EU Morning Report – Markets Consolidate in tight ranges
Tuesday, December 15th, 2009Abu Dhabi bails out Dubai World and markets consolidate in tight ranges looking for new direction!
- Markets yesterday were trading in tight ranges with no real direction, the EURUSD had a range of 50 pips between 1.4660 – 1.4610 and the GBPUSD had a range of 60 pips trading between 1.6330 – 1.6270. The highlight of the day was Abu Dhabi bailing out Dubai World with $10bln on the last day before a default could have been official. The drama ended and the financial community was reassured that big brother Abu Dhabi is behind the UAE corporations and the equity markets across the globe rallied on this relief.
- There were no economic data out of the US yesterday and thus the tight ranges. The early gains in the USD and in the Equity markets slowly faded away as it seems the market is not willing to take undue risk ahead of the yearend where most trading books will be closed and squared off for yearend financial reporting purposes. The US 2y Treasury yields increased to 0.8548%, from 0.7900% the previous day, indicating also that the market is slowly positioning or ”pricing in” a sooner than anticipated rate hike. With the USDJPY quite predictably tracking the yields it traded back to 89.00 from lows of 88.30.
- In the Euro Zone yesterday we had Industrial production data which measures the inflation adjusted output produced by manufacturers, mines and utilities. The data was weaker than expected at 0.3% as opposed to a previous month of 1.2%. We also had unemployment data for the EU yesterday which showed that unemployment increased by another 0.5% for the last quarter. The EURO was pressured across the board. It was down against the EURGBP the EURUSD and the EURJPY. The Euro is also under pressure as of late due to the current fiscal positions of a number of its member’s like Greece Spain and Ireland not to mention its Eastern European trading partners which are also struggling to dig themselves out of a recession and their fiscal disasters.
- Today we have a diversified set of economic reports. We start of the day with focus on the British pound and the current inflation data CPI mm and CPI yy expected to print 0.2% and 1.8% respectively. Remember that when trading the GBP as of late focus is turned to the BoE inflation report and any inflation data out of the UK will have significance. ZEW current conditions and investor sentiment data will be released in Germany today. NY FED Manufacturing, Producer Prices and Industrial output all out of the US with data expected to beat expectations.
Currency to watch out for:  EURUSD & USDJPY
- The EURUSD pivot point is at 1.4585 with a preference to enter into long positions at 1.4595
- The USDJPY pivot point is at 88.35 with a preference to enter into long positions at 88.45
Today’s calendar and market movers:
- United Kingdom Consumer Price Index mm is out today with an increase of 0.2% expected and a previous reading of 0.2%.
- EUROZONE ZEW Investor Sentiment for December is expected to fall by -61 with a previous print of -65.6
- US NY FED Manufacturing for December forecasted to come out 24 with a previous reading of 23.51
Now onto Stocks:
- Equity markets in the US closed the session in the possitive0.28% for the DJIA, on the back of the Dubai World bail out. European equity markets closed the session in positive terrain overall with the DAX 0.80% the CAC 0.70% and the FTSE 1.02 %. And in the Asian equity markets we see the NIKEI225 trading at -0.22% % and the HSI at -1.05% at the time of writing
Written by Easy-Forex
