EU Morning Report

Euro above the 1.45 again as more rate hikes are expected

  • The euro resumes its rally against the dollar on expectations for further interest rate hikes by the European Central Bank. Belgium's Central Bank Governor Coene said that ECB is likely to start a series of rate hikes in the following months. Against the dollar, the single currency broke above the 1.45 level today rising as high as 1.4512 from 1.4407. 
  • The US dollar is broadly weaker against a basket of currencies today and the dollar index hit a 16-month low. The dollar appears to be weighed by expectations that the Federal Reserve may continue with its loose monetary policy while other central banks are preparing to tighten their monetary policies. Mixed US retail sales did little to support the dollar. Retail Sales revealed a lower than expected 0.4% gain for March but ex. Autos retail sales gained 0.8% exceeding expectations. Against the safe haven Swiss franc, the dollar dipped to a fresh record low at 0.8896 from 0.8991. Focus now shifts to the US Producer Price Index data, which is expected at 12:30 GMT today and may provide a clearer picture about inflation. Against the Japanese Yen, the dollar plummeted hitting 83.27 from 84.25 traded yesterday.
  • The Australian dollar rallied against the dollar today supported by surging commodity prices. The Aussie is also supported by an inflation report from China showing a strong economic growth. The Aussie rose on the news as China is Australia's largest trade partner. The Aussie edged as high as 1.0544 versus the dollar from 1.0428 traded yesterday. 
  • Sterling rose against a weaker greenback on Thursday. Yesterday, mixed jobs data showed that Claimant Count Change increased more than expected in March but the country's unemployment rate fell to 7.8% from 8%. Expectations for a Q3 interest rate hike by the Bank of England begin to fade weighing on the British Pound. The pair fell as low as 1.6227 from 1.6343. Today's UK jobs data at 08:30 GMT may provide a clearer picture. 
  • Oil prices rose to 107.49 dollars a barrel from 105.30. Gold also rose to 1463.82 dollars an ounce from 1451.10. Silver rallied 41.36 dollars an ounce from 40.

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4410 with a preference to enter Long positions at 1.4420
  • § The USDJPY pivot point is at 83.95 with a preference to enter Short positions at 83.90             

Today's calendar and market movers:

  • § US Producer Price Index in March is forecasted to gain 1%
  • § US Initial Jobless Claims is forecasted to fall to 380K 

Equity Markets:

US equities were positive on Wednesday with the S&P500 trading up 0.02% and the DJIA trading up 0.06%. The European bourses were also positive with the FTSE trading up 0.77%, the DAX up 1.06% and the CAC up 0.75%. The NIKKEI and the HSI at the time of writing are trading up 0.3% and down -0.41% respectively.

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