EU Morning Report

The dollar is under pressure ahead of the Non-farm Payrolls

  • The euro rose yesterday hitting a one-month high against the dollar supported by comments from Jean-Claude Trichet and Angela Merkel. European Central Bank President Trichet said that a finance ministry for eurozone should be created in order to avoid future economic crises suggesting that more discipline is needed within the eurozone. The euro got a boost after German Chancellor Angela Merkel said that the euro is a stable currency and emphasized on Germany's commitment to the eurozone. Further supporting the single currency was a successful auction of Spanish government bonds and expectations that Greece may present a new austerity plan today. Against the dollar, the euro jumped to 1.4517 from 1.4344.
  • The US dollar is under pressure ahead of the US Non-farm Payrolls data expected at 12:30 GMT. Today's NFP is the most important economic indicator of the month as it expresses the paid jobs added or lost in the US economy excluding the farm sector. NFP data is highly significant as it provides insights into the country's Labor sector and reflects the health of the economy. Investors expect the NFP data to reveal a decline to 150K lower than the 190K forecast before Wednesday's poor ADP employment figures. Yesterday's data showed Initial Jobless Claims dropped slightly to 422K. Also, credit rating agency Moody's warned that the US rating may be put under review for downgrade if no measures are taken to tackle the fiscal deficit.
  • The Australian dollar rose to 1.0715 against the dollar from 1.0597. Against the Japanese yen, the dollar dipped to 80.56 from 81.32.
  • Oil prices fell at 98.46 dollars a barrel from 100.87. Gold fell to 1519.38 dollars an ounce from 1544.32. Silver also edged lower at 35.58 dollars an ounce from 37.41.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4400 with a preference to enter Long positions at 1.4410
  • § The USDJPY pivot point is at 81.00 with a preference to enter Short positions at 80.95
  • § The OIL pivot point is at 100.95 with a preference to enter Short positions at 100.95
  • § The Gold pivot point is at 1538 with a preference to enter Short positions at 1538                       

Today's calendar and market movers:

  • § US Non-farm Payrolls in May is forecast to fall to 150K
  • § US Unemployment rate in May is forecast to fall to 8.9%
  • § US ISM Non-Manufacturing in May is forecast to rise to 54
  • § Europe Purchasing Manager Index Services in May is forecast to fall to 55.4

Equity Markets:                                               

US equities were negative on Thursday with the S&P500 trading down -0.12% and the DJIA down -0.34%. The European bourses were also negative with the FTSE trading down -1.36%, the DAX down -1.99% and the CAC down -1.89%. The NIKKEI and the HSI at the time of writing are trading down -0.58% and -0.33% respectively.

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