EU Morning Report

Euro edges higher as risk appetite stabilizes

  • The euro edged higher against the dollar as world equities turn positive and risk appetite begins to heal. Interest rate expectations continue to support the single currency. ECB members Stark and Bini-Smaghi maintained their hawkish stance saying that monetary policy will gradually normalize in the following months. Today, EU Consumer Price Index is expected to reveal a 2.3% gain. Also, today Ireland is expected to release the results of the banking system stress tests and question remains whether more capital will be needed. Against the dollar, the euro rallied to 1.4174 from 1.4051 traded yesterday.
  • The US dollar appears weaker against a basket of currencies today weighed by higher demand for riskier assets. US ADP employment came roughly as expected revealing 201 thousand new employed people for March. The positive ADP figures indicate a strong Non Farm Payrolls report released tomorrow. Focus now turns to today's Initial Jobless Claims. 
  • The Japanese yen rose on Thursday supported by demand from Japanese exporters. Against the yen, the US dollar edged lower falling to 82.55 from 83.20. 
  • The Australian dollar rallied against the dollar today supported by better than expected retail sales data and rising commodity prices. The Aussie jumped to a record high level against the greenback hitting 1.0345 from 1.0268. Sterling also advanced against the dollar after Housing Prices showed an unexpected 0.5% increase. The pair rose to 1.6120 from 1.5977 traded yesterday.
  • Oil prices remained elevated supported by the Libya unrest jumping to 105.11 dollars a barrel. Gold rose to 1429.94 dollars an ounce from 1411.82

Currency to watch out for: GBPUSD & USDJPY  

  • § The GBPUSD pivot point is at 1.6040 with a preference to enter Long positions at 1.6050
  • § The USDJPY pivot point is at 83.25 with a preference to enter Short positions at 83.25            

Today's calendar and market movers:

  • § Europe Consumer Price Index in March is forecasted to gain 2.3%
  • § US Initial Jobless Claims is forecasted to fall to 380K
  • § Canada Gross Domestic Product in January is forecasted to gain 0.5%
  • § US Factory Orders in February is forecasted to gain 0.5%

Equity Markets:

US equities were positive on Wednesday with the S&P500 trading up 0.67% and the DJIA trading up 0.58%. The European bourses are also positive with the FTSE trading up 0.27%, the DAX up 1.77% and the CAC up 0.92%. The NIKKEI and the HSI at the time of writing are trading up 0.17% and 0.10% respectively.

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