EU Morning Report

Sterling falls after inflation data disappoints

  • The euro resumes its rally against the dollar as investors' appetite for riskier bets begins to heal. The single currency was supported by talks that China is willing to buy the currency as well as purchase Spanish government debt. ECB's decision to raise its benchmark lending rate by 25 bps to 1.25% continues to be the main driver of the euro's upward trend. Against the greenback, the euro broke above the 1.45 level to 1.4518 from as low as 1.4377.
  • The US dollar edged lower against a basket of currencies today. Against the safe haven Swiss franc, the dollar fell weighed by a decline in US shares following an upgrade in Japan's nuclear emergency level. The pair dipped to 0.8941. Focus now shifts to the US Retail Sales data expected later today.
  • The Japanese Yen strengthened against its major counterparts yesterday after the nuclear safety commission raised the international alert of the Fukushima nuclear plant. The dollar dropped against the yen due to profit taking and the pair edged as low as 83.46 from 84.57. Today, as Asian equities turn positive and risk appetite begins to heal, the pair recovers some of its losses to trade at 84.25. 
  • Sterling plummeted against the greenback yesterday after Consumer Price Index surprisingly revealed lower than expected figures for March. Retail Price Index also slowed in March. Expectations for a Q3 interest rate hike by the Bank of England begin to fade weighing on the British Pound. The pair fell as low as 1.6227 from 1.6343. Today's UK jobs data at 08:30 GMT may provide a clearer picture.
  • Oil prices plummeted yesterday after Goldman Sachs forecasted a fall on the price of oil in the following months. Oil dipped to 105.27 dollars a barrel from 110.21. Gold also retreated to 1443.97 dollars an ounce from 1467.18. Silver edged as low as 39.70 dollars an ounce from 40.86.

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4435 with a preference to enter Long positions at 1.4445
  • § The USDJPY pivot point is at 84.50 with a preference to enter Short positions at 84.45              

Today's calendar and market movers:

  • § UK Claimant Count Change in March is forecasted to fall to -3.1K
  • § Europe Industrial Production in February is forecasted to gain 0.8%
  • § US Retail Sales in March is forecasted to gain 0.5%

Equity Markets:

US equities were negative on Tuesday with the S&P500 trading down -0.78% and the DJIA trading down -0.95%. The European bourses were also negative with the FTSE trading down -1.47%, the DAX down -1.42% and the CAC down -1.54%. The NIKKEI and the HSI at the time of writing are trading up 0.94% and up 0.21% respectively.

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