EU Morning Report
Dollar rose ahead of the Non Farm Payrolls data
- The euro dropped against its major counterparts after the European Central Bank decided to keep interest rates unchanged at 1.50%. ECB President Jean Claude Trichet's comments during the following press conference weighed on the euro as he sounded more cautious over the health of the global economic growth. Risk aversion heightened and world equity markets turned negative. Wall Street tumbled marking the worst day for almost three years and 4.5 trillion dollars has been wiped off worldwide stock market. The central bank announced that it will resume its bond purchases as well as a special six-month liquidity plan in an effort to ease tensions in the euro area. Versus the dollar the single currency shed 2.2% edging as low as 1.4055 from 1.4368
- The US dollar strengthened against a basket of currencies as risk aversion spurred demand for the safe haven currency. Focus now turns to today's Non-Farm Payrolls (NFP) data released at 12:30 GMT where investors expect a rise to 85K. NFP expresses the number of paid jobs added or lost in the US economy, excluding the farming industry. It is one of the most significant economic reports as it provides insights into the US labour sector and reflects the health of the US economy.
- Against the Japanese yen, the dollar spiked to 79.42 from 78.42 today increasing uncertainty in the markets as investors talk of additional intervention by the Bank of Japan. Yesterday, the central bank stepped in the currency market and sold the yen as a strong yen has a negative impact on the Japanese exports. Heightened risk aversion in the market as well as growing concerns over the US economic growth and the eurozone debt crisis resulted in the rise of the yen.
- Oil prices shed 8% sliding to 85.07 dollars a barrel from 92.45. Gold edged lower to 1640.05 dollars an ounce from a record high at 1681.94. Silver shed 9% falling to 38.41 dollars an ounce from 42.23.
Currencies to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.4170 with a preference to enter Short positions at 1.4160
- § The USDJPY pivot point is at 79.25 with a preference to enter Short positions at 79.20
- § The OIL pivot point is at 89.75 with a preference to enter Short positions at 89.75
- § The Gold pivot point is at 1666 with a preference to enter Short positions at 1666
Today's calendar and market movers:
- § Switzerland Consumer Price Index in July is forecast to fall 0.6%
- § Canada Net Change in Employment in July is forecast to fall to 15K
- § US Non-Farm Payrolls in July is forecast to rise to 85K
US equities were negative on Thursday with the S&P500 trading down -4.78% and the DJIA down -4.31%. The European bourses were also negative with the FTSE trading down -3.43%, the DAX down -3.40% and the CAC down -3.90%. The NIKKEI and the HSI at the time of writing are trading down -3.97% and -4.75% respectively.
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