EU Morning Report

Moody's downgrades two big French banks 

  • The euro fell today against its major counterparts as the eurozone debt crisis deepens. Fears that Greece may be forced to default on its debt, a poor Italian bond auction and a downgrade of two big French banks by Moody's weighed on the single currency. Focus turns to a conference call between the German Chancellor Merkel, French President Sarkozy and Greek Prime Minister Papandreou. Against the US dollar, the euro edged as low as 1.3591 from 1.3738.
  • The US dollar edged higher today supported by growing fears of a Greek default. Against the Japanese yen, the greenback rose to 77.06 today from 76.80 traded yesterday. Against the Swiss franc, the dollar edged slightly higher to 0.8853 from 0.8758. 
  • The Australian dollar dropped for the fifth straight day to a five-week low against the dollar weighed by a heightened risk aversion in the market. Concerns about the eurozone debt crisis and a sluggish US economic growth are growing, weighing on high yielding currencies such as the Aussie. The pair dipped to 1.0177 from 1.0370. Sterling hit a seven and a half month low versus the dollar weighed by comments from BoE policymaker Adam Posen. He said that the UK economy is in need for more monetary stimulus and that high inflation is not a threat. Yesterday, data showed that inflation gained 0.6% in August. The pair fell to 1.5739 from 1.5869. Focus turns to the UK jobs data expected at 08:30 GMT. 
  • Oil prices ticked higher yesterday to 90.50 dollars a barrel from 87.79 but today it surrendered some of its gains to trade at 88.77. Gold jumped to 1844.64 dollars an ounce from 1794.55 and today it is trading at 1825.25. Silver also rose yesterday to 41.26 dollars an ounce from 40.00 and today it is trading at 40.80. 

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.3730 with a preference to enter Short positions at 1.3720
  • § The USDJPY pivot point is at 77.10 with a preference to enter Short positions at 77.00
  • § The OIL pivot point is at 89.95 with a preference to enter Short positions at 89.95
  • § The Gold pivot point is at 1855 with a preference to enter Short positions at 1855                           

Today's calendar and market movers:

  • § UK Claimant Count Unemployment Change in August is forecast to fall to 35K
  • § UK ILO Unemployment Rate in July is forecast to remain unchanged at 7.9%
  • § Europe Industrial Production in July is forecast to gain 1.5%
  • § US Retail Sales in August is forecast to gain 0.2%
  • § US Producer Price Index in August is forecast to fall 0.1% 

Equity Markets:                                                

US equities were positive on Tuesday with the S&P500 trading up 0.91% and the DJIA up 0.40%. The European bourses were also positive with the FTSE trading up 0.87%, the DAX up 1.85% and the CAC up 1.41%. The NIKKEI and the HSI at the time of writing are trading down -1.23% and -1.34% respectively.

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