EU Morning Report

The euro rebounds on hopes for a Greek bailout

  • The euro edged higher today on reports saying that Germany appears willing to put together another bailout package for Greece. Against the dollar, the euro climbed to a three-week high at 1.4406 from 1.4256 as fears for a Greek default begin to fade. Investors expect Germany to drop its push for a Greek debt restructuring and join the EU policymakers in forming a comprehensive plan on further aid for Greece. Today, data revealed Germany's Retail Sales gained 0.6% in April less than the 1.8% expected.
  • The US dollar weakened against high yielding currencies such as the euro and the Aussie weighed by recent poor US economic data. The poor data raised concerns over the US economic recovery pushing back expectations for an interest rate hike by the Fed. Versus the Swiss franc, the dollar rose to 0.8539 from 0.8465 today after Switzerland's weaker than expected Gross Domestic Product in the first quarter.
  • Against the Japanese yen, the dollar rallied to 81.50 from 80.71 after credit rating agency Moody's put Japan on a negative outlook. Further weighing on the Japanese yen was data revealing a disappointing Manufacturing and Industrial sector. Moody's emphasized on concerns about the country's economic growth which will make it more difficult for the government to significantly lower its deficit.
  • The Australian dollar rose to a three-week high against a softer dollar trading as high as 1.0756 from 1.0675. Later, the pair fell on talks that Gross Domestic Product may reveal poor figures for the first quarter. Aussie's neighbor, the Kiwi, hit record high versus the dollar at 0.8262 from 0.8151 after significantly higher exports and imports figures.   
  • Oil prices ticked higher at 101.41 dollars a barrel from 99.67. Gold also rose to 1540.55 dollars an ounce from 1534.06. Silver traded as high as 38.38 dollars an ounce from 37.43.

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4320 with a preference to enter Long positions at 1.4330
  • § The USDJPY pivot point is at 81.00 with a preference to enter Long positions at 81.10
  • § The OIL pivot point is at 99.60 with a preference to enter Long positions at 99.60
  • § The Gold pivot point is at 1527 with a preference to enter Long positions at 1527                     

Today's calendar and market movers:

  • § Europe Unemployment Rate in April is forecasted to remain unchanged at 9.9%
  • § Europe Consumer Price Index in April is forecasted to gain 2.8%
  • § Canada Interest Rate Decision is forecasted to keep rates unchanged at 1%

Equity Markets:                                            

US equities were positive on Monday with the S&P500 trading up 0.41% and the DJIA up 0.31%. The European bourses were mixed with the FTSE trading up 0.98%, the DAX down -0.04% and the CAC down -0.21%. The NIKKEI and the HSI at the time of writing are trading up 1.83% and 0.92% respectively.

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