EU Morning Report

Euro slides weighed by Japan's nuclear crisis

  • The euro plummeted against the dollar weighted by a heightened risk aversion in the market. Radiation levels began to rise in Japan following explosions in three nuclear plants. As Japan battles to prevent reactors from melting down investors' risk appetite plunges. World equities weakened with Nikkei dropping as much as 14%. The euro fell as low as 1.3891 versus the greenback from above the 1.40 level at 1.4002.
  • The US dollar edged higher against a basket of currencies as Japan's massive earthquake and danger of radiation leaks in Japan prompted a demand for safe haven bets. Focus now turns to the Fed Interest Rate Meeting due later today at 18:15 GMT, where investors expect rates to remain unchanged. Investors are expecting the FOMC accompanying statement hoping for sings on the next monetary move.
  • The Japanese Yen rose against its major counterparts as investors buy the yen hoping for repatriation of funds. As Japan's Prime Minister warned of higher radiation level, the Japanese seek to liquidate their assets for reconstruction. Against the dollar, the Japanese Yen fell as low as 81.21 today from 82.44 traded yesterday. The euro also fell against the Yen falling as low as 113.23 from 114.65.
  • The Australian dollar dropped against the greenback as demand for high yielding assets is low. The Aussie also fell following the Reserve Bank of Australia minutes that showed no signs of higher interest rates. As hopes for a rate hike fade, the Aussie breaks below parity falling as low as 0.9923 dollars from 1.0111 traded yesterday. 
  • Oil prices edged as low as 98.65 dollars a barrel from 101.73. Gold prices also plummeted on Japan's nuclear crisis. The precious metal dipped to 1407.76 dollars an ounce from 1430.53.

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3965 with a preference to enter into Short positions at 1.3965
  • § The USDJPY pivot point is at 81.95 with a preference to enter Short positions at 81.95           

Today's calendar and market movers:

  • § UK House Price Index in January is forecasted to gain 3.5%
  • § Europe Employment Change in Q4 is forecasted to gain 0.2%
  • § US Manufacturing Index in March is forecasted to rise to 16.2
  • § US Fed Interest Rate Decision is forecasted to keep interest rates unchanged at 0.25%

Equity Markets:

US equities were negative on Monday with the S&P500 trading down -0.60% and the DJIA unchanged. The European bourses are also negative with the FTSE trading down -0.92%, the DAX down -1.65% and the CAC down -1.29%. The NIKKEI and the HSI at the time of writing are trading down -10.55% and down -3.26% respectively.

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