EU Morning Report

Portugal and IMF reached a bailout agreement

  • The euro edged lower against the dollar moving away from a 17-month high hit on Monday. Yesterday's economic data revealed that Producer Price Index gained 6.7% in March higher than the market expected. Portugal announced that a bailout agreement was reached with the International Monetary Fund. The size of the financial aid agreed is 78bln euros with a maturity period of three years. Against the dollar, the euro fell to 1.4774 today from 1.4889. Investors are focusing on the ECB interest rate decision released tomorrow.
  • The US dollar strengthened today recovering from a three year low against a basket of currencies hit this week. US Factory Orders surprised investors by showing an increase of 3% in March while investors expected a 1.5% gain. Against the Swiss franc, the dollar rose as high as 0.8649 from 0.8595. Against the Japanese yen, the dollar edged higher rising to 81.10 from 80.69.
  • The Australian dollar resumes its fall against the dollar weighed by the falling commodity prices. The Aussie continues to be under pressure after the Reserve Bank of Australia kept interest rates unchanged at 4.75% and the central bank sounded less hawkish in their statement. Against the dollar, the Aussie dipped to 1.0789 from 1.0944 traded yesterday.
  • The sterling plunged yesterday after PMI Manufacturing data revealed weaker than expected figures. Comments from the Bank of England Governor also weighed on the British pound. He said that the impact of the high-level indebtedness would worsen if interest rates go up. His comments added strength on the speculation that the Bank of England will keep interest rates unchanged during their meeting tomorrow and that rates may remain low for the rest of the year. Against the dollar, the sterling shed 1.2% falling to 1.6455 from 1.6647.
  • Oil prices fell to 110.22 dollars a barrel from 113.18. Gold plummeted to 1526.65 dollars an ounce from a record high at 1551.05. Silver also shed 11% yesterday sliding to 40.50 dollars an ounce from 45.56.  

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4750 with a preference to enter Long positions at 1.4750
  • § The USDJPY pivot point is at 81.25 with a preference to enter Short positions at 81.25               

Today's calendar and market movers:

  • § Europe Purchasing Manager Index Services in April is forecasted to fall to 56.9
  • § US ADP Employment Change in April is forecasted to fall to 198K
  • § US ISM Non-Manufacturing in April is forecasted to rise to 57.4

Equity Markets:                                            

US equities were negative on Tuesday with the S&P500 trading down -0.34% and the DJIA unchanged. The European bourses were mixed with the FTSE trading up 0.21%, the DAX down -0.36% and the CAC down -0.29%. The NIKKEI and the HSI at the time of writing are trading up 1.57% and down -1.26% respectively.

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