EU Morning Report- Euro falls on resurfaced euro zone jitters

By @ibtimes on

 Euro falls on resurfaced euro zone jitters

  • The euro plummeted today weighted by Portugal's record high bond yields and resurfaced fears that Portugal is the next country which will soon seek financial aid. Talks speak of ECB intervening in the bond market to lower the euro zone peripheral bond yields from ultra high levels. The euro which is haunted by continuing concerns over the euro zone debt problems broke below the 1.36 level versus the US dollar sliding as low as 1.3551 from 1.3743 traded on Wednesday.
  • The US dollar appears stronger after data revealed Initial Jobless Claims shrunk to 383K when speculators expected 411K. That was a significant decline in unemployment as it is the lowest figure since July 2008. Investors' sentiment over the dollar is high as data indicates the US has entered a sustainable recovery phase.
  • Against the Japanese Yen, the dollar hit a one-month high breaking above the 83 level and rose as high as 83.51. The dollar also hit a one month high against the Swiss franc rising to 0.9715.
  • The Sterling rose as high as 1.6136 against the US dollar yesterday as the markets were pricing the chances of a rate hike. The Bank of England decided on Thursday to keep the country's interest rates unchanged at 0.5%. The British pound dropped after the decision also weighed by a stronger dollar and fell as low 1.6051. Eyes turn to the UK Inflation Report released on February 16 and to the February 23 Interest Rate meeting minutes.
  • The Australian dollar slid today after Reserve Bank of Australia Governor Glenn Stevens said that there is no urgent need to increase the interest rates in the first half of the year. Investors, who were expecting a rate hike sooner than later, were disappointed by the central bank's dovish stance unwinding their long Aussie positions. Stevens' comments dragged the Aussie below parity level against the dollar and the pair fell as low as 0.9969

 Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3625 with a preference to enter into Short positions at 1.3615
  • § The USDJPY pivot point is at 83.05 with a preference to enter Long positions at 83.15              

Today's calendar and market movers:

  • § UK Producer Price Index- Output in January is forecasted to gain 0.5%
  • § UK Producer Price Index- Input in January is forecasted to gain 1.2%
  • § US Trade Balance in December is forecasted to fall to -40.40B

Equity Markets:

US equities were mixed on Thursday with the S&P500 trading up 0.07% and the DJIA trading down -0.09%. The European bourses are also mixed with the FTSE trading down -0.53%, the DAX trading up 0.26% and the CAC up 0.11%. The NIKKEI and the HSI at the time of writing are trading down 0.11% and down 0.28% respectively.

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