EU Morning Report – Greek T-Bill issue spurs risk appetite across the board!
Wednesday, July 14th, 2010Greek T-Bill issue spurs risk appetite across the board!
- Risk appetite took center stage yesterday following a well received T-Bill auction in Greece as well as a series of impressive earnings results from giants such as Alcoa Inc and Intel beating analysts’ estimates. Stock markets rallied above 1.5% in the US, risk currencies such as the Euro broke through all nearby major levels making a high of 1.2748 from a 1.2522 low on the day. On a more negative tone however we had a widening trade balance in the US which did spur a bout of USD sales and we saw a weak dollar across the board both due to risk seeking and risk aversion away from the USD. Today focus will turn to US retail sales given its strong link to consumer strength in terms of spending and confidence. USDJPY price action on the day was between 88.00 – 89.00.
- In Europe yesterday the session begun with a Moody’s downgrade of Portuguese debt. This spooked the market a little as Greece was due to issue debt to the markets which was a crucial risk event. This downgrade however was an anticipated one and an extremely well received and oversubscribed Greek bond issue helped increase confidence in the bond markets. The single currency rallied over 200 pips, the DAX and the CAC close above 1.8% on the day. In Germany we saw the release of the ZEW survey which disappointed for a 3rd month in a row putting in question future German strength.
- In the UK yesterday we saw a higher than expected inflation which helped strengthens the Pound. We also had speculation of a possible buyer of BP’s assets by a Middle Eastern name. GBPUSD price action on the day was between 1.4964 – 1.5244.
Currency to watch out for: EURUSD & USDJPY
- The EURUSD pivot point is at 1.2650 with a preference to enter into Long positions at 1.2660
- The USDJPY pivot point is at 88.60 with a preference to enter Long positions at 88.65
Today’s calendar and market movers:
- UK unemployment expected today at 7.9%
- European CPI y/y is anticipated at 1.4%
- European Industrial production expected at 1.2%
- US Retail Sales are projected to be negative at -0.2%
- The Minutes of the FOMC meeting are published today
Equity Markets:
- US equities closed positive on Friday with the S&P500 closing at 1.54% and the DJIA closing at 1.44%. The European bourses were positive yesterday with the FTSE up 2.01% the DAX and the CAC closing at 1.87% and 1.96% respectively. The NIKKEI and the HSI at the time of writing is 2.64% and 1.03% respectively.
Written by Easy-Forex
