EU Morning Report – Rate Hikes not expected until late 2011!
Friday, July 16th, 2010Rate Hikes not expected until late 2011!
- The USD weakened across the board yesterday as risk appetite picked up in Europe and economic data continued to be weak in the US. Philly Fed manufacturing failed to meet expectations as well as the Empire state manufacturing survey. Disappointing economic data out of the US is causing interest rate hike expectations to shift to late 2011 and encourages investors to sell USD and buy higher yielding assets such as stocks or risk correlated currencies. A tier one bank released its earnings results yesterday which managed to beat expectations and added to the global risk appetite theme that took hold. The price action in the EURUSD yesterday was phenomenal; as the pair rallied from 1.2705 to 1.2937. Investors shunned fears of Greek defaults as well as reassessed US rate hike expectations, the EUR also benefited from large speculative trades in the EURAUD pair which is thought to have based at 1.4327.
- There was little economic news from the Euro zone yesterday despite the single currency’s impressive rally. The Euro received its boost from Q2 earnings, from fading EZ debt crisis and from weaker US economic data. Large option structures are said to be placed at 1.3000 with the market expecting a test of these levels with fierce supply coming in. EURJPY price action yesterday was between 113.40 and 112.25.
Currency to watch out for: EURUSD & USDJPY
- The EURUSD pivot point is at 1.2830 with a preference to enter into Long positions at 1.284
- The USDJPY pivot point is at 87.40 with a preference to enter Short positions at 87.35
Today’s calendar and market movers:
- EUR Trade Balance for May expected to fall to 0.8Bn from its prior 1.6Bn surplus.
- US Core Consumer Price Index m/m expected to remain at  0.1%
- Preliminary Consumer Sentiment expected to fall to 74.2
Equity Markets:
- US equities closed yesterday with the S&P500 at 0.00% and the DJIA closed at -0.07%. The European bourses were negative yesterday with the FTSE down -0.80% the DAX and the CAC closing at -0.97% and -1.41% respectively. The NIKKEI and the HSI at the time of writing is -2.86% and -0.07% respectively.
Written by Easy-Forex
