EU Morning Report

FOMC minutes weigh on the dollar

  • The US dollar edged higher against a basket of currencies but fell against the safe haven Swiss franc and Japanese yen. Later in the US session, the dollar pared some of its gains after the FOMC policy meeting minutes were released. The minutes expressed the Fed's concerns about the high unemployment and sluggish growth and left the door open that the Fed may act in their September policy meeting to provide further stimulus. Against the Japanese yen, the dollar edged lower to 76.53 from 76.95. Against the Swiss franc, the greenback fell to 0.8139 from 0.8231. Focus turns to the US ADP Employment Change in August that may be an indication for Friday's Non Farm Payrolls data.
  • The euro plummeted yesterday retreating from near a two month high against the dollar weighed by renewed concerns over the eurozone debt crisis. A weak Italian bond auction pushed Italian yields higher raising fears about a debt contagion to eurozone's third biggest economy. Further pressuring on the single currency was economic data that showed Economic sentiment and Consumer Confidence both fell more than expected in August. The pair dropped as low as 1.4385 from 1.4532 and it was last trading at 1.4444. Versus the Swiss franc, the single currency dipped to 1.1752 from 1.1897.
  • The Australian dollar advanced supported by speculation the central bank will not cut the country's interest rates. Against the dollar, the Aussie jumped as high as 1.0719 from 1.0620. The British Pound fell against the greenback hitting 1.6255 from 1.6419.
  • Oil prices jumped to 89.17 dollars a barrel from 86.44. Gold edged higher to 1840.40 dollars an ounce from 1783.22. Silver also ticked higher to 41.64 dollars an ounce from 40.38.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4475 with a preference to enter Short positions at 1.4465
  • § The USDJPY pivot point is at 76.80 with a preference to enter Short positions at 76.75
  • § The OIL pivot point is at 87.75 with a preference to enter Long positions at 87.75
  • § The Gold pivot point is at 1810 with a preference to enter Long positions at 1810                        

Today's calendar and market movers:

  • § Europe Consumer Price Index in August is forecast to gain 2.5%
  • § Europe Unemployment Rate in July is forecast to remain unchanged at 9.9%
  • § US ADP Employment Change in August is forecast to fall to 100K
  • § Canada Gross Domestic Product Annualized in Q2 is forecast to gain 0.1%
  • § US Factory Orders in July is forecast to gain 1.9%

Equity Markets:                                              

US equities were positive on Tuesday with the S&P500 trading up 0.23% and the DJIA up 0.18%. The European bourses were mixed with the FTSE trading up 2.70%, the DAX down -0.46% and the CAC up 0.18%. The NIKKEI and the HSI at the time of writing are trading down -0.14% and up 0.35% respectively.

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