest rate decision. Interest rates will be announced at 16:30 GMT today and speculators expect rates to remain unchanged at 0-0.25%. Focus turns to the Fed Chairman Ben Bernanke press conference and possible hints of a policy tightening. Risk appetite remains elevated supported by solid corporate earnings reports. US data revealed a higher than expected Consumer Confidence in April but the Manufacturing Index unexpectedly dipped. Durable Goods Orders are also expected at 12:30 GMT. Against the Japanese yen, the greenback fell as low as 81.26 from 81.93. The dollar also slid to a fresh record low against the Swiss franc at 0.8669 from 0.8852.
  • The euro rallied today and broke above the 1.47 level against the greenback. An improved risk appetite and a weaker US dollar pushed the single currency higher.  Against the dollar, the euro climbed as high as 1.4713 from 1.4493.
  • The Australian dollar rallied to a fresh all-time high versus the dollar supported by higher than expected Consumer Price Index data. Data revealed a 1.6% gain in the first quarter, which is significantly higher comparing to the 0.4% previous figure. The stronger CPI figure added further on inflation pressures raising expectations for an interest rate hike. The Aussie is also supported by the surging commodity prices and investors' higher demand for risk. Against the dollar, the Aussie rose to 1.0851 from 1.0676 traded yesterday.
  • Sterling edged higher against the dollar ahead of the release of the first quarter's Gross Domestic Product. Yesterday, CBI Industrial Trends disappointed the markets by showing a significantly lower than expected figure. Sterling jumped to 1.6523 from 1.6431.
  • Oil prices ticked higher at 112.60 dollars a barrel from 111.10. Gold rose at 1509.58 dollars an ounce from 1492.65.

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4580 with a preference to enter Long positions at 1.4595
  • § The USDJPY pivot point is at 82.00 with a preference to enter Short positions at 81.90             

Today's calendar and market movers:

  • § US Fed Interest Rate Decision is forecasted to keep rates unchanged at 0.25%
  • § UK Gross Domestic Product in Q1 is forecasted to gain 0.5%
  • § US Durable Goods Orders in March is forecasted to gain 2%

Equity Markets:                                             

US equities were positive on Tuesday with the S&P500 trading up 0.9% and the DJIA trading up 0.93%. The European bourses were also positive with the FTSE trading up 0.85%, the DAX up 0.84% and the CAC up 0.58%. The NIKKEI and the HSI at the time of writing are trading up 1.42% and 0.41% respectively.

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