EU Morning Report

Moody's downgrades Greece by three notches

  • The euro edged lower after credit rating agency Moody's downgraded Greece's sovereign rating by three notched to Ca. The single currency got a boost last week against its major counterparts as the agreement on a bailout plan for Greece eased eurozone debt contagion fears. On Friday, economic data showed that Industrial New Orders rose more than expected in May. Against the dollar, the euro fell to 1.4342 from 1.4437. Against the Japanese yen, the euro declined to 112.25 from 113.56.
  • The US dollar remains under pressure as US policymakers failed to reach an agreement regarding the US debt ceiling. The US risks of losing its AAA rating if a plan is not decided before the August 2 deadline. Against the Japanese yen, the dollar dipped to a four month low at 78.11 from 78.72. Versus the safe haven Swiss franc, the dollar dropped to 0.8100 from 0.8246. No economic data from the US is expected today.
  • The Australian dollar edged lower after data showed that Producer Price Index dropped to 0.8% from a previous 1.2% gain. Focus now turns to the Consumer Price Index as it will be a key driver for the central bank's monetary policy. Softer inflation figures may indicate that the Reserve Bank of Australia will cut interest rates to boost growth. Against the greenback, the Aussie fell from a two and a half months high at 1.0874 to 1.0807. Aussie's neighbor, the Kiwi, rose against the greenback, hitting 0.8673 from 0.8582.
  • Sterling remains elevated as the EU summit results raised optimism that the euro area will overcome its debt crisis. Against the greenback, sterling climbed to a five week high at 1.6342 from 1.6264.
  • Oil prices ticked lower to 98.65 dollars a barrel today from 100.15. Gold edged higher to a record high at 1622.18 dollars an ounce from 1583.50. Silver also ticked higher to 40.69 dollars an ounce from 38.18.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4290 with a preference to enter Long positions at 1.4300
  • § The USDJPY pivot point is at 78.20 with a preference to enter Long positions at 78.30
  • § The OIL pivot point is at 98.40 with a preference to enter Long positions at 98.40
  • § The Gold pivot point is at 1593 with a preference to enter Long positions at 1593                          

Today's calendar and market movers:

  • § UK Mortgage Approvals in June is forecast to rise to 31.3K
  • § New Zealand Trade Balance in June is forecast to fall to 404K

Equity Markets:                                             

US equities were mixed on Friday with the S&P500 trading up 0.09% and the DJIA down -0.34%. The European bourses were positive with the FTSE trading up 0.60%, the DAX up 0.50% and the CAC up 0.68%. The NIKKEI and the HSI at the time of writing are trading down -0.80% and -0.79% respectively.

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