EU Morning Report

The dollar is under pressure after the Non-farm Payrolls

  • The euro rose on Friday against the dollar supported by easing concerns over Greece debt crisis. The International Monetary Fund and the European Union approved the next installment of Greece's 11bln bailout package and fears of a Greek debt restructuring start to fade on talks that the next tranche of financial aid to Greece will be available in early July.  Focus turns to the European Central Bank Interest Rate meeting this week where investors expect hawkish comments on inflation. Interest rate hike expectations support the single currency while the US dollar is likely to resume its loose monetary policy for an extended period of time. Against the dollar, the euro rallied to 1.4657 from 1.4450.
  • The US dollar plummeted after Friday's Non-farm Payrolls disappointed the market. The NFP report revealed that only 54 thousand jobs were added in the US economy in May while investors were expecting an increase of 150 thousand. Also, the unemployment rate surprisingly rose to 9.1% further weighing on the greenback. After the data, the dollar slid to a one month low versus a basket of currencies while world equities plunged. The disappointing jobs data came after a series of poor data raising fears that the world's largest economy was slowing. Against the safe haven Swiss franc the dollar fell to a record low at 0.8329 from 0.8445. Against the Japanese yen, the dollar dipped to a one-month low at 80.04 from 80.88.
  • The Australian dollar gained 1.7% against the dollar rising to 1.0774 from 1.0594. Eyes turn to tomorrow's Interest Rate decision by the Reserve Bank of Australia.
  • Oil prices rose to 100.62 dollars a barrel from 98.12. Gold jumped to 1546.64 dollars an ounce from 1523.86. Silver also edged higher at 36.87 dollars an ounce from 35.08.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4580 with a preference to enter Long positions at 1.4590
  • § The USDJPY pivot point is at 80.70 with a preference to enter Short positions at 80.65
  • § The OIL pivot point is at 100.76 with a preference to enter Short positions at 100.76
  • § The Gold pivot point is at 1535 with a preference to enter Long positions at 1535                          

Today's calendar and market movers:

  • § Europe Sentix Investor Confidence in June is forecast to fall to 9.3
  • § Europe Producer Price Index in April is forecast to gain 0.8%
  • § Canada Purchasing Managers Index in May is forecast to rise to 60

Equity Markets:                                             

US equities were negative on Friday with the S&P500 trading down -0.97% and the DJIA down -0.79%. The European bourses were also negative with the FTSE trading down -0.12%, the DAX down -0.49% and the CAC down -0.02%. The NIKKEI and the HSI at the time of writing are trading down -1.35% and -1.31% respectively.

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