EU Morning Report

Prepare for the Bank of England MPC minutes

  • The euro rebounded recovering its losses against the greenback on higher demand for riskier assets. Fears of a Greek debt restructuring knocked the euro as low as 1.4156 but a successful debt auction from Greece calmed the markets. Comments from ECB's Bini Smaghi further reassured the markets after saying that there must be no restructuring of Greek debt. The euro rose as high as 1.4412 versus the dollar and the pair was last trading at 1.4402.    
  • The US dollar edged lower against its major counterparts as risk appetite in the market begins to heal. Standard & Poor's decision to downgrade its outlook on the US appears to be digested while world equities rebound. US Housing Starts rebounded in March but was slightly below consensus and building permits exceeded market expectations. Focus now turns to today's Existing Home Sales data. 
  • Against the Japanese yen, the dollar edged as high as 83.09 from 82.36 as investors turn back into carry trades. As risk appetite stabilizes, investors' demand for higher yielding assets such as the Australian dollar and the euro increases. The euro gained 2.7% against the yen rising to 119.66 from 116.47 traded on Monday. The Aussie also rallied versus the yen jumping to 87.99 from 85.96.
  • The Australian dollar rallied to a fresh 29-yeat high supported by a higher risk appetite and surging commodity prices. The Aussie rallied versus the dollar rising as high as 1.0597 from 1.0442.
  • Sterling rose ahead of the Bank of England MPC minutes released today at 8:30 GMT. Speculators do not expect another member to join the hawkish side voting for an interest rate hike. Against the greenback, the dollar ticked as high as 1.6356 from 1.6229.
  • The dollar plummeted against the Canadian dollar after data showed inflation in Canada accelerated in March. The dollar dipped to 0.9536 versus the Loonie from 0.9666.
  • Oil prices ticked lower at 109.26 dollars a barrel from 106.01. Gold rose to a fresh record high at 1501.23 dollars an ounce from 1487.45. Silver rallied to 44.34 dollars an ounce from 42.73.

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4330 with a preference to enter Long positions at 1.4340
  • § The USDJPY pivot point is at 82.70 with a preference to enter Long positions at 82.75               

Today's calendar and market movers:

  • § US Existing Home Sales in March is forecasted to gain 2.5%

Equity Markets:                                                

US equities were positive on Tuesday with the S&P500 trading up 0.57% and the DJIA trading up 0.53%. The European bourses were also positive with the FTSE trading up 0.46%, the DAX up 0.18% and the CAC up 0.7%. The NIKKEI and the HSI at the time of writing are trading up 1.77% and 0.92% respectively.

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