EU Morning Report

 

ECB refuses to cut rates, lifts the globe

  •  The euro rallied for the third straight day against a basket of currencies yesterday after the European Central Bank Interest Rate Decision. The ECB surprised the markets by keeping the rates unchanged at 1.5% and Trichet during his last press conference said the bank will take measures to avoid a banking crisis boosting risk appetite. A highly speculated rate cut was never announced. Versus the US dollar, the single currency climbed to 1.3450 from 1.3241. The euro also rose higher from 1.2289 to 1.2427 against the Swiss Franc, on rumors of a Swiss intervention to raise the 1.20 floor. Against the Japanese yen, the euro climbed to 103.09 from 101.67.
     
  • The US dollar slipped against a basket of currencies as investors ignored data showing jobless claims rising less than expected last week and are now focusing on the Non-Farm Employment Change later on today. The positive ADP Non-Farm Employment Change on Wednesday has set the stage for a similar result for the Non-Farm Payrolls report. Against the Swiss franc, the US dollar dropped to 0.9185 from 0.9315. Against the Japanese yen, the greenback fell to 76.56 from 76.83 with yet another day clouded with speculation of a Japanese intervention to weaken the Yen. The Bank of Japan press conference will surely be monitor by investors world-wide.
     
  • The Australian dollar mounted to 0.9766 from 0.9621 against the US dollar, confirming our view that risk appetite is back. The British pound plunged against the US dollar and traded as low as 1.5271 from 1.5501. This was a direct result of Bank of England decision to leave interest rates unchanged but to go ahead with 75 billion GBP additional quantitative easing. The central bank will do that by buying financial assets in order to inject this amount of money into the economy.
  • Oil prices rose to 82.88 dollars a barrel from 79.06. Gold also marched higher to 1654.83 dollars an ounce from 1631.53. Silver followed suit and jumped to 32.1688 dollars an ounce from 30.23.

 Currencies to watch out for: EURUSD & USDJPY  

§  The EURUSD pivot point is at 1.3370 with a preference to enter Long positions at 1.3380

§  The USDJPY pivot point is at 76.85 with a preference to enter Short positions at 76.80

§  The OIL pivot point is at 80.40 with a preference to enter Long positions at 80.40

§  The Gold pivot point is at 1617 with a preference to enter Long positions at 1617

                           

Today’s calendar and market movers:

§  Canadian Unemployment Rate in September is forecast to remain at 7.3%

§  US Non-Farm Employment Change for September is forecast to rise to 55K

§  US Unemployment Rate in September is forecast to remain at 9.1%

 

Equity Markets:

                                                

The European bourses were positive with the FTSE trading up 3.18%, the DAX up 3.15% and the CAC up 3.41%. US equities were positive as well with the S&P500 trading up 1.83% and the DJIA 1.68%. The NIKKEI and the HSI at the time of writing are trading up 0.92% and 3.20% respectively.