EU Morning Report


Euro advances on resolution hopes

  • The euro produced substantial gains against most of its major counterparts as France and Germany leaders committed on Sunday to do whatever necessary to resolve the Eurozone crisis. The globe anticipates more details with skepticism, as EU leaders have disappointed in the past. Versus the US dollar, the single currency found resistance at 1.37, surging to 1.3698 from 1.3393. Against the Swiss Franc, the euro dropped to 1.2302 from 1.2436. Against the Japanese yen, the euro climbed to 104.99 from 102.83. Focus now turns to Slovakia, the last country to vote on the expansion of the Eurozone rescue fund.
  • The US dollar slipped against a basket of currencies as headlines from Europe controlled trades and optimism-reduced risk aversion. Against the Swiss franc, the US dollar plunged to 0.9002, from 0.9261. Against the Japanese yen, the greenback dropped to 76.56 from 76.84. The US Federal Reserve is expected to reveal minutes from September's FOMC policy meeting later today. This was the meeting where “Operation Twist” - a rearrangement of the central bank’s balance sheet in order to reduce long-term borrowing costs – was unveiled and investors will be eager to gain insight on the Fed’s thought process.
  • The Australian dollar rose to 1.0013 from 0.9780 against the US dollar, continuing its rally for a sixth consecutive day on heightened risk appetite. The British pound climbed to 1.5688 from 1.5543 against the US dollar. Bank of England, Monetary Policy Committee member Miles admitted his uncertainty on the prospect of further quantitative easing and noted GDP would likely be flat in fourth quarter.
  • Oil prices advanced to 86.06 dollars a barrel from 83.18. Gold also rose higher to 1683.83 dollars an ounce from 1644.40. Silver followed suit and jumped to 32.33 dollars an ounce from 31.4480.

Currencies to watch out for: EURUSD & USDJPY  

§  The EURUSD pivot point is at 1.3570 with a preference to enter Long positions at 1.3585

§  The USDJPY pivot point is at 76.90 with a preference to enter Short positions at 76.85

§  The OIL pivot point is at 84.00 with a preference to enter Long positions at 84.00

§  The Gold pivot point is at 1655 with a preference to enter Long positions at 1655


Today’s calendar and market movers:

§  UK Industrial Production for September is forecast to drop by -0.2%

§  UK Manufacturing Production for September is forecast to drop by -0.2%

§  Canadian Housing Starts for September is forecast to rise to 188K


Equity Markets:


The European bourses were positive, with the FTSE trading up 1.80%, the DAX up 3.02% and the CAC up 2.13%. US equities were positive as well, with the S&P500 trading up 3.41% and the DJIA up 2.97%. The NIKKEI and the HSI at the time of writing are trading up 2.10% and 3.26% respectively.


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