EU Morning Report 

Euro falls on rising tensions in Libya

  • Euro edged higher on Friday after European Central Bank (ECB) board member Lorenzo Bini Smaghi emphasized on inflation pressures adding strength on the view the ECB will lift interest rates before the Fed. Against the dollar, the euro jumped as high as 1.3715 from 1.3544 traded on Friday. G20 leaders agreed on Friday to apply a list of indicators to tackle financial imbalances in the euro zone such as public debt, fiscal deficit, private debt and trade balance. Today, risk appetite in the market appears softer as political tensions spreading in Libya raised fears of a civil war weighing on the single currency. The euro surrendered some of its gains falling to 1.3665 dollars and the pair was last traded at 1.3684.
  • Financial markets in the US are closed today to celebrate President's Day. Focus now turns to Germany and Europe Purchasing Manager Index data released later today. 
  • Against the Japanese Yen, the dollar dropped on Friday hitting a low at 83 from 83.52. The pair failed to break below the 83 level and was last traded at 83.19. 
  • The Australian dollar fell versus the dollar after China announced an increase in the banks' required reserve ratio by 50 basis points. Australia is China's largest trade partner and tight monetary measures by Beijing may hurt demand for Australia's commodities. The Aussie fell as low as 1.0111 from 1.0157.
  • Gold rallied today hitting a seven-week high as spreading tensions in the Middle East raised demand for safe haven assets. The precious metal rose as high as 1397.80 dollars an ounce from 1381.68 traded on Friday.

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3605 with a preference to enter into Long positions at 1.3615
  • § The USDJPY pivot point is at 83.45 with a preference to enter Short positions at 83.40             

Today's calendar and market movers:

  • § Germany Purchasing Manager Index Services is forecasted to remain unchanged at 60.3
  • § Germany Purchasing Manager Index Manufacturing is forecasted to fall to 60.3
  • § Europe Purchasing Manager Index Services is forecasted to rise to 56.0
  • § Europe Purchasing Manager Index Manufacturing is forecasted to remain unchanged at 57.3

Equity Markets:

US equities were positive on Friday with the S&P500 trading up 0.19% and the DJIA trading up 0.59%. The European bourses are mixed with the FTSE trading down -0.07%, the DAX unchanged and the CAC up 0.12%. The NIKKEI and the HSI at the time of writing are trading up 0.14% and down -0.37% respectively.

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