EU Morning Report

Euro falls as focus turns to the euro zone debt problems

The euro plummeted as fears about a Greek debt restructuring intensified.  Greek bond yields soared to record high levels while Moody's downgraded Ireland's public debt. Further weighing on the single currency, was election gains for Finland's euro-skeptic True Finns. The elections dragged the euro lower as Finland has the right to vote on EU financial aid requests creating an uncertainty over Portugal's future. On Friday, inflation in the euro zone gained 1.4% in March beating expectations but it failed to support the euro. Against the dollar, the euro dipped to 1.4349 from 1.4502 traded on Friday.

The US dollar recovered some of last week's losses supported by strong economic data. Consumer Price Index revealed a higher than expected 0.5% gain in March and the Fed Manufacturing Index showed its highest figure since April last year. Industrial Production also rose more than expected and Consumer Sentiment Index bounced in April.  

The Japanese yen, rose broadly today. Against the Japanese yen, the dollar ticked as low as 82.78 from 83.75. Also, the euro slid to 118.93 yen from 121.41 yen.

The Australian dollar edged slightly lower against the dollar after China raised its reserve ratio requirement today. China's growth is accelerating and the country is tightening its monetary policy in an effort to stop prices from rising. Against the dollar, the Aussie fell to 1.0525 from 1.0578 but then recovered its losses to trade at 1.05725. Also, the Kiwi fell on softer than expected Consumer Price Index. Against the dollar, the Kiwi slid to 0.7917 from 0.8004, as expectations for higher interest rates begin to fade.

Oil prices rose to 110.06 dollars a barrel from 107.21. Gold rose to a fresh record high at 1488.34 dollars an ounce from 1471.33. Silver rallied to 43.34 dollars an ounce from 41.79 traded on Friday. 

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4435 with a preference to enter Short positions at 1.4425
  • § The USDJPY pivot point is at 83.50 with a preference to enter Short positions at 83.45            

Today's calendar and market movers:

  • § Europe Consumer Confidence in April is forecasted to fall to -11 

Equity Markets:

US equities were positive on Friday with the S&P500 trading up 0.39% and the DJIA trading up 0.46%. The European bourses were also positive with the FTSE trading up 0.54%, the DAX up 0.44% and the CAC up 0.10%. The NIKKEI and the HSI at the time of writing are trading down -0.09% and up 0.1% respectively.

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