EU Morning Report

EFSF approved, Spain downgraded

  • The euro slipped against most of its major counterparts after S&P downgraded Spain, citing weak growth. The eurozone rescue fund has been finally approved by Slovakia and investors around the globe anticipate its implementation and its effectiveness. Versus the US dollar, the euro dropped to 1.3685 from 1.3826. Against the Swiss franc, the single currency rose to 1.2377 from 1.2325. Against the Japanese yen, the euro receded to 105.11 from 106.56. Eurogroup Chairman Juncker shared his optimism on Greece receiving its sixth tranche.
  • The US dollar recorded mixed results against a basket of currencies as the economic data released failed to convince the markets. Against the Swiss franc, the US dollar advanced to 0.9038 from 0.8927. Against the Japanese yen, the greenback retreated to 76.67 from 77.22. The G20 are due to meet today and their agenda is expected to include global growth outlook and the eurozone debt crisis. Any statements will be highly anticipated.
  • The Australian dollar continued its rally against the US dollar, rising to 1.0232 from 1.0104. This came after Chinese trade data for September presented record-high monthly imports from Australia. The British pound advanced to 1.5784 from 1.5665 against the US dollar, ignoring Fitch’s rating cuts for UBS, Lloyds and RBS.
  • Oil prices dropped for a third day to 83.14 dollars a barrel from 85.37. Gold declined to 1652.75 dollars an ounce from 1684.40. Silver followed suit reaching 31.4458 dollars an ounce from 32.765.

Currencies to watch out for: EURUSD & USDJPY  

§  The EURUSD pivot point is at 1.3830 with a preference to enter Short positions at 1.3830

§  The USDJPY pivot point is at 77.05 with a preference to enter Short positions at 77.00

§  The OIL pivot point is at 83.50 with a preference to enter Long positions at 83.50

§  The Gold pivot point is at 1654 with a preference to enter Long positions at 1654


Today’s calendar and market movers:

§  Eurozone Inflation for September is forecast to rise to 0.8%

§  Canadian Manufacturing Sales for August is forecast to rise by 0.5%

§  US Core Retail Sales for September is forecast to rise by 0.3%

§  US Preliminary Consumer Sentiment for October is forecast to rise to 60.2


Equity Markets:


The European bourses were negative, with the FTSE trading down -0.71%, the DAX down -1.33% and the CAC down -1.33%. US equities were negative as well, with the S&P500 trading down -0.30% and the DJIA up -0.35%. The NIKKEI and the HSI at the time of writing are trading down -0.78% and -1.13% respectively.


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