EU Morning Report

Euro rebounds on China's interest in eurozone bailout bonds

  • The euro rallied to a one-week high against the dollar after a report revealed that China is interested in buying Portuguese bailout bonds during next month's auctions. Beijing expressed interest in investing its money in Europe in an effort to diversify its holdings. China's willingness to purchase risky sovereign bonds such as Portugal and Greece may help sentiment against the euro zone periphery. Surging commodity prices and positive world equities are also helping the single currency. Against the dollar, the euro gained 1.3% jumping to 1.4189 from 1.4012 traded yesterday.
  • The US dollar weakened today against a basket of currencies. Economic data revealed significantly weaker than expected Durable Goods Orders figures for April raising concerns about the US economic recovery. Focus turns to the US Initial Jobless Claims data and Gross Domestic Product expected at 12:30 GMT. Against the Swiss franc, the dollar fell to a three-week low at 0.8695 from 0.8813. Against the Japanese yen, the dollar dipped to 81.66 from 82.17.
  • The Australian dollar rose today supported by the strong commodity prices as well as better than expected Capital Spending figures for March. Against the greenback, the Aussie traded as high as 1.0613 from 1.0440. Aussie's neighbor, the Kiwi, also rallied to 0.8111 versus a weaker dollar from 0.7857.
  • Sterling rallied against the greenback rising to 1.6333 from 1.6130 on an improved risk sentiment. Yesterday, revised GDP in the first quarter showed that growth remained unchanged at 0.5%.
  • Oil prices rose to 101.88 dollars a barrel today from 98.19, a rise of 3.8%. Gold also jumped to 1532.14 dollars an ounce from 1521.12. Silver gained 7% edging higher at 38.83 dollars an ounce from 36.24

Currency to watch out for: EURUSD & USDJPY  

  • § The EURUSD pivot point is at 1.4100 with a preference to enter Long positions at 1.4110
  • § The USDJPY pivot point is at 81.60 with a preference to enter Long positions at 81.66
  • § The OIL pivot point is at 99.50 with a preference to enter Long positions at 99.50
  • § The Gold pivot point is at 1521 with a preference to enter Long positions at 1521                           

Today's calendar and market movers:

  • § US Initial Jobless Claims is forecasted to fall to 400K
  • § US Gross Domestic Product Annualized in Q1 is forecasted to gain 2.1%

Equity Markets:                                                

US equities were positive on Wednesday with the S&P500 trading up 0.32% and the DJIA up 0.31%. The European bourses were also positive with the FTSE trading up 0.2%, the DAX up 0.28% and the CAC up 0.31%. The NIKKEI and the HSI at the time of writing are trading up 1.48% and 0.64% respectively.

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