EU Morning Report

Japanese Yen sharply falls after the G-7 intervention pledge

  • The euro rallied against the dollar today after the G-7 Finance ministers agreed on a joint intervention in order to stop the Japanese Yen from rising. The G-7 leaders agreed to join forces to support Japan by selling the yen as a strong yen may stall the country's recovery. World equities rose and risk appetite begins to stabilize. Further supporting the euro, was solid demand for Spanish government bonds in a bond auction yesterday. The euro jumped as high as 1.4086 versus the dollar from 1.3979. 
  • After the G-7 intervention decision was announced, the Japanese Yen fell sharply against its major counterparts. The dollar rallied against the yen climbing to 81.91 from 78.24 traded yesterday. The G-7 intervention came after the yen soared on speculation the Japanese will liquidate their assets and repatriate their funds for reconstruction. 
  • Investors are also focusing on the Libya unrest and the UN decision for a no-fly zone over Libya. The decision authorizes the UN to intervene in case Gaddafi's forces violate the no-fly zone. As unrest in Bahrain continues fears that clashes will spread to Saudi Arabia rise. 
  • The US dollar dropped against a basket of currencies today as demand for riskier bets rises. Risk sentiment is also supported by solid data from the US showing a surprising decline in US Initial Claims. US Consumer Price Index and Fed Manufacturing Survey also improved exceeding investors' expectations. 
  • The Australian dollar rose against the greenback to 0.9947 and heading towards parity again from as low as 0.9780. Sterling also traded higher to 1.6189 dollars from 1.5981. Against the safe haven Swiss franc, the dollar edged higher to 0.9089 from 0.8962.   
  • Oil prices rose on fears of a further violence in Libya. Oil jumped to 103.50 dollars a barrel and gold rose to 1413.85 dollars an ounce.

Currency to watch out for: EURUSD & USDJPY

  • § The EURUSD pivot point is at 1.3980 with a preference to enter into Long positions at 1.3990
  • § The USDJPY pivot point is at 80.75 with a preference to enter Long positions at 80.80            

Today's calendar and market movers:

  • § Canada Consumer Price Index in February is forecasted to gain 0.4%
  • § Europe Trade Balance in January is forecasted to rise to -1.3B

Equity Markets:

US equities were positive on Thursday with the S&P500 trading up 1.34% and the DJIA unchanged. The European bourses are also positive with the FTSE trading up 1.75%, the DAX up 2.20% and the CAC up 2.43%. The NIKKEI and the HSI at the time of writing are trading up 2.72% and up 0.51% respectively.

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