EU Morning Report 

Euro is under pressure ahead of the ECB rate decision 

  • The euro edged slightly higher against the US dollar yesterday on an improved risk appetite in the market. World equities turned positive and gold retreated from a record high after a German court rejected lawsuits that attempted to block Germany's participation in bailouts of eurozone countries suffering from the debt crisis. The pair climbed to 1.4149 but during the Asian session the single currency lost momentum and slipped to 1.4050 ahead of the European Central Bank (ECB) Interest Rate Decision at 11:45 GMT. Speculators argue that the ECB may signal a change in the monetary policy direction as the eurozone economy faces escalating debt problems. It all depends on what the ECB President Jean-Claude Trichet has to say during the following Press Conference at 12:30 GMT.
  • The US dollar edged mildly higher in today's Asian session before the US President Barack Obama's speech which is expected to unveil a plan to stimulate the jobs market. The Federal Reserve Chairman Ben Bernanke is also due to speak today and the question on investors' mind is whether he will signal additional monetary easing that may put the greenback under pressure. Against the Japanese yen, the greenback is little firmer today rising to 77.41 up from 77.06.  
  • The Australian dollar rose yesterday against its major counterparts but dropped today after data revealed that the country's Unemployment Rate unexpectedly rose to 5.3% in August. The data also showed that employers cut 9.7K jobs while the market expected an increase of 10K. Against the dollar, the Aussie fell as low as 1.0571 from 1.0660. Sterling also fell against the dollar to 1.5918 from 1.6039 ahead of the Bank of England Interest Rate Decision.
  • Oil prices ticked higher to 89.92 dollars a barrel from 85.84. Gold edged lower to 1792.48 dollars an ounce from 1880.54. Silver also fell hitting 40.38 dollars an ounce from 42.13.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4110 with a preference to enter Short positions at 1.4100
  • § The USDJPY pivot point is at 77.50 with a preference to enter Short positions at 77.45
  • § The OIL pivot point is at 88.50 with a preference to enter Long positions at 88.50
  • § The Gold pivot point is at 1865 with a preference to enter Short positions at 1865                          

Today's calendar and market movers:

  • § UK Interest Rate Decision is forecast to keep rates unchanged at 0.5%
  • § Europe Interest Rate Decision is forecast to keep rates unchanged at 1.5%
  • § US Initial Jobless Claims is forecast to fall to 405K

Equity Markets:                                                

US equities were positive on Wednesday with the S&P500 trading up 2.86% and the DJIA up 2.47%. The European bourses were also positive with the FTSE trading up 3.14%, the DAX up 4.07% and the CAC up 3.63%. The NIKKEI and the HSI at the time of writing are trading up 0.25% and down -0.75% respectively.

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