EU Morning Report

Euro rebounds ahead of the German Parliament vote

  • The euro rebounded against its major counterparts during today's Asian session ahead of the German Parliament vote on the European Financial Stability Facility. Risk sentiment in the market recovered as investors expect the vote for an extension of the EFSF rescue funds to pass. Failure for the vote to pass may increase the risk for a eurozone debt contagion. German Chancellor Angela Merkel said that Germany will do everything is needed to support Greece and expects the next tranche of funding to be given in order to avoid a catastrophic default. Versus the US dollar, the single currency declined to 1.3519 from 1.3689 and today it rebounded to trade as high as 1.3638. Against the Japanese yen, the euro dipped to 103.30 from 104.50 but today the pair recovered to 104.37.
  • The US dollar got a boost during the US session yesterday against a basket of currencies after Durable Goods Orders showed better than expected figures. Fed Chairman Ben Bernanke spoke yesterday and expressed concerns about the country's slow growth saying that the stubbornly high unemployment is a national crisis. Against the Swiss franc, the US dollar rose to 0.9021 from 0.8925. Against the Japanese yen, the greenback edged higher to 76.63 from 76.33. Focus turns to Initial Jobless Claims and Gross Domestic Product expected later today.
  • The Australian dollar rallied versus the dollar today rebounding to 0.9826 up from yesterday's low at 0.9710. Heightened risk appetite as well as higher stocks and commodity prices pushed the Aussie higher. The British pound also recovered yesterday's losses against the dollar today to trade as high as 1.5649 from 1.5547.
  • Oil prices fell to 79.50 dollars a barrel from 84.59. Gold edged lower yesterday to 1582.95 dollars an ounce from 1669.40. Silver also ticked lower yesterday to 29.08 dollars an ounce from 32.70.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.3690 with a preference to enter Short positions at 1.3690
  • § The USDJPY pivot point is at 76.70 with a preference to enter Short positions at 76.70
  • § The OIL pivot point is at 82.65 with a preference to enter Short positions at 82.65
  • § The Gold pivot point is at 1640 with a preference to enter Short positions at 1640                           

Today's calendar and market movers:

  • § Europe Consumer Confidence in September is forecast to fall to -18.9
  • § Europe Economic Confidence in September is forecast to fall to 96.0
  • § Europe Industrial Confidence in September is forecast to fall to -4.9
  • § US Gross Domestic Product Final in Q2 is forecast to gain 1.2%
  • § US Initial Jobless Claims is forecast to fall to 420K

Equity Markets:                                                

US equities were negative on Wednesday with the S&P500 trading down -2.07% and the DJIA down -1.61%. The European bourses were also negative with the FTSE trading down -1.44%, the DAX down -0.89% and the CAC down -0.92%. The NIKKEI at the time of writing is trading up 0.56%.

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