EU Morning Report – ECB and BoE rate decisions, no change expected!
Thursday, August 5th, 2010ECB and BoE rate decisions, no change expected!
-  The Dollar traded stronger yesterday following a spur of good data out from the US economy. We saw a better than expected Non manufacturing ISM index yesterday coming in at 54.3 for the month of July as well as improved new orders and ADP employment indices beating market expectations. ADP employment came in at 42K compared to an expectation of 30K. Overall both ADP and ISM support an expectation of 100K for the NFP data on Friday. Overall however the policy outlook expectation for the Fed is for the status quo to remain and a possibility for further easing via QE measures and bond repurchases. US treasury yields traded between 0.54% – 0.57%.The USDJPY price action on the day traded between 86.44 – 85.31.
-  In the Euro Zone attention is shifted to the ECB policy rate decision followed by Trichet’s press conference. The market is expecting the policy rate to stay the same and the accompanying statements to highlight cautious optimism. Trichet will likely comment on the recent bank stress tests. PMI services from Europe and Germany were released as well with slightly lower than expected outcomes at 55.8 and 56.5 respectively. EURUSD price action yesterday was between 1.3240 – 1.3131.
-  In the United Kingdom we have an upcoming policy rate decision as well by the BoE with no change in policy expected. The market expects the first rate hike to take effect in the first quarter of 2011 despite the recent divisions between policy members within the Monetary Policy Committee (MPC). PMI figures for the UK came out lower than expected at 53.1 however Halifax housing figures gained by 0.6% helping keep the Cable supported, GBPUSD price action 1.5961 – 1.5856.
 Currency to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.3100 with a preference to enter into Long positions at 1.3110
- § The USDJPY pivot point is at 85.80 with a preference to enter Long positions at 85.85
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Today’s calendar and market movers:
- § United Kingdom BoE Rate Decision for August expected unchanged at 0.5%
- § Euro Zone ECB Rate Decision for August expected unchanged at 1%
- § United States Initial Jobless Claims for the week expected at 455K
 Equity Markets:
-  US equities closed positive yesterday with the S&P500 at 0.41% and the DJIA at 0.64%. The European bourses were mixed with the FTSE down -0.19% the DAX and the CAC closing up 0.37% and 0.35% respectively. The NIKKEI and the HSI at the time of writing is 1.57% and -0.05% respectively.
Written by Easy-Forex
