EU Morning Report

Euro falls as Portugal's debt crisis deepens

  • The euro plummeted against the dollar weighted by renewed concerns over Portugal's debt crisis. Portugal's prime minister resigned after Portugal's parliament rejected his new fiscal austerity measures. The prime minister aimed to cut the country's budget deficit in order to avoid emergency funds from the European Union. The rejection of the latest austerity plan may increase the pressure on Portugal to receive bailout, further deepening the uncertainty over the euro zone. The euro appears under pressure against a basket of currencies ahead of this week's EU summit. Against the dollar the euro dipped to 1.4056 from 1.4213 traded yesterday. The euro also fell against the sterling and the Aussie falling to 0.8662 and 1.3868 respectively.  
  • Against the Japanese Yen, the US dollar is little changed trading in a tight range around 80.90 for the fourth straight day. Investors appear cautious to push up the yen as the prospect of another G-7 intervention still exists. The intervention came after the yen soared to record high levels on speculation the Japanese will liquidate their assets and repatriate their funds for reconstruction.
  • The US dollar appears stronger against a basket of currencies supported by a heightened risk aversion in the market. The Australian dollar rose against the greenback climbing to 1.0155 from 1.0063. The New Zealand dollar also rose jumping to 0.7471 versus the dollar from 0.7373. Focus turns to US Durable Goods Orders data and Initial Jobless Claims released later today. 
  • Sterling is trading lower against the greenback a day after the Bank of England minutes and the UK 2011 Budget. BoE minutes revealed that no more policymakers joined the hawkish side and only three out of the six members voted for a rate hike. The 2011 Budget forecasted a slower growth and higher inflation. Sterling edged lower against the greenback falling to 1.6203 from 1.6384.   
  • Oil prices remained elevated supported by Middle East worries and jumped to 106.29 dollars a barrel. Gold also rose climbing as high as 1440.92 dollars an ounce from 1380.69.

Currency to watch out for: GBPUSD & USDJPY  

  • § The GBPUSD pivot point is at 1.6300 with a preference to enter Short positions at 1.6290
  • § The USDJPY pivot point is at 81.40 with a preference to enter Short positions at 81.35             

Today's calendar and market movers:

  • § UK Retail Sales in February is forecasted to fall 0.6%
  • § US Durable Goods Orders in February is forecasted to gain 1%
  • § US Initial Jobless Claims is forecasted to 383K

Equity Markets:

US equities were positive on Wednesday with the S&P500 trading up 0.29% and the DJIA trading up 0.56%. The European bourses are also positive with the FTSE trading up 0.58%, the DAX up 0.35% and the CAC up 0.54%. The NIKKEI at the time of writing is trading down -0.15% and the HSI is trading up 0.81%.

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