EU Morning Report
The Japanese Yen soars as the nuclear crisis deepens
- The euro fell against the dollar yesterday as fears of a nuclear leak in Japan hurt demand for riskier bets. The nuclear crisis in Japan knocked the euro to 1.3865 dollars from 1.40. But the euro's decline was limited as investors are focusing on EU's new rescue package and rate hike expectations. Today, the single currency managed to recover its losses and climb as high as 1.3977 versus the dollar.
- Against the Japanese Yen, the US dollar plummeted to an all time low during the US session as Japan's nuclear crisis deepens. US officials warned of a possible catastrophic nuclear situation in Japan spreading fears and global uncertainty. Investors buy the Yen on speculation the Japanese will seek to liquidate their assets and repatriate their funds for reconstruction. The pair dipped to 76.72 from 81.12. After the dramatic move, the pair recovered some of its losses on speculation the Bank of Japan will intervene to stop the Yen's rise. The pair then rose to trade at 79.72 and it was last trading at 79.05.
- The US dollar appears stronger as heightened risk aversion in the market spurs demand for safe haven assets. Risk sentiment was also hurt by data revealing that US Housing Starts and Building Permits fell more than expected in February. The dollar rose against the sterling and the Australian dollar but fell against the Swiss franc.
- The sterling slid to 1.5981 dollars from 1.6130 hurt by risk aversion as well as a rising unemployment rate. The Australian dollar also dropped against the greenback as demand for high yielding assets is low. Yesterday, the Aussie fell well below parity sliding to 0.9702 from 0.9963. Against the safe haven Swiss franc, the dollar dipped to 0.8919 from 0.9197.
- Gold prices plummeted on Japan's nuclear crisis falling to 1386.30 dollars an ounce. Today, the precious metal rose to 1398.32.
Currency to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.3870 with a preference to enter into Long positions at 1.3880
- § The USDJPY pivot point is at 80.25 with a preference to enter Short positions at 80.25
Today's calendar and market movers:
- § Switzerland Interest Rate Decision is forecasted to keep rates unchanged at 0.25%
- § US Consumer Price Index in February is forecasted to gain 2%
- § US Initial Jobless Claims is forecasted to fall to 387K
US equities were negative on Wednesday with the S&P500 trading down -1.95% and the DJIA down -2.04%. The European bourses are also negative with the FTSE trading down -1.70%, the DAX down -2.01% and the CAC down -2.23%. The NIKKEI and the HSI at the time of writing are trading down -1.24% and down -1.64% respectively.
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