EU Morning Report

Euro rises as EU leaders find an agreement

The euro rallied on Friday after euro zone leaders agreed to increase the lending capacity of the European Financial Stability Facility and to lower the interest rate on Greece's bailout package. Also, it was agreed that the European Financial Stability Facility will be allowed to purchase bonds in the market, which is considered to be positive for Portugal. EU leaders surprised the market delivering more than expected and offering better conditions for the financially troubled countries. After the agreement was announced the single currency jumped to 1.3986 versus the dollar from as low as 1.3751.

On Friday, data revealed US Retail Sales rose higher than the market expected but Consumer Sentiment disappointed investors with a lower figure. Against the Japanese Yen, the dollar rose on Monday as the Bank of Japan adds liquidity into the money market to support an economy deeply hurt by a massive earthquake. The pair rebounded from a near record low level climbing as high as 82.44. Friday's disaster knocked the dollar down to 80.62 yen from 83.28 yen.

The Australian dollar rallied against the greenback on Friday supported by a report showing that China's inflation increased in February. China's Consumer Price Index rose while the market was expecting a decline. The data eased investors' fears that the world's largest economy may slow helping the Aussie jump as high as 1.0162 dollars from 0.9967. Today, the Aussie surrendered some of its gains weighted by fears that the global recovery will be hurt following Japan's deadly earthquake. As the Asian stocks decline, the Aussie fell as low as 1.0062 dollars and it was last traded at 1.0092.

Oil prices edged as low as 98.53 dollars a barrel from 105.04 from 101.43 traded on Friday. Gold ticked higher as demand for safe haven bets is high. The precious metal rose as high as 1432.72 dollars an ounce from 1403.0.

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3885 with a preference to enter into Long positions at 1.3895
  • § The USDJPY pivot point is at 82.40 with a preference to enter Short positions at 82.35               

Today's calendar and market movers:

  • § Europe Industrial Production in January is forecasted to gain 0.4%

Equity Markets:

US equities were positive on Friday with the S&P500 trading up 0.71% and the DJIA trading up 0.50%. The European bourses are negative with the FTSE trading down -0.28%, the DAX down -1.16% and the CAC down -0.89%. The NIKKEI and the HSI at the time of writing are trading down -6.11% and up 0.11% respectively.

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