EU Morning Report- Euro is weighed by higher US yields

By @ibtimes on

Euro is weighed by higher US yields

  • The euro plummeted versus the US dollar weighted by Friday's US Non-Farm Payrolls. The data showed the US unemployment rate to decline sharply to 9% from a previous 9.4%. Non-farm payrolls showed a disappointing small rise lower than what the market anticipated, but investors blamed the poor figure to bad weather. Further weighing on the euro is the fact that no decisive steps were made at Friday's EU summit disappointing investors who were expecting the formation of a strong rescue mechanism.
  •  The unexpected fall in the US unemployment rate raised hopes for a sustainable US recovery pushing the US yields higher. The dollar now has a rate advantage over the euro after ECB President Jean-Claude Trichet surprised investors by saying that there are no inflation concerns, thus no need to lift interest rates any time soon.
  • The euro, which rallied for three and a half weeks against the dollar, dropped sharply shedding more than 2%. The single currency managed to break above the 1.38 level climbing as high as 1.3861 but after Friday's US jobs data it slid as low as 1.3542. Today, the euro recovers some of its losses helped by Asian demand and the pair was last traded at 1.3612.
  • Against the Japanese Yen, the firmer dollar jumped on Friday as high as 82.45 from 81.09. Today the pair continues its upward trend to trade around 82.39 dollars. 
  • The Australian dollar edged higher on Monday supported by rising commodity prices and strong jobs advertisements data. The Aussie rose to 1.0157 from 1.0103.

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3540 with a preference to enter into Long positions at 1.3550
  • § The USDJPY pivot point is at 81.90 with a preference to enter Long positions at 81.95            

Today's calendar and market movers:

  • § Europe's Consumer Confidence in February is forecasted to rise to 14.1
  • § Germany Factory Orders in December is forecasted to fall 1.4%
  • § US Consumer Credit in December is forecasted to rise to 2.20B

Equity Markets:

US equities were positive on Friday with the S&P500 trading up 0.29% and the DJIA trading up 0.25%. The European bourses are also positive with the FTSE trading up 0.23%, the DAX trading up 0.31% and the CAC up 0.26%. The NIKKEI and the HSI at the time of writing are trading up 0.46% and down 0.49% respectively.

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