EU Morning Report

 

The return of risk appetite

  • The euro recorded gains against its major counterparts for a second straight day. This came as a response to speculation that we will witness a shift to the European Central Bank’s monetary policy, which may calm investors’ nerves about the eurozone’s future. Plans to recapitalize Eurozone banks along with IMF comments that implied that financial help could also be extended to Spain and Italy captured investors’ attention. Versus the US dollar, the single currency rose to 1.3383 from 1.3260. The euro also marched higher from 1.2217 to 1.2355 against the Swiss Franc. Against the Japanese yen, the euro climbed to 102.72 from 101.6. The globe will turn all its attention to the ECB’s last policy meeting under Trichet, where a cut – or not - in the ECB’s lending rate will be decided.
     
  • The US dollar produced mixed results against a basket of currencies after ADP Non-Farm Employment showed better than expected results whereas data from Chicago-based Challenger showed a 211% change in the number of job cuts announced by employers. Against the Swiss franc, the US dollar climbed to 0.9251 from 0.9161. Against the Japanese yen, the greenback rose to 77.07 from 76.61, with the pair remaining in a tight range for yet another day, in speculation of a Japanese intervention to weaken the Yen.
     
  • The Australian dollar mounted to 0.9667 from 0.9487 against the US dollar as risk appetite is back on the table. The British pound also rose against the US dollar and traded as high as 1.5492 from 1.5393. The Bank of England interest rate meeting is highly anticipated, with speculators arguing for additional quantitative easing. The central bank can do that by buying financial assets in order to inject money into the economy.
     
  • Oil prices rose to 79.80 dollars a barrel from 76.91. Gold put a stop on its Tuesday loses and climbed to 1646.91 dollars an ounce from 1597.55. Silver also rose to 30.6175 dollars an ounce from 28.4075.

 Currencies to watch out for: EURUSD & USDJPY  

§  The EURUSD pivot point is at 1.3385 with a preference to enter Short positions at 1.3375

§  The USDJPY pivot point is at 77.00 with a preference to enter Short positions at 76.60

§  The OIL pivot point is at 77.90 with a preference to enter Long positions at 80.50

§  The Gold pivot point is at 1617 with a preference to enter Long positions at 1680

                           

Today’s calendar and market movers:

§  Swiss Consumer Price Index for September is forecast to fall to 0.0%

§  Canadian Building Permits in September is forecast to fall to 0.3%

§  USD Unemployment Claims for the past week is forecast to rise 410K

 

Equity Markets:

                                                

The European bourses were positive with the FTSE trading up 4.22%, the DAX up 4.91% and the CAC up 4.33%. US equities were positive as well with the S&P500 trading up 1.79% and the DJIA 1.21%. The NIKKEI and the HSI at the time of writing are trading up 1.38% and 3.98% respectively.

 

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