EU Morning report – Markets consolidate their losses on thin markets!
Tuesday, June 1st, 2010Markets consolidate their losses on thin markets!
- Markets in the US and the UK were enjoying a public holiday yesterday and trading was thin throughout the day. The big boys who like to make their opinions heard during the liquid London/New York overlap were nowhere to be seen and a general USD strength was seen as US portfolio managers were seen balancing their portfolios for month end reporting purposes. Despite tensions in North Korea, eastern Mediterranean and Spain’s ratings cut risk assets in general failed to experience any sustained sell off indicating that much of the world’s negative sentiment and expectations are clearly priced in to all assets. Fed Chairman Bernanke’s speech yesterday on ”Policy response in Korea and other Emerging Market Economies’ failed to discus monetary policy and Philadelphia Fed Plosser said that safe haven flows were responsible for the USDs recent strength. Markets are eagerly awaiting Non Farm Payrolls on Friday and will be looking at ADP employment report tomorrow for clues on Fridays NFP. USDJPY price action yesterday was between 90.87 – 91.60.
- In Europe yesterday we saw the markets coming to terms with Fitch’s downgrade on Spain’s debt EU equity markets closed mixed as extreme negative sentiment is priced in most risk assets and the market now is consolidating its loses. However as the Asian session came in we saw the EURUSD and the EURJPY sell off on the back of Germanys President Horst Kohler’s resignation. The risk aversion is because of fears of political instability in Germany in a time were unity and leadership is expected from Germany and the European Union in general.
- In Australia overnight we saw the RBA keep interest rates unchanged at 4.5%. The latest RBA statements reiterated that the bank is looking to bring interest rates above ”emergency levels” which the markets believe this has been achieved. The inflation target for the RBA is 2-3%. In Canada we have the BoC rate decision today as well and the market is expecting a 25bp hike as the economy is growing at a faster pace than previously expected.
Currency to watch out for: EURUSD & USDJPY
- § The EURUSD pivot point is at 1.2240 with a preference to enter into Long positions at 1.2250
- § The USDJPY pivot point is at 90.65 with a preference to enter Long positions at 90.70
Today’s calendar and market movers:
- § Germany Retail Sales for the month expected to grow by 0.9%
- § EZ PMI Manufacturing for May expected at 55.9
- § EZ Unemployment Rate for April expected at 10.1%
- § Canada BoC rate decision expected at 0.5%
Equity Markets:
- US equities were closed yesterday due to public holiday. The European bourses were mixed yesterday with the FTSE closed the DAX and the CAC closing at -0.21% and 0.31%. The NIKKEI and the HSI at the time of writing is -0.58% and -0.66% respectively.
Written by Easy-Forex
