EU Morning Report

Euro extends gains versus the greenback

  • The euro edged higher against the dollar today supported by hawkish comments by the ECB official Axel Weber. Weber expressed his concerns about inflation and said that interest rates can only go up fuelling speculation of an increase in the interest rates before the Fed. Risk appetite in the market heals as concerns over oil supplies ease. The euro extends gains on Friday rising as high as 1.3837 dollars from 1.3703 traded yesterday.
  • Escalating tensions in Libya continue to weigh on the US dollar. Thursday's economic data from the US revealed that ex transportation Durable Goods Orders plummeted in January and New Home Sales fell more than the market anticipated. Improved Jobless Claims also surprised the markets showing a lower than expected figure but failed to support the dollar. Rising oil prices appear to weigh on the dollar as it is consider negative for the US economy and global growth. The greenback edged lower against the safe haven Swiss franc touching a record low at 0.9233 from 0.9324. Against the Japanese Yen, the dollar slid hitting a three week low at 81.61 from 82.45. Focus turns to the US Annualized Gross Domestic Product and the US Consumer Sentiment Index released later today.
  •  The Sterling fell yesterday after CBI showed that sales declined to 6 while the market was expecting sales to be at 30. Further weighing on the sterling was comments by BoE official David Miles saying that inflation is worrying but rushing into monetary tightening may not be a wise decision. Against the dollar, the British pound dipped to 1.6083 from 1.6253.
  • The Australian dollar rose today supported by an improved risk sentiment. Against the greenback, the Aussie edged as high as 1.0136 from 0.9999 traded yesterday.
  • Oil ticked higher today as investors fear the Libya unrest can spread to other oil producing countries which, in turn, can hurt oil supplies. Oil edged as high as 103.39 dollars a barrel but then plummeted to 95.63 on reports saying that Saudi Arabia is willing to increase its oil production on order to make up for the loss by Libya. 

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3745 with a preference to enter into Long positions at 1.3755
  • § The USDJPY pivot point is at 82.10 with a preference to enter Short positions at 82.05           

Today's calendar and market movers:

  • § US Gross Domestic Product Annualized in Q4 is forecasted to gain 3.3%
  • § US Consumer Sentiment Index in February is forecasted to rise to 75.4

Equity Markets:

US equities were negative on Thursday with the S&P500 trading down -0.10% and the DJIA trading down -0.31%. The European bourses are also negative with the FTSE trading down -0.06%, the DAX down -0.89% and the CAC down -0.09%. The NIKKEI and the HSI at the time of writing are trading up 0.71% and up 1.60% respectively.

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