EU Morning Report

Dollar supported by Fed policymaker's comments

  • The euro plummeted against the dollar yesterday after rating agency Standard and Poors downgraded Portugal's debt for the second time in less than a week. Greece's sovereign debt was also downgraded yesterday due to concerns that the country may need further bailout funds. As the euro zone debt problems return, the euro fell to 1.4046 versus the greenback from 1.4147. The pair recovered some of its losses helped by expectations of higher interest rates. Comments from ECB's Makuch and Stark supported the single currency after saying that a rate hike as soon as April is still very likely. Today, the pair edged lower falling to 1.4058 and the pair was last trading at 1.4062.
  • The US dollar appears stronger against the euro, the Swiss franc and the Japanese Yen. US economic data disappointed investors yesterday with Consumer Confidence falling more than expected in March. Later, the dollar found support after St Louis Fed President James Bullard said the Fed could exit its Quantitative Easing monetary policy once the US economy shows signs of robust growth. Investors are now focusing on the ADP Employment Change released later today that may provide a clearer insight about Friday's Non Farm Payrolls.
  • Against the Japanese Yen, the US dollar edged higher supported by an improvement in risk appetite as well as higher US Treasury yields. The pair broke above the 83 level climbing to 83.02 up from 80.69 traded yesterday.
  • The Australian dollar rallied against a basket of currencies supported by higher commodity prices. The Aussie continues to be one of the strongest currencies making a fresh high against the greenback. The pair jumped as high as 1.0331 from 1.0203. The Kiwi also rose edging as high as 0.7605 from 0.7493.  
  • Oil prices remained elevated supported by the Libya unrest jumping to 104.95 dollars a barrel. Gold rose to 1423.24 dollars an ounce from 1410.94.

Currency to watch out for: GBPUSD & USDJPY  

  • § The GBPUSD pivot point is at 1.6045 with a preference to enter Short positions at 1.6035
  • § The USDJPY pivot point is at 82.30 with a preference to enter Long positions at 82.35             

Today's calendar and market movers:

  • § US ADP Employment Change in March is forecasted to fall to 205K
  • § Switzerland KOF Leading Indicator in March is forecasted to fall to 2.16 

Equity Markets:

US equities were positive on Tuesday with the S&P500 trading up 0.71% and the DJIA trading up 0.67%. The European bourses are mixed with the FTSE trading up 0.47%, the DAX down -0.06% and the CAC up 0.27%. The NIKKEI and the HSI at the time of writing are trading up 1.89% and 1.71% respectively.

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