EU Morning Report
Euro is under pressure ahead of the Greek austerity vote
- The euro resumes its fall against its major counterparts as investors remain cautious ahead of the Greek Parliament's vote on the new austerity measures happening on Wednesday. The five-year new austerity plan includes further tax hikes and deep spending cuts agreed by the European Union and the International Monetary Fund which will secure a second round of financial aid for Greece. Against the stronger dollar, the euro shed 1.4% falling to 1.4102 from 1.4305 traded on Friday. Against the safe haven Swiss franc, the euro reached a fresh record low at 1.1802 from 1.1961.
- The US dollar rose against a basket of currencies supported by heightened risk aversion in the market. On Friday, positive economic data from the US gave the dollar a boost. Durable Goods Orders gained more than expected in May while Groos Domestic Product in the first quarter was revised up from 1.8% to 1.9%. The greenback is also supported by the Fed Chairman Ben Bernanke after he said that the 600 billion quantitative easing program will end by the end of June and signaled no additional stimulus. Against the Japanese yen, the dollar jumped as high as 80.87 from 80.13.
- Sterling remains under pressure as investors' expectations for an interest rate hike start to fade. Recent economic data from the UK disappointed investors who were expecting a tightening of the monetary policy by the end of the year. Instead, the Bank of England policymakers emphasized on their concerns over the UK economic slowdown and said that additional quantitative easing may be needed. Versus the dollar, sterling shed 2.1% falling to a five-month low at 1.5913 from 1.6262.
- The Australian dollar plummeted today weighed by the falling commodity prices and growing concerns of an interest rate cut. Against the dollar, the Aussie dipped to 1.0411 from 1.06 traded on Friday.
- Oil prices fell to 89.81 dollars a barrel from 92.32. Gold shed 2% falling to 1494.12 dollars an ounce from 1524.82. Silver also shed 5% edging as low as 33.59 dollars an ounce from 35.36.
Currencies to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.4200 with a preference to enter Short positions at 1.4200
- § The USDJPY pivot point is at 80.50 with a preference to enter Long positions at 80.50
- § The OIL pivot point is at 92.68 with a preference to enter Short positions at 92.68
- § The Gold pivot point is at 1516 with a preference to enter Short positions at 1516
Today's calendar and market movers:
- § US Personal Income in May is forecast to gain 0.4%
US equities were negative on Friday with the S&P500 trading down -1.17% and the DJIA down -0.96%. The European bourses were mixed with the FTSE trading up 0.41%, the DAX down -0.39% and the CAC down -0.08%. The NIKKEI and the HSI at the time of writing are trading down -0.82% and -0.66% respectively.
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