EU Morning Report- Euro edges higher ahead of the ECB interest rate decision

By @ibtimes on

Euro edges higher ahead of the ECB interest rate decision

  • The euro fell on Wednesday after S&P cut Ireland's credit rating to A- and warned of a further downgrade. Rising tensions in Egypt also weighted on the single currency, dragging it as low as 1.3766 against the dollar from a two and a half month high at 1.3860. The euro edges slightly higher today, breaking above the 1.38 level again ahead of the ECB interest rate decision later today. Investors expect the ECB to follow a hawkish stance regarding inflation and the possibility of a rate hike in the near future. The pair was last traded at 1.3809.
  • The dollar appeared stronger on Wednesday's currency markets after the US ADP employment data revealed a higher than expected figure. ADP data reinforces speculation that Friday's Non Farm Payrolls will show a significant improvement in the US employment sector. Today, investors' eyes turn on the US Initial Jobless Claims expecting a drop to 420K. Against the Japanese Yen, the dollar rose as high as 81.84 but then surrendered gains and fell as low as 81.48. The pair was last traded at 81.63 yen.
  • The Australian dollar edged higher supported by higher than expected Trade Balance and Building Permits data. The Aussie climbed as high as 1.0120 versus the dollar from 1.0054. Aussie's neighbor, the Kiwi dipped on disappointing jobs data. New Zealand's unemployment rate surprisingly rose to 6.8% in the fourth quarter lowering expectations of a rate rise in the near future. After the data, the Kiwi slid as low as 0.7704 against the dollar from 0.7822.
  • Gold dropped today weighed by a heightened risk appetite in the currency markets. Investors focus on the ECB interest rate decision and US jobs data hoping for robust signs that the economy is improving. The precious metal declined to 1327.80 dollars an ounce from 1342.85.

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3755 with a preference to enter into Long positions at 1.3765
  • § The USDJPY pivot point is at 81.90 with a preference to enter Short positions at 81.85              

Today's calendar and market movers:

  • § ECB Interest Rate Decision is forecasted to keep rates unchanged at 1%
  • § Europe's Purchasing Manager Index Services is forecasted to rise to 55.2
  • § US Initial Jobless Claims is forecasted to fall to 420K

Equity Markets:

US equities were positive on Wednesday with the S&P500 trading down -0.27% and the DJIA trading up 0.02%. The European bourses are also mixed with the FTSE trading up 0.71%, the DAX trading down -0.01% and the CAC down -0.15%. The NIKKEI and the HSI at the time of writing are trading down -0.25% and up 1.81% respectively.

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