EU Morning Report

RBA Governor's hawkish comments support the Aussie

  • The euro rose yesterday after a series of positive economic data from the US and China boosted risk appetite. Today, the euro came under pressure again as euro zone debt problems resurfaced. Credit rating agency Moody's threatened to downgrade large French banks. European policymakers held an emergency meeting yesterday but no agreements were made. Against the dollar, the euro rose to 1.4497 from 1.4378 yesterday but today it surrendered its gains to trade as low as 1.4394.
  • The US dollar strengthened against a basket of currencies after economic data revealed better than expected figures. Producer Price Index showed an increase of 0.2% in May while Retail Sales fell 0.2% in May less than expectations of a 0.4% fall. Focus turns to the US Consumer Price Index released later today Against the Japanese yen, the dollar traded as high as 80.63 from 80.12. Against the Swiss franc, the dollar gained 1.8% rising as high as 0.8494 from 0.8347.
  • The Australian dollar rallied after a speech by the Reserve Bank of Australia Governor Glenn Stevens. He emphasized on inflation signaling a further tightening of the monetary policy in the near future. The Aussie strengthened following the Governor's hawkish stance and against the dollar it rose as high as 1.0713 from 1.0568. Aussie's neighbor, the Kiwi, slid to 0.8141 against the dollar from 0.8213.
  • Oil prices rallied to 99.51 dollars a barrel today from 96.27. Gold edged lower to 1526.85 dollars an ounce from 1511.97. Silver also fell to 35.68 dollars an ounce from 34.39.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4375 with a preference to enter Long positions at 1.4385
  • § The USDJPY pivot point is at 80.30 with a preference to enter Long positions at 80.35
  • § The OIL pivot point is at 98.00 with a preference to enter Long positions at 98.00
  • § The Gold pivot point is at 1530 with a preference to enter Short positions at 1530                        

Today's calendar and market movers:

  • § UK Claimant Count Unemployment Change in May is forecast to fall to 7K
  • § UK Unemployment Rate in May is forecast to remain unchanged at 7.7%
  • § Europe Industrial Production in April is forecast to fall 0.2%
  • § US Consumer Price Index in May is forecast to gain 0.1%

Equity Markets:                                            

US equities were positive on Tuesday with the S&P500 trading up 1.26% and the DJIA up 1.03%. The European bourses were also positive with the FTSE trading up 0.51%, the DAX up 1.69% and the CAC up 1.5%. The NIKKEI and the HSI at the time of writing are trading up 0.25% and down -0.39% respectively.

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