EU Morning Report

Focus turns to the Swiss National Bank

  • The euro edges lower against the dollar yesterday after weaker than expected eurozone Gross Domestic Product figures. Second quarter GDP revealed the economy expanded by 0.2% while the market was expecting a 0.3% gain. Later in the day, the euro found support after German Chancellor Angela Merkel and French President Nicolas Sarkozy said they are committed to defend the euro. Focus now turns to the Swiss government and the Swiss National Bank (SNB) and whether they will announce a plan to tackle franc's appreciation. Against the greenback, the euro dipped to 1.4352 from 1.4471. Versus the Swiss franc, the single currency jumped to a three-week high at 1.1550 from 1.1162. 
  • The US dollar was modestly firmer yesterday after rating agency Fitch affirmed US AAA rating. Economic data also supported the greenback after positive figures from Industrial Production, Housing Starts and Capacity Utilization. Versus the Swiss franc, the dollar rallied to 0.8016 from 0.7769. Against the Japanese yen, the dollar edged slightly lower at 76.60 from 76.92. 
  • The British Pound rose to 1.6476 against the dollar from 1.6323 ahead of the Bank of England meeting minutes expected at 08:30 GMT. Investors expect the two hawkish MPC members to withdraw their vote for a rate hike and to have a unanimous decision to keep interest rates unchanged. Unemployment figures are also expected today at 08:30 GMT.
  • Oil prices rose to 87.92 dollars a barrel from 85.61. Gold edged higher to 1790.53 dollars an ounce from 1761.10. Silver also ticked higher to 40.13 dollars an ounce from 39.26. 

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4350 with a preference to enter Long positions at 1.4360
  • § The USDJPY pivot point is at 77.00 with a preference to enter Short positions at 76.95
  • § The OIL pivot point is at 85.60 with a preference to enter Long positions at 85.60
  • § The Gold pivot point is at 1767 with a preference to enter Long positions at 1767                          

Today's calendar and market movers:

  • § UK Unemployment Change in July is forecast to fall to 20K
  • § UK Unemployment Rate is forecast to remain unchanged at 7.7%
  • § Europe Consumer Price Index in July is forecast to fall 0.6%
  • § US Producer Price Index in July is forecast to gain 0.1%

Equity Markets:                                               

US equities were negative on Tuesday with the S&P500 trading down -0.97% and the DJIA down -0.67%. The European bourses were mixed with the FTSE trading up 0.13%, the DAX down -0.45% and the CAC down -0.25%. The NIKKEI and the HSI at the time of writing are trading down -0.51% and up 1.38% respectively.

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