EU Morning Report
Euro remains above 1.42 as risk appetite stabilizes
- The euro rallied against the dollar yesterday as the nuclear situation in Japan appears more stabilized. World equities rose as well as risk appetite on the news that the Japanese workers were gaining control of the Fukushima nuclear reactors. As the steadily improves, demand for riskier assets increases. Rate hike expectation is also helping the single currency after ECB President Jean-Claude Trichet signaled an early rate hike. Against the dollar, the euro jumped above the 1.42 level and climbed to 1.4239 from 1.4138.
- Against the Japanese Yen, the US dollar is little changed trading in a tight range around 80.90. Investors appear cautious to push up the yen as the prospect of another G-7 intervention still exists. The intervention came after the yen soared to record high levels on speculation the Japanese will liquidate their assets and repatriate their funds for reconstruction.
- The US dollar appears weaker against a basket of currencies as risk appetite begins to heal. US Existing Home Sales disappointed investors by showing a decline of 9.6%, which is significantly lower than the 4.9% expected decline.
- The Australian dollar rallied against the greenback trading well above parity and climbing to 1.0101. Sterling also traded higher climbing to 1.6327 dollars from 1.6203 ahead of the UK inflation data expected later today.
- Oil prices rose supported by Middle East worries. Oil jumped to 104.08 dollars a barrel and gold rose to 1434.78 dollars an ounce.
Currency to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.4155 with a preference to enter into Long positions at 1.4165
- § The USDJPY pivot point is at 81.40 with a preference to enter Short positions at 81.35
Today's calendar and market movers:
- § UK Consumer Price Index in February is forecasted to 0.6%
- § UK Retail Price Index in February is forecasted to gain 0.7%
- § Canada Retail Sales in January is forecasted to gain 1.1%
- § US Manufacturing Index in March is forecasted to fall to 23
US equities were positive on Monday with the S&P500 trading up 1.5% and the DJIA trading up 1.5%. The European bourses are also positive with the FTSE trading up 1.19%, the DAX up 2.28% and the CAC up 2.47%. The NIKKEI and the HSI at the time of writing are trading up 4.36% and up 0.8% respectively.
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