Euro edges higher on Trichet's words

  • The euro edged slightly lower on Friday after four days of consecutive gains against the US dollar. On Thursday, the European Central Bank announced that interest rates will be kept steady for now but ECB President Jean-Claude Trichet expressed inflation concerns implying a possible rate hike in the near future. Trichet's hawkish comments and speculation that European policymakers will take decisive steps to defend the euro zone added strength to the euro supporting it above the 1.33 level. Also, a successful sale of Portuguese, Spanish and Italian bonds eased investors' fears about a euro zone debt contagion further helping the single currency.
  • Against the dollar, the euro gained almost 4% since the beginning of the week to reach a one and a half week high at 1.3381. The pair was last traded at 1.3370. The euro rallied against the Japanese Yen hitting a month's high at 110.66 from 106.80 traded on Monday.
  • The dollar appeared weaker after Jobless claims disappointed investors showing an unexpected increase, the highest since October. Against the Japanese Yen, the dollar slid as low as 82.47 breaking below the 83 level.  The greenback also fell against the Swiss franc falling as low as 0.9611 yesterday from 0.9762.
  • Gold edged higher today after it plummeted on Thursday due to heightened risk appetite in the currency markets. The precious metal slid as low as 1369.13 dollars an ounce from 1392.95.

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3250 with a preference to enter into Long positions at 1.3260
  • § The USDJPY pivot point is at 82.90 with a preference to enter Short positions at 82.85

Today's calendar and market movers:

  • § US Retail Sales in December is forecasted to drop 0.8%
  • § US Industrial Production in December is forecasted to gain 0.5%
  • § US Consumer Sentiment Index in January is forecasted to rise to 75.5

Equity Markets:

US equities closed negative on Thursday with the S&P500 traded down 0.17% and the DJIA down 0.20%. The European bourses are trading mixed with the FTSE trading down 0.44%, the DAX trading up 0.09% and the CAC up 0.75%. The NIKKEI and the HSI at the time of writing are trading down 0.86% and up 0.24% respectively.

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