EU Morning Report


EU leaders vow to reveal rescue plan

  • The euro produced a positive opening last night as France and Germany leaders committed to reveal a plan to resolve the Eurozone debt crisis by the end of the month. This came on Sunday, after Fitch downgraded Spain and Italy on Friday. Versus the US dollar, the single currency opened at 1.3344 and soon covered the gap from 1.3360 from last close. Against the Swiss Franc, the euro opened almost unchanged at 1.2407 from 1.2408. Rumors of a Swiss intervention to raise the 1.20 floor are expected to influence the pair this week as well. Against the Japanese yen, the euro opened at 102.31 and rapidly managed to cover the difference from the 102.63 Friday close. The exact details of the Dexia bail-out are also highly anticipated.
  • The US dollar slipped against a basket of currencies as better than expected Non-Farm Payroll numbers and news from Europe reduced risk aversion. Against the Swiss franc, the US dollar opened unchanged at 0.9272, but soon drop lower. Against the Japanese yen, the greenback opened at 76.52 from 76.72 but managed to cover the difference over night. Speculation of a Japanese intervention to weaken the Yen will be the prime factor to influence the pair this week.
  • The Australian dollar opened slightly lower at 0.9741 from 0.9768 against the US dollar, and confirmed our view of a reduced risk aversion as it subsequently rose higher. While the British pound opened at 1.5516 from 1.5555 against the US dollar, it erased the difference overnight. On Sunday, Monetary Policy Committee member Weale, acknowledged the likelihood of further quantitative easing.
  • Oil prices opened at 82.77 dollars a barrel from 82.56. Gold opened at 1638.43 dollars an ounce from 1637.81. Silver opened at 31.01 dollars an ounce from 31.1225.

Currencies to watch out for: EURUSD & USDJPY  

§  The EURUSD pivot point is at 1.3380 with a preference to enter Long positions at 1.3400

§  The USDJPY pivot point is at 76.95 with a preference to enter Short positions at 76.90

§  The OIL pivot point is at 82.50 with a preference to enter Long positions at 82.50

§  The Gold pivot point is at 1620 with a preference to enter Long positions at 1620


Today’s calendar and market movers:

§  Bank holiday for the US, Canada and Japan.

§  EMU Sentix Investor Confidence for September is forecast to drop to -19

§  UK RICS Housing Price Balance in September is forecast to drop to -24


Equity Markets:


The European bourses were positive on Friday, with the FTSE trading up 0.23%, the DAX up 0.54% and the CAC up 0.66%. US equities were negative with the S&P500 trading down -0.82% and the DJIA down -0.18%. The NIKKEI and the HSI at the time of writing are trading up 0.98% and 0.64% respectively.


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