EU Morning Report

Euro marches higher

  • The euro produced gains against most of its major counterparts, overlooking news expecting a higher haircut in Greek debt than the one agreed on the 21st of July. Investors’ optimism was fuelled by positive comments regarding Greece’s future from Troika and Jean-Claude Trichet. The long-awaited eurozone rescue fund approval is expected to be finalised by Slovakia, possibly on Friday, after their rejection of the plan two days ago. Versus the US dollar, the euro ascended to 1.3833 from 1.3582. Against the Swiss franc, the single currency dropped to 1.2320 from 1.2418. Against the Japanese yen, the euro jumped to 107.04 from 104.18. EU Commission President Barroso presented a five-point plan to resolve the eurozone crisis and joined the crowd calling for immediate actions.
  • The US dollar recorded mixed results against a basket of currencies as the FOMC minutes provided no noteworthy information. Against the Swiss franc, the US dollar plunged to 0.8917 from 0.9111. Against the Japanese yen, the greenback climbed to 77.48 from 76.31 as investors speculated on a possible Japanese intervention to weaken the yen.
  • The Australian dollar produced a decisive break above 1.0000 and surged to 1.0205 from 0.9864 against the US dollar, a strong signal of a rising risk appetite. The British pound advanced to 1.5797 from 1.5542 against the US dollar. This came after jobless claims for September came in better than expected, although the unemployment rate marginally rose.
  • Oil prices dropped to 84.52 dollars a barrel from 86.55. Gold rose to 1692.30 dollars an ounce from 1662.10. Silver moved in the same direction to 33.024 dollars an ounce from 31.8425.

Currencies to watch out for: EURUSD & USDJPY  

§  The EURUSD pivot point is at 1.3690 with a preference to enter Long positions at 1.3690

§  The USDJPY pivot point is at 76.95 with a preference to enter Long positions at 76.95

§  The OIL pivot point is at 84.00 with a preference to enter Long positions at 84.00

§  The Gold pivot point is at 1655 with a preference to enter Long positions at 1655


Today’s calendar and market movers:

§  UK Trade Balance for August is forecast to come out at -8.80b

§  Canadian Trade Balance for August is forecast to come out at -1.00b

§  US Initial Unemployment Claims for the past week is forecast to rise to 405k

§  US Federal Budget Balance for September is forecast to come out at -65.0b


Equity Markets:


The European bourses were positive, with the FTSE trading up 0.85%, the DAX up 2.21% and the CAC up 2.42%. US equities were positive as well, with the S&P500 trading up 0.98% and the DJIA up 0.90%. The NIKKEI and the HSI at the time of writing are trading up 0.93% and 1.91% respectively.


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