EU Morning Report

Euro falls on fears of a Greek debt restructuring

  • The euro plummeted yesterday as euro zone debt problems resurfaced. Greek bond yields rose to record highs on heightened fears that the country may need to restructure its public debt. Weighed by the uncertainty over Greece's debt situation, the single currency dipped to 1.4365 from 1.4513. Later during the US session, the euro recovered its losses to trade as high as 1.4503 after EU's Rehn ruled out the possibility of a Greek debt restructuring. Today, the single currency ticked down again to hit a session low at 1.4450 after rating agency Moody's downgraded Ireland's sovereign debt.
  • The US dollar weakened against a basket of currencies during the US session weighed by poor economic data. Initial Jobless Claims revealed an unexpected increase to 412K while the market expected a decline to 380K. Also, Producer Price Index disappointed investors by showing a lower than expected gain of 0.7% in March. The dollar appears to be weighed by expectations that the Federal Reserve may continue with its loose monetary policy while other central banks are preparing for interest rate hikes. Focus now shifts to the US Consumer Price Index, which is expected at 12:30 GMT today and may provide a clearer picture about inflation. Against the Japanese Yen, the dollar recovered its losses during yesterday's US session rising to 83.78 from 82.95.
  • The Australian dollar edged lower against the dollar today as data showed that China's growth accelerated in the first quarter. Also, China's inflation was at its higher level since 2008 in March raising expectations for more monetary tightening. The Aussie fell on the news as China is Australia's largest trade partner. Against the greenback, the Aussie hit a fresh high at 1.0557 during the US session but then fell to 1.0512 after the Chinese data.
  • Oil prices rose to 108.65 dollars a barrel from 105.77. Gold also rose to 1478.98 dollars an ounce from 1452.31. Silver rallied 42.38 dollars an ounce from 40.51.

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4430 with a preference to enter Long positions at 1.4440
  • § The USDJPY pivot point is at 83.80 with a preference to enter Short positions at 83.70              

Today's calendar and market movers:

  • § Europe Consumer Price Index in March is forecasted to gain 1.3%
  • § US Consumer Price Index in March is forecasted to gain 0.4%
  • § US Industrial Production in March is forecasted to gain 0.5%
  • § US Consumer Sentiment Index in April is forecasted to rise to 68.5 

Equity Markets:

US equities were positive on Thursday with the S&P500 trading up 0.01% and the DJIA trading up 0.12%. The European bourses were negative with the FTSE trading down -0.78%, the DAX down -0.44% and the CAC down -0.89%. The NIKKEI and the HSI at the time of writing are trading down -0.57% and down -0.24% respectively. 

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