EU Morning Report
Focus turns to the ECB and BoE monetary policy meetings
- The euro edged higher today ahead of the European Central Bank Interest Rate meeting due at 11:45 GMT. No change in the monetary policy is expected but focus turns to the news conference by the ECB President Jean-Claude Trichet. Whether the euro will continue its rally against the dollar depends on whether Trichet will follow a hawkish rhetoric. Investors are expecting Trichet to emphasize on price stability and use phrases such as strong vigilance signaling a rate hike. A signal for further monetary tightening by the ECB may add strength to the euro's rally despite ongoing concerns about Greece's debt problems. Against the dollar, the euro rose to 1.4631 from 1.4564.
- The US dollar was under pressure against a basket of currencies as sentiment over the US economy remains weak. Against the Japanese yen, the dollar hit a fresh one-month low at 79.69 from 80.21.
- The Australian dollar dropped yesterday weighed by disappointing jobs data. Employment Change data revealed 7.8 thousand new employed people while the market expected 25 thousand. Against the dollar, the Aussie shed 1.4% falling to 1.0562 from 1.0711 traded yesterday. Aussie's neighbor, the Kiwi, rallied following the Reserve Bank of New Zealand monetary policy meeting. Interest rates were kept unchanged at 2.5% but a gradual rate hike was signaled. Against the dollar, the Kiwi rose to 0.8244 from 0.8140.
- Sterling edged higher ahead of the Bank of England monetary policy today at 11 GMT. The BoE is expected to keep the monetary policy unchanged. Sterling rose to 1.6437 versus the dollar from 1.6347.
- Oil prices gained 3.9% rising to 101.86 dollars a barrel from 98.02. Gold fell to 1530.91 dollars an ounce from 1545.08. Silver edged lower at 36.05 dollars an ounce from 37.14.
Currencies to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.4555 with a preference to enter Long positions at 1.4565
- § The USDJPY pivot point is at 79.85 with a preference to enter Long positions at 79.90
- § The OIL pivot point is at 99.80 with a preference to enter Long positions at 99.80
- § The Gold pivot point is at 1542 with a preference to enter Short positions at 1542
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 1.25%
- § US Initial Jobless Claims is forecast to fall to 415K
US equities were negative on Wednesday with the S&P500 trading down -0.42% and the DJIA down -0.18%. The European bourses were also negative with the FTSE trading down -0.95%, the DAX down -0.61% and the CAC down -0.88%. The NIKKEI and the HSI at the time of writing are trading up 0.24% and down -1.04% respectively.
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