EU Morning Report

Euro near a one month high after the G20 meeting 

  • The euro rallied near a one month high against the greenback after the G20 finance ministers and central bankers called for decisive measures to fight the eurozone debt problems. Risk appetite heightened and world equities rose after the meeting, on hopes for a concrete plan to resolve Europe's sovereign debt crisis which risks dragging the global economy back into recession. Focus now turns to the EU Summit on October 23 for a detailed plan which may include recapitalization of banks and further measures for Greece. Against the US dollar, the euro gained 1.2% on Friday rising as high as 1.3894 from 1.3723. Versus the Sterling, the single currency dipped to 0.8780 from 0.8722. Against the Japanese yen, the single currency gained 1.8% climbing to 107.44 from 105.59.
  • The US dollar edged lower against a basket of currencies as demand for the safe haven currency eased on an improved risk sentiment in the market. Further supporting risk sentiment was better than expected retail sales data from the US that showed a 1.1% increase while investors were expecting 0.5%. Against the Swiss franc, the dollar dipped to 0.8903 from 0.9009. Eyes turn to the US Manufacturing Index and Industrial Production data expected today.
  • The Australian dollar appreciated against the US dollar for the second straight week as risk appetite dominates the currency markets. Heightened demand for high yielding assets pushed the Aussie as high as 1.0346 from 1.0145. The Kiwi was also lifted against the greenback and jumped to a three week high at 0.8055 from 0.7907.
  • Oil prices gained 4.8% rising to 87.46 dollars a barrel from 83.44. Gold jumped to 1684.63 dollars an ounce from 1661.11 supported by a soft dollar. Silver edged higher at 32.52 dollars an ounce from 31.25.

Currencies to watch out for: EURUSD & USDJPY

  •  The EURUSD pivot point is at 1.3800 with a preference to enter Long positions at 1.3810
  •  The USDJPY pivot point is at 77.00 with a preference to enter Long positions at 77.05
  •  The OIL pivot point is at 85.50 with a preference to enter Long positions at 85.50
  •  The Gold pivot point is at 1654 with a preference to enter Long positions at 1654

Today's calendar and market movers:

  • § US Manufacturing Index in October is forecast to fall to -4
  • § US Industrial Production in September is forecast to gain 0.2%

Equity Markets:

US equities were positive on Friday with the S&P500 trading up 1.74% and the DJIA up 1.45%. The European bourses were also positive with the FTSE trading up 1.17%, the DAX up 0.89% and the CAC up 0.97%. The NIKKEI and the HSI at the time of writing are trading up 1.5%% and 1.16% respectively.

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