EU Morning Report

Dollar is under pressure after Bernanke's comments

  • The euro edged higher yesterday as investors are optimistic that Greece's debt problems may soon be resolved. Data showed Retail Sales in the euro zone and Germany factory orders grew more than expected in April. US President Obama commented on the euro zone debt crisis saying that economic growth depends on a resolution to debt problems in the euro area. Focus turns to the Eurozone Gross Domestic Product released today at 9 GMT. The euro remains well supported by interest rate hike expectations while the US dollar is likely to resume its loose monetary policy for an extended period of time. Against the dollar, the euro remains firm jumping as high as 1.4695 from 1.4563.
  • The US dollar was under pressure against a basket of currencies yesterday after Fed Chairman Ben Bernanke's comments. He emphasized on the disappointing employment data acknowledging the slow recovery of the US economy. Despite his negative tone, he signaled that the Fed is not planning a third round of Quantitative Easing. Against the Japanese yen, the dollar dipped below the 80 level hitting a one-month low at 79.74 from 80.32.
  • The Australian dollar dropped yesterday weighed by a heightened risk aversion in the market. Investors turned cautious on concerns about a slow US economic recovery and escalating Eurozone debt problems. Data showed that Home loans rose significantly higher than expected in April but it failed to support the Aussie. Against the dollar, the Aussie dipped to 1.0639 from 1.0758 traded yesterday. Focus turns to May's employment data in Australia released tomorrow.
  • Oil prices rose to 99.68 dollars a barrel from 97.75. Gold fell to 1536.03 dollars an ounce from 1549.80. Silver edged lower at 36.45 dollars an ounce from 37.48.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4620 with a preference to enter Long positions at 1.4630
  • § The USDJPY pivot point is at 80.40 with a preference to enter Short positions at 80.35
  • § The OIL pivot point is at 99.90 with a preference to enter Short positions at 99.90
  • § The Gold pivot point is at 1533 with a preference to enter Long positions at 1533                        

Today's calendar and market movers:

  • § Europe Gross Domestic Product in Q1 is forecast to gain 0.8%
  • § Germany Industrial Production in April is forecast to gain 0.2%
  • § Canada Housing Starts in May is forecast to rise to 183K
  • § New Zealand Interest Rate decision is forecast to keep rates unchanged at 2.5%

Equity Markets:                                                

US equities were negative on Tuesday with the S&P500 trading down -0.1% and the DJIA down -0.16%. The European bourses were positive with the FTSE trading up 0.03%, the DAX up 0.26% and the CAC up 0.22%. The NIKKEI and the HSI at the time of writing are trading up 0.08% and down -0.93% respectively.

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