EU Morning Report

Dollar rebounds on news that the al-Qaeda leader is dead

  • The US dollar recovered from a three year low against a basket of currencies on the news that the al-Qaeda leader Osama Bin Laden was dead. Bin Laden's death boosted confidence in the greenback as it lowers the national security risk. Against the Swiss franc, the dollar jumped as high as 0.8696 from 0.8625.
  • The euro edged lower against the dollar after US President Barack Obama announced the news. Against the dollar, the euro fell to 1.4762 from 1.4863 and it was last traded above the 1.48 level at 1.4808. Consumer Price Index surprised investors on Friday by revealing a 2.8% gain in April. Speculation for further interest rate hikes in the euro zone continues to support the single currency while the US maintains its easing monetary policy. Focus now turns to Purchasing Manager Index Manufacturing data revealed later today.
  • The Japanese yen weakened broadly, as the Osama Bin Laden' death boosted risk appetite and the demand for higher yielding assets. The euro and the Australian dollar advanced against the yen rising to 120.74 and 89.31 respectively. Against the yen, the dollar rose to 81.68 from 80.99.
  • The Australian dollar retreated from a fresh all-time high versus the stronger dollar on Monday. Weighed by the falling commodity prices and a strong dollar the Aussie slid to 1.0921 from 1.1010 versus the dollar. Further weighing on the Aussie is data showing the House Price Index grew less than expected in the first quarter. Aussie's neighbor, the Kiwi, also weakened declining to 0.8029 from 0.8109 versus the dollar.
  • Oil prices fell to 112.11 dollars a barrel from 114.15. Gold plummeted to 1540.35 dollars an ounce from a record high at 1576.38. Silver shed 11.5% sliding to 42.55 dollars an ounce from 48.10.  

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4770 with a preference to enter Long positions at 1.4770
  • § The USDJPY pivot point is at 81.85 with a preference to enter Short positions at 81.85              

Today's calendar and market movers:

  • § Switzerland Purchasing Manager Index in April is forecasted to rise to 60
  • § Europe Purchasing Manager Index Manufacturing in April is forecasted to rise to 57.7
  • § US Construction Spending in March is forecasted to gain 0.4%
  • § US ISM Manufacturing in April is forecasted to fall to 59.9

Equity Markets:                                              

US equities were positive on Friday with the S&P500 trading up 0.23% and the DJIA trading up 0.37%. The European bourses were also positive with the FTSE trading up 0.03%, the DAX up 0.52% and the CAC up 0.05%. The NIKKEI and the HSI at the time of writing are trading up 1.49% and down -0.36% respectively.

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