EU Morning Report – EURUSD held above the 1.2600 support level after choppy trade the last few days.
Thursday, May 13th, 2010- The Asian session recorded a 50 pip rally for the EURUSD, giving the pair a break after choppy trading in the last few trading sessions. On the downside the 1.2605/10 lows have proved to provide support for the EUR in the last 24 hours of trading. Investors are cross-examining the adequacy of the Euro-Zones bailout plan and with the market to some extent doubling-down; the momentum seems to be lost. A break below 1.2600 will expose 1.2585 then the 1.2518 low. Resistance is now at 1.2710 and 1.2740.
- Yesterday’s US session saw the wholesale inventories rise for a third consecutive month leading to a quarter gain of +0.5%. Also, durable goods accounted for all of the strength in inventories with a gain of +0.8%, as non-durable goods inventories dropped -0.2%. US T-Notes finished lower as risk appetite returned and equities rallied. In the latter half of the session, attention turned to the 10yr note auction which was fairly well received but limited reaction was seen as Treasuries settled into range-bound trade.
- Fed’s Bullard commented on the US monetary policy saying it remains extremely accommodative. On the effects of the debt crisis from Greece to the US, Bullard says the risks are ‘very real’, but not too pronounced at this point, adding that the currency swap lines will probably not be used as much as during the 2007-2009 crisis. Demand for safe-haven assets continues and the benchmark contract for gold rallied to a new all time high of 1249.20 before settling at 1243.1, up 1.87%.
- Today, the ECB is scheduled to release their monthly report, where the central bank releases a statement that explains the reasons behind leaving the interest rates steady at 1%. In addition, the ECB will explain the current situation while giving out some futuristic expectations for the euro zone over the medium term.
Currency to watch out for: EURUSD & GBPUSD
- The EURUSD pivot point is at 1.2740 with a preference to enter into a short position at 1.2730
- The GBPUSD pivot point is at 1.4950 with a preference to enter into a short position at 1.4940Today’s calendar and market movers:
- UK Trade Balance for March, expected to drop to -6.41bln
- US Initial Claims expected to drop to 440,000
- US Import Prices for April expected to rise to 0.8%
Equity Markets:
US equities finished in positive territory as economic data pointed to an increase in the level of imports which consequently gave the manufacturers a boost. The basic materials and technology sectors were the best performers in the S&P 500 as equities rallied and pared some of the heavy losses seen last week. Stocks settled into range-bound trade in what turned out to be a quite end to the session and at the close; the S&P 500 closed up 1.37%, the DJIA closed up 1.39% and the NASDAQ 100 closed up 1.81%. The Nikkei is up 2.18% and the Hang Seng up 1.37% at the time of writing.
Written by Easy-Forex
