EU Morning Report- Focus on Sarkozy Merkel meeting
The euro continues to sink against its major counterparts today on growing concerns about the eurozone debt crisis. Versus the greenback, the single currency broke below the 1.27 level falling to a 16-month low at 1.2682 from 1.2812 traded on Friday. Eurozone retail sales fell more than expected and Hungary’s debt rating was downgraded to junk. Against the Japanese yen, the single currency dropped to an 11-year low at 97.50 from 98.85. Focus now turns to a meeting scheduled for today between the German Chancellor Angela Merkel and French President Nicolas Sarkozy to discuss fiscal coordination in the eurozone, ahead of an EU summit on January 30. Investors are concerned about rising borrowing costs in Europe and eyes turn to this week’s debt auctions in Spain and Italy.
The US dollar rose against a basket of currencies on a heightened risk aversion in the market. The Non Farm Payrolls report was released on Friday and surprised investors after it showed an increase to 200K while the market was expecting 150K. Unemployment rate also fell to 8.5% from 8.7% confirming that employment growth in the US accelerated in December. The positive jobs figures added on the view that the world’s biggest economy is recovering and expectations for a third round of quantitative easing started to fade. Versus the Japanese yen, the greenback traded as low as 76.85 from 77.33. Versus the Swiss franc, the greenback jumped to 0.9585 from 0.9505.
The Australian dollar weakened versus the greenback falling to 1.0180 from 1.0274 as investors fear the eurozone debt crisis is hurting global growth. Retail sales in Australia stagnated in November further weighing on the Aussie.
Oil prices fell to 100.84 yesterday dollars a barrel from 102.75. Gold dipped to 1608.48 dollars an ounce from 1631.10 weighed by the stronger dollar. Silver edged lower to 28.60 dollars an ounce from 29.46.
| Outlook | Pivot | Preference1 | Sentiment2 | |
| EURUSD | 1.2765 | SHORT @ 1.2765 | 65% of deals buy EUR | |
| USDJPY | 77.15 | SHORT @ 77.15 | 86% of deals buy USD | |
| GBPUSD | 1.5465 | SHORT @ 1.5465 | 68% of deals buy GBP | |
| AUDUSD | 1.0220 | SHORT @ 1.0220 | 48% of deals buy AUD | |
| GOLD | 1604.00 | SHORT @ 1604.00 | 59% of deals buy GOLD | |
| OIL | 100.50 | SHORT @ 100.50 | 55% of deals buy OIL |
| Calendar | Currency | Time (GMT) | Event | Forecast |
| EUR | 09:30 | Investors Confidence in January | -24.2 | |
| EUR | 11:00 | Eurozone Flash Manufacturing PMI | -0.5% | |
| CAD | 13:30 | Building Permits in November | -3% |
| Equities | EUROPE | US | ASIA3 | ||||||||
| FTSE 100 | 0.45% |  |
S&P 500 | -0.25% | ▼ | NIKKEI | -1.16% | ▼ | |||
| DAX | -0.62% | ▼ | DJIA | -0.45% | ▼ | HIS | -0.63% | ▼ | |||
| CAC | -0.24% | ▼ | NASDAQ | 0.16% |  |
CSI 300 | 3.27% |  |
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3 at the time of writing