Euro slides weighed by a heightened risk aversion

  • The euro tumbled on Tuesday as tensions in the Middle East continue. Fighting in Libya became deadly as protestors battle to keep leader Gaddafi in power. Reports from the Suez Canal also said that two Iranian ships entered the canal and heading towards Syria. This political uncertainty pushed risk aversion higher weighing on the euro.  Against the greenback, the euro plummeted as low as 1.3549 from 1.3638
  • The US dollar appears firmer today supported by investors' appetite for safer assets. Focus now turns to the US Consumer Confidence and Manufacturing Index released later today.
  • Against the Japanese Yen, the dollar rallied after rating agency Moody's changed Japan's sovereign rating to negative from stable. The dollar climbed as high as 83.42 yen from 82.83.
  • The Australian dollar fell on Tuesday as unrest in the oil-producing Libya intensified. Low risk appetite put the Aussie under pressure and pushed it as low as 1.0005 from 1.0082 versus the dollar. Aussie's neighbor, the Kiwi, dropped almost 2 percent after a deadly earthquake hit the country. Talks say that New Zealand's central bank may lower the interest rates in order to boost confidence. The Kiwi fell as low as 0.7487 from 0.7639 against the dollar.
  • Oil prices surged on Tuesday hitting record high levels as Libya is one of the largest producers of oil and tensions in the region may hurt supply of oil. Oil prices jumped as high as 98.15 dollars a barrel on Tuesday from 96.05.

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3625 with a preference to enter into Short positions at 1.3615
  • § The USDJPY pivot point is at 83.00 with a preference to enter Long positions at 83.05              

Today's calendar and market movers:

  • § Canada Retail Sales in December is forecasted to gain 0.7%
  • § US Consumer Confidence in February is forecasted to rise to 63.0
  • § US Manufacturing Index in February is forecasted to fall to 17
  • § US S&P/Case-Shiller House Price Indices in December is forecasted to fall 2.1%

Equity Markets:

The European bourses are negative with the FTSE trading down -1.12%, the DAX trading down -1.41% and the CAC down -1.44%. The NIKKEI and the HSI at the time of writing are trading down -1.78% and down -1.92% respectively. The US market was closed on Monday for the President's Day holiday.

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