EU Morning Report

Focus turns to the US Non-Farm Payrolls

  • The euro plummeted against the dollar after the European Central Bank interest rate decision. The central bank kept interest rates unchanged at 1.25% but the ECB President Jean-Claude Trichet disappointed investors during his press conference. He emphasized on inflation pressures and the significance of closely monitoring any upside risks to price stability but the absence of phrases such as strong vigilance weighed on the euro. His statement was less hawkish than expected and expectations for a rate hike in June faded. The euro shed 2.6% declining sharply to 1.4509 from 1.4899 dollars.
  • The US dollar got a boost yesterday against a basket of currencies supported by higher demand for safe haven bets. Initial Jobless Claims revealed an increase to 474K which is a significantly higher figure comparing to the 410K expected. The poor jobs data raised concerns about the strength of the US economic recovery supporting the safe haven dollar. Focus turns to today's Non-Farm Payrolls data expected at 12:30 GMT that may provide a clearer picture about the country's employment sector.
  • Against the Japanese yen, the dollar plummeted to a seven-week low at 79.56 from 80.65. Concerned by the yen's rise, the Japanese authorities warned that they will be closely watching the currency as it creates risks to Japan's export-based economy. Today, the dollar rose to trade as high as 80.60 yen.   
  • The Australian dollar edged higher today supported by Reserve Bank of Australia's hawkish statement. Australia's central bank increased its forecast for the country's inflation signaling that interest rates may rise in the following months. Against the greenback, the Aussie rose to 1.0733 from 1.0536.
  • The sterling plunged yesterday against the dollar falling to 1.6357 from 1.6543. Yesterday the Bank of England decided to keep interest rates unchanged at 0.5%. Focus now turns to the release of the minutes on May 18 but no change is expected to the votes.
  • Oil prices shed 10% falling to 98.24 dollars a barrel from 109.35. Gold dipped to 1462.05 dollars an ounce from a 1521.86. Silver shed 13.5% yesterday sliding to 34.22 dollars an ounce from 39.55  

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4660 with a preference to enter Short positions at 1.4660
  • § The USDJPY pivot point is at 80.70 with a preference to enter Short positions at 80.60              

Today's calendar and market movers:

  • § US Non-Farm Payrolls in April is forecasted to fall to 186K
  • § Canada Net Change in Employment in April is forecasted to rise to 22.5K 

Equity Markets:                                               

US equities were negative on Thursday with the S&P500 trading down -0.91% and the DJIA down -1.10%. The European bourses were mixed with the FTSE trading down -1.07%, the DAX up 0.04% and the CAC down -0.95 %. The NIKKEI and the HSI at the time of writing are trading down -1.35% and -0.6% respectively. 

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