EU Morning Report

The dollar slides on weak economic data

  • The euro plummeted during yesterday's US session after ECB's Jean-Claude Juncker said that Greece may not receive the next tranche of financial aid by the International Monetary Fund (IMF). He also emphasized on the high risk of a Eurozone debt contagion and said that the IMF's decision will depend on the troika report, an analysis of the Greek budget accounting. Juncker's comments knocked the euro as low as 1.4067 versus the dollar from 1.4206. Today, the pair rallied recovering its losses and traded as high as 1.4277 supported by China's interest in buying Portuguese bailout bonds during next month's auctions. China's willingness to purchase risky sovereign bonds such as Portugal and Greece may help sentiment against the Euro zone periphery. ECB President Jean-Claude Trichet also said that the central bank's primary mandate is to fight inflation indicating a rate hike despite the debt crisis in the Eurozone periphery.
  • The US dollar weakened against its major counterparts today on weak US economic data and higher Treasury yields. The US Gross Domestic Product in the first quarter was left unchanged at 1.8% while investors were expecting an upward revision of 2.2%. Initial Jobless Claims also missed expectations rising to 424K while the market was expecting a fall to 400K further weighing on the greenback. The poor data raised concerns over the US economic recovery pushing back expectations for an interest rate hike by the Federal Reserve. Against the Swiss franc, the dollar fell to a record low at 0.8532 from 0.8732 traded yesterday. Against the Japanese yen, the dollar dipped to 80.87 from 82.03.
  • The Australian dollar rose against a softer dollar trading as high as 1.0717 from 1.0509. Aussie's neighbor, the Kiwi, also rallied to a three-year high versus the dollar at 0.8196 from 0.7857.  
  • Oil prices fell to 99.61 dollars a barrel from 101.88. Gold also slid to 1514.55 dollars an ounce from 1530.76. Silver dipped to 36.26 dollars an ounce from 38.83.

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4190 with a preference to enter Long positions at 1.4200
  • § The USDJPY pivot point is at 81.40 with a preference to enter Short positions at 81.40
  • § The OIL pivot point is at 99.50 with a preference to enter Long positions at 99.50
  • § The Gold pivot point is at 1514 with a preference to enter Long positions at 1514                          

Today's calendar and market movers:

  • § US Personal Income in April is forecasted to gain 0.4%
  • § US Pending Home Sales in April is forecasted to fall 1%

Equity Markets:                                               

US equities were positive on Thursday with the S&P500 trading up 0.4% and the DJIA up 0.07%. The European bourses were mixed with the FTSE trading up 0.18%, the DAX down -0.79% and the CAC down -0.3%. The NIKKEI and the HSI at the time of writing are trading down -0.34% and up 0.99% respectively. 

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