EU Morning Report – FOMC minutes released indicating a Dovish Federal reserve!
Wednesday, April 7th, 2010EU Morning Report
FOMC minutes released indicating a Dovish Federal reserve!
-  Tuesday’s trading saw the USD weaken across the board as the FOMC minutes indicated that the current level of interest rates in the US will remain low for ”an extended period”. However despite the dovish tone the minutes showed that the Fed is optimistic about the current economic recovery however also indicated a slight concern about the drop in inflation figures. Equity markets in the US closed positive yesterday as they cheered the dovish Fed and the S&P closed at 0.17%. 2 year yields traded back down to 1.13% from a high of 1.19% with the USDJPY tracking the yield lower to 93.54 from a high of 94.67. The BoJ will end a 2 day policy meeting at 06:30 GMT were Governor Shirakawa will hold a news conference.
-  In Europe yesterday we had negative sentiment prevail and the EURUSD approaching its yearly lows of 1.3270. The concern is over the agreed plan by EU and the IMF. First up is the concern that opposition is building within the Greek parliament over further austerity measures imposed on Greece via the IMF. The second cause of concern is over the interest rate which was agreed upon by Greece and the EU/IMF plan. The EURUSD price action yesterday was between 1.3496 – 1.3355 as risk aversion gripped the markets.
-  In the UK the concern remains over a ”hung” parliament which saw the GBPUSD trade as low as 1.5127 however a positive surprise from UK Construction PMI coming in at 53.1 compared to an expectation of 48.8 saw the GBPUSD pair its losses and rallied back up to a high of 1.5281.
-  Today’s financial calendar will focus on Services PMI reports both from Europe and the UK both expected to remain unchanged. In the US we have a number of Fed members speaking as well as the Fed Chairman Bernanke. The rhetoric will most likely reflect the latest FOMC minutes and no surprises are expected.
 Currency to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.3425 with a preference to enter into short positions at 1.3415
- § The USDJPY pivot point is at 93.60 with a preference to enter long positions at 93.65
 Today’s calendar and market movers:
- § EU PMI services for March expected at 53.7
- § UK PMI Services for March expected at 58.
- § US Crude Oil Inventories for the week expected at 1m barrels
- § US Fed Chairman Bernanke will be speaking in Dallas
 Equity Markets:
-  US equities closed positive on Tuesday with the DJIA and the SP500 closing 0.00% and 0.17% respectively. The European bourses were positive on Tuesday with the FTSE up 0.62% the DAX and the CAC closing up at 0.27% and 0.49% respectively. The NIKKEI and the HSI at the time of writing is 0.09% and 1.46% respectively.
Written by Easy-Forex
