EU Morning Report 

Reserve Bank of Australia keeps interest rates on hold

  • The US dollar edged higher against a basket of currencies as fears about the US economy and eurozone debt crisis continue to support the safe haven currency. World equities dropped and gold hit a fresh record high on worries that the US economy may be sliding back into recession. Against the Japanese yen, the greenback edged lower today hitting 76.73 from 76.97. Focus turns to the US ISM Non-Manufacturing expected later today. 
  • The euro plummeted against its major counterparts weighed by a heightened risk aversion in the market. Eurozone debt contagion fears rose after Greece failed to agree with the International Monetary Fund on a new austerity plan to meet its fiscal targets. Against the greenback, the euro broke below the 1.41 level dropping to a seven-week low at 1.4038 from 1.4173 and it was last trading at 1.4047. Versus the Japanese yen, the single currency dipped to a six-month low at 107.83 from 108.84, a decline of 0.9%.
  • The Australian dollar fell today after the Reserve Bank of Australia Interest Rate Decision. The central bank decided to keep its cash target rate at 4.75% and expressed its concerns about the global economic growth and inflation. Against the dollar, the Aussie fell as low as 1.0494 from 1.0606. 
  • Oil prices ticked lower to 82.86 dollars a barrel from 85.96. Gold edged higher to a new record high at 1920.02 dollars an ounce from 1874.34. Silver also ticked higher today rising to 43.24 dollars an ounce from 42.30.

Currencies to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4130 with a preference to enter Short positions at 1.4120
  • § The USDJPY pivot point is at 77.00 with a preference to enter Short positions at 76.95
  • § The OIL pivot point is at 83.00 with a preference to enter Long positions at 83.00
  • § The Gold pivot point is at 1890 with a preference to enter Long positions at 1890                           

Today's calendar and market movers:

  • § Switzerland Consumer Price Index in August is forecast to fall 0.1%
  • § Europe Gross Domestic Product in Q2 is forecast to gain 0.2%
  • § Germany Factory Orders in July is forecast to fall 1.5%
  • § US ISM Non-Manufacturing in August is forecast to fall to 51.0 

Equity Markets:                                                

The European bourses were negative with the FTSE trading down -3.58%, the DAX down -5.28% and the CAC down -4.73%. The NIKKEI and the HSI at the time of writing are trading down -1.95% and -0.94% respectively. The US market was closed yesterday due to Labor Day Holiday.

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