EU Morning Report

The euro rebounds on expectations for further aid for Greece

  • The euro edged higher today on expectations for an agreement on financial aid and new austerity measures for Greece. Reports said that Germany appears willing to drop its push for a Greek debt restructuring and join the EU policymakers in forming a comprehensive plan on further bailout for Greece. Against the dollar, the euro climbed to a three-week high at 1.4443 from 1.4361 as hopes for a resolution to Greece's debt problems begin to rise. Eurozone Consumer Price Index was less than the market anticipated at 2.7% in May but still significantly above the central bank's inflation target of 2%. The high CPI figures indicate that interest rates may rise as the central bank's primary mandate is price stability. 
  • The US dollar was under pressure yesterday weighed by poor US data and lower US Treasury yields. Consumer Confidence, House Price Index and Purchasing Managers' Index revealed softer than expected figures disappointing investors. The poor data raised concerns over the US economic recovery pushing back expectations for an interest rate hike by the Fed.
  • Versus the Canadian dollar, the dollar dipped to 0.9655 from 0.9764 after the Bank of Canada (BoC) left interest rates unchanged and a rebound in oil prices. Against the Japanese yen, the dollar rallied to 81.77 from 80.71 after credit rating agency Moody's put Japan on a negative outlook.
  • The Australian dollar rose towards a three-week high against a softer dollar trading as high as 1.0750 from 1.0642. Today, data showed Australia's Gross Domestic Product fell 1.2% in the first quarter less than some speculators forecasted.
  • Oil prices ticked higher at 103.36 dollars a barrel from 100.05. Gold fell to 1529.43 dollars an ounce from 1540.69. Silver also edged lower at 37.92 dollars an ounce from 38.75.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4360 with a preference to enter Long positions at 1.4370
  • § The USDJPY pivot point is at 81.60 with a preference to enter Short positions at 81.60
  • § The OIL pivot point is at 100.90 with a preference to enter Long positions at 100.90
  • § The Gold pivot point is at 1541 with a preference to enter Short positions at 1541                        

Today's calendar and market movers:

  • § Europe Purchasing Manager Index Manufacturing in May is forecast to fall to 54.8
  • § UK Purchasing Manager Index Manufacturing in May is forecast to fall to 54.1
  • § US ADP Employment Change in May is forecast to fall to 175K

Equity Markets:                                                

US equities were positive on Tuesday with the S&P500 trading up 1.06% and the DJIA up 1.03%. The European bourses were positive with the FTSE trading up 0.86%, the DAX up 1.86% and the CAC up 1.63%. The NIKKEI and the HSI at the time of writing are trading up 0.12% and down -0.14% respectively. 

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