EU Morning Report

The dollar gets a boost after Bernanke's press conference

  • The US dollar rose yesterday after the Federal Reserve Interest Rate decision. Policymakers decided to keep rates unchanged at 0.25% but focus turned to the following press conference by the Fed Chairman Ben Bernanke. He said that the Quantitative Easing program will end on schedule by the end of June and no further stimulus was signaled. Bernanke emphasized on inflation and the central bank's determination to maintain price stability. His comments gave the dollar a boost and pushed it higher against a basket of currencies. Against the Japanese yen, the dollar jumped to 80.63 from 80.01.
  • The euro plummeted against its major counterparts yesterday as investors remain cautious on the eurozone debt crisis. The Greek government won the vote of confidence on Tuesday night but the question is whether the Greek parliament will approve the unpopular new austerity plan on June 28. An approval of the new austerity measures will increase expectations for another loan tranche by the International Monetary Fund in order to avoid a catastrophic Greek default. Against the stronger dollar, the euro fell to 1.4283 from 1.4441.
  • The Australian dollar fell sharply against the stronger dollar today after data showed China's factory growth underperformed in June. The poor Chinese data is a result of tightening in monetary policy and a slowdown in global demand. Against the dollar, the Aussie slid as low as 1.0532 from 1.0650.   
  • Sterling dipped after the Bank of England meeting minutes revealed a dovish stance by the MPC policymakers. Against the dollar, sterling fell to a two and a half month low at 1.6017 from 1.6546 as interest rates are expected to remain at record low levels as downside risks to growth remain a concern.
  • Oil prices fell to 93.68 dollars a barrel during the US session from 95.67. Gold rallied to 1544.50 dollars an ounce from 1557.99. Silver also ticked lower to 36.05 dollars an ounce from 36.74.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4360 with a preference to enter Short positions at 1.4350
  • § The USDJPY pivot point is at 80.25 with a preference to enter Long positions at 80.30
  • § The OIL pivot point is at 92.85 with a preference to enter Long positions at 92.85
  • § The Gold pivot point is at 1541 with a preference to enter Long positions at 1541                           

Today's calendar and market movers:

  • § US Initial Jobless Claims is forecast to rise to 415K
  • § US New Home Sales in May is forecast to fall to 0.31M

Equity Markets:                                                

US equities were negative on Wednesday with the S&P500 trading down -0.65% and the DJIA down -0.66%. The European bourses were also negative with the FTSE trading down -0.04%, the DAX down -0.1% and the CAC down -0.15%. The NIKKEI and the HSI at the time of writing are trading down -0.13% and -0.79% respectively.

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