EU Morning Report – Federal Reserve leaves monetary policy unchanged!
Thursday, April 29th, 2010Federal Reserve leaves monetary policy unchanged!
- The markets yesterday fretted about Greece once again as this problem seems to be getting worse day by day hour by hour. Markets were spooked with Greece as S&P downgraded their sovereign debt once again putting the country in the same category as Azerbaijan, Romania and Egypt. Immediately after Greek benchmark spreads against German bunds widened to over 1300bp. If that was not enough the aid package has not been activated yet as Germany and the IMF are delaying the approval of the package in return for stricter austerity measures by Greece. This mess has resulted in sovereign risk aversion across other member states such as Portugal and Spain as their own sovereign debt issues were sold off and yields their reached record levels. EURUSD price action yesterday saw the pair make new lows to 1.3113 from daily highs of 1.3264.
- In the US we saw a return to risk appetite despite the Greek concerns as US equities finished the session again higher by 0.65%. The main focus in the US was the FOMC announcement of its monetary policy. As expected the rates remained unchanged and the ”extended period” language was reiterated. The Fed went on to assess the US economy and had an upbeat on growth however they believe that inflation will most likely remain subdued. This can only support the Feds loose monetary policy and a shift will most likely come as employment picks up and excess capacity starts getting utilized within the economy. We also saw a jump in crude oil inventories yesterday as producers are stocking up on the black gold in anticipation of future demand due to global growth expectations. US 2 year yields yesterday traded between 0.96% and 1.06 and the USDJPY tracked the yields back up to 94.30 despite the rush to safety across the board.
- Today the market will shift its focus to German unemployment rate expected at 8% and a myriad of sentiment reports from the Euro zone all expected to slightly improve despite the Greek saga. In the US we have the Jobless continuous claims for April expected to improve to 4.62 mio.
Currency to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.3175 with a preference to enter into Short positions at 1.3185
- § The USDJPY pivot point is at 93.65 with a preference to enter Long positions at 93.70
Today’s calendar and market movers:
- § Germany Unemployment rate for April expected at 8%
- § Euro Zone Consumer sentiment for pril expected at -15
- § Euro Zone Economic Sentiment for April expected at 99.4
- § US Jobless continuous claims for April expected at 4.62 mio
Equity Markets:
- US equities closed positive yesterday with the DJIA and the SP500 closing 0.48% and 0.65% respectively. The European bourses were negative yesterday with the FTSE closing -0.30% the DAX and the CAC closing down at -1.22% and -1.50%. The NIKKEI and the HSI at the time of writing is -2.57% and 0% respectively.
Written by Easy-Forex
