EU Morning Report

Dollar falls to record lows against yen, focus turns to BoJ

  • The US dollar edged lower against its major counterparts on fears the US economy may slide back into recession. Risk appetite remains weak, world equities turned negative and safe haven gold jumped to a record high. Focus turns to this week's speech by the Fed Chairman Ben Bernanke which is expected to provide an insight on how policymakers plan to tackle instability in the financial markets. Against the Japanese yen, the dollar dipped to a record low at 75.94 but later the pair recovered to trade at 77.20 on fears the Bank of Japan will intervene to stop the yen's rise. After the yen's rally to record high levels, the Japanese Finance Minister Yoshihiko Noda emphasized on Japan's readiness to act decisively in the currency markets if necessary.   
  • The euro edged higher against the dollar on Friday but fell during the weekend after Germany Chancellor Angela Merkel and Finance Minister Schaeuble expressed their opposition for Joint Eurobonds. The pair jumped to 1.4452 from 1.4258 but it later surrendered its gains to trade at 1.4357. Versus the Swiss franc, the single currency edged slightly lower at 1.1265 from 1.1392.
  • Oil prices are under pressure falling to 79.11 dollars a barrel on Friday from 87.46 as the unrest in Libya continues. Reports say that rebels in Libya now occupy most of the city raising concerns about the oil production as Libya is one of the world's major oil exporters. Gold gained 3.3% edging higher to a fresh record high at 1885.72 dollars an ounce from 1825.13. Silver gained 7.8% rising to 43.91 dollars an ounce from 40.49. 

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4345 with a preference to enter Long positions at 1.4350
  • § The USDJPY pivot point is at 77.00 with a preference to enter Short positions at 76.95
  • § The OIL pivot point is at 79.35 with a preference to enter Long positions at 79.35
  • § The Gold pivot point is at 1853 with a preference to enter Long positions at 1853                        

Today's calendar and market movers:

  • § No economic data is expected today

Equity Markets:                                                

US equities were negative on Friday with the S&P500 trading down -1.50% and the DJIA down -1.57%. The European bourses were also negative with the FTSE trading down -1.01%, the DAX down -2.19% and the CAC down -1.92%. The NIKKEI and the HSI at the time of writing are trading down -0.84% and -0.93% respectively. 

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