EU Morning Report

Euro edges higher ahead of ECB interest rate meeting

  • The euro edged higher against the dollar ahead of today's European Central Bank interest rate meeting.   Even though forecasts expect interest rates to remain at 1 percent, investors expect the ECB President Jean Claude Trichet to emphasize on inflation pressures and signal a rate hike. Speculators argue that the ECB has no other choice but to adjust the monetary policy to the rising commodity prices. Yesterday, data revealed Producer Price Index rose more than the market expected further supporting the single currency. Against the dollar, the euro hovers near a four month high jumping to 1.3879 recovering from Wednesday's low at 1.3741. The pair was last traded at 1.3872.
  • The US dollar remains under pressure against a basket of currencies today as oil and commodity prices remain at high levels. Yesterday's data revealed that the US ADP employment change surprisingly rose in February but failed to support the dollar. Focus now turns to today's Jobless Claims hoping to give an indication about Friday's Non Farm Payrolls figures. Against the Japanese Yen, the dollar plummeted on Wednesday falling to 81.55 but then recovered its losses to trade at 81.91.
  • The Australian dollar extends its gains against the greenback today after data showed the country's Trade Balance grew more than expected. The Aussie rose as high as 1.0181 dollars from 1.0083 traded yesterday. Against the Kiwi, the Aussie rose to 1.3689 from 1.3554 after Prime Minister said on Wednesday that interest rates must be cut.
  • Oil prices rallied on Wednesday as antigovernment protests in the Arab countries continue.  Oil jumped as high as 102.79 dollars a barrel and today it eased to 100.28. Gold prices rallied on Wednesday rising to a record high level at 1440.28 dollars an ounce as demand for safe haven assets is high.

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3800 with a preference to enter into Long positions at 1.3810
  • § The USDJPY pivot point is at 81.55 with a preference to enter Long positions at 81.60             

Today's calendar and market movers:

  • § Europe Gross Domestic Product in Q4 is forecasted to gain 0.3%
  • § Europe Interest Rate Decision is forecasted to keep interest rates at 1%
  • § US Initial Jobless Claims is forecasted to fall to 386K 

Equity Markets:

US equities were positive on Wednesday with the S&P500 trading up 0.16% and the DJIA trading up 0.07%. The European bourses are negative with the FTSE trading down -0.35%, the DAX down -0.58% and the CAC down -0.81%. The NIKKEI and the HSI at the time of writing are trading up 0.89% and up 0.99% respectively. 

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