EU Morning Report – Initial Jobless claims yesterday meets expectations at 462K!

Initial Jobless claims yesterday meets expectations at 462K!

• Yesterday’s trading saw some range trading across all the majors with no major event risk able to push the pairs out of their recent ranges. Markets tend to consolidate in tight ranges as the participants take some time out reassessing market fundamentals and overall positioning. The main piece of data yesterday was the initial jobless claims report which was expected at 460K and came in at 462K. Analysts believe that for job growth to resume jobless claims must fall to between 425K – 450K per week. We also had the US trade balance yesterday which showed the figure to drop to $-37.3B. 2 year yields yesterday made new weekly highs and traded at 0.9640%. USDJPY tracked the yields and traded to a high of 90.74 from a low of 90.18.
• In Europe the sentiment remains wary on current fiscal situations of various EU members. Greek woes have subsided slightly following the verbal threats against Euro speculators however no matter what is said and done against the speculators the fact of the matter is that Greece is faced with a 12% deficit, civil unrest and un-trusted government reporting. Along with Greece we also have Portugal, Ireland and Spain faced with large fiscal deficits and high unemployment. The economies have no choice but to reduce fiscal spending effectively reducing demand and increasing unemployment. All this will be to the detriment of Euro zone growth as a whole and will almost certainly prolong any future rate hike decisions. Analysts indeed expect the EURUSD to trade down to 1.30 within the next few months. EURUSD price action yesterday was between 1.3618 – 1.3705.
• In Switzerland yesterday we had the monthly SNB monetary policy decision which kept rates unchanged at 0.25%. The SNB also reiterated that they will intervene in the currency markets so as to prevent CHF currency appreciation against the Euro. The SNB also raised its inflation forecasts which indicate the SNB is closer to eventual rate hikes.
• Today the main focus will turn to Retail sales in the US the report is expected to show retail sales grew by 0.1% for the month of February. Retail sales are likely to be one of the indicators which are closely looked at by the Fed in considering future rate decisions. In the US we also have the University of Michigan sentiment reports. In Europe Trichet will be speaking in Stanford before the Institute of Economic Policy Research.

Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.3620 with a preference to enter into short positions at 1.3630
• § The USDJPY pivot point is at 89.80 with a preference to enter long positions at 89.85

Today’s calendar and market movers:

• § United States Retail Sales for February expected at 0.1%
• § United States Michigan Sentiment for March expected at 73.6

Equity Markets:

• US equities closed positive yesterday with the DJIA and the SP500 closing 0.42% and 0.49% respectively.  The European bourses were negative yesterday with the FTSE down -0.41% the DAX and the CAC closing positive at -0.14% and -0.37% respectively.  The NIKKEI and the HSI at the time of writing is 0.81% and -0.28% respectively.

Written by Easy-Forex

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