EU Morning Report – Earnings Season kicks off to a bad start!
Tuesday, April 13th, 2010Earnings Season kicks off to a bad start!
- Mondays trading saw a mixed to strong dollar with a firmer focus on circumstances within the EU. The Greek bailout package has helped to spur some risk appetite across the board and is a definite boost to positive global sentiment. Earnings season got off to a mixed start on Monday as well as the largest aluminum producer Alcoa kicked of the season by failing to meet expectation. Infosys a major software developer in India also showed disappointing earnings as the strong rupee hurt repatriated earnings. Overall the Yen strengthened in the Asian overnight session following the news. The Yen also strengthened due to China monetary tightening fears. USDJPY price action was between 93.59 – 92.56.
- In Europe yesterday we saw the 10 year benchmark spread between 10 year Greek and German bonds drop back down to 338 bp from the record highs we saw in the past week. The market seems to be a little apprehensive over the veto powers of each member state when push comes to shove however analysts say that such a move by any member state is highly unlikely. Today a E1.2b Greek T-Bill auction will take place and it is important to see how the market’s appetite has changed following the release of the plan. A failed auction will be very bad news for the Euro in general.
- Today the market will shift its focus to Consumer Price Index rates in Germany were a 0.5% rise in March is expected. Soft inflationary pressures allow the ECB to maintain its extraordinary loose monetary policy for a longer period. In the UK focus will be on Trade balance figures expected to improve to -7.35b from 7.99b the month before. In the US the key economic indicator will be the International trade report for February expected to increase to $-38.5b. Intel will also report today.
Currency to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.3625 with a preference to enter into Long positions at 1.3615
- § The USDJPY pivot point is at 93.15 with a preference to enter Short positions at 93.10
Today’s calendar and market movers:
- § UK Trade balance for February expected at GBP-7.35b
- § US International Trade for February expected at $-38.5
- § Canada New Housing Price Index for February expected at 0.4%
Equity Markets:
- US equities closed positive on Monday with the DJIA and the SP500 closing 0.08% and 0.18% respectively. The European bourses were flat to positive on Monday with the FTSE closing 0.12% the DAX and the CAC closing up at 0.02% and 0.0%. The NIKKEI and the HSI at the time of writing is -0.81% and 0.56% respectively.
Written by Easy-Forex
