EU Morning Report

Hopes for a eurozone rescue support the single currency

  • The euro rallied against its major counterparts yesterday on hopes that European leaders will act in order tackle the eurozone debt crisis. Against the dollar, the single currency jumped as high as 1.3668 from 1.3481. Later the pair surrendered some of its gains to trade at 1.3541 after German Finance Minister rejected the idea of expanding the European Financial Stability Facility rescue funds while Financial Times reported that a split has opened in the eurozone over Greece's next bailout package. Versus the Japanese yen, the euro traded as high as 104.96 from 102.90 but later fell to 103.67.
  • The US dollar was softer against a basket of currencies supported by a heightened risk appetite in the market. Against the Swiss franc, the US dollar dipped to 0.8924 from 0.9057. Against the Japanese yen, the dollar plummeted during today's Asian session on Japanese fund repatriation and as Japanese exporters bought the yen ahead of Japan's financial half year. The pair jumped to 76.93 from 76.26 yesterday but surrendered some of its gains falling to 76.46. US Consumer Confidence disappointed investors after it showed an unexpected fall to 45.4. Focus turns to the US Durable Goods Orders and a speech by Fed Chairman Ben Bernanke expected later today.
  • The Australian dollar rallied yesterday versus the dollar gaining 2.1% rising to 0.9985 from 0.9775. Heightened risk appetite as well as higher stocks and commodity prices pushed the Aussie higher. Today the pair is trading lower at 0.9842 while eurozone officials struggle to restore confidence in the market. The British pound also rose yesterday against the dollar to as high as 1.5704 from 1.5525 on an improved risk sentiment.
  • Oil prices jumped to 84.74 dollars a barrel from 80.78. Gold edged lower today to 1631.50 dollars an ounce from 1677.10. Silver also ticked lower today to 30.66 dollars an ounce today from 33.51.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.3670 with a preference to enter Short positions at 1.3670
  • § The USDJPY pivot point is at 76.70 with a preference to enter Short positions at 76.70
  • § The OIL pivot point is at 81.10 with a preference to enter Long positions at 81.10
  • § The Gold pivot point is at 1624 with a preference to enter Long positions at 1624                          

Today's calendar and market movers:

  • § US Durable Goods Orders in August is forecast to fall 0.4% 

Equity Markets:                                                

US equities were positive on Tuesday with the S&P500 trading up 1.07% and the DJIA up 1.33%. The European bourses were also positive with the FTSE trading up 4.02%, the DAX up 5.29% and the CAC up 5.74%. The NIKKEI and the HSI at the time of writing are trading up 0.22% and down -0.9% respectively.

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