MORNING BRIEFING:  EUR/USD pushes further ahead, and the Aussie shines.

What’s new:
Euro: Eyeing the 1.400 level
United States: Weaker than expected ADP national employment report weighs on investor sentiment
AUD: Aussie performs well on the back of a better than expected Employment report.

Today:



Rates in Asia and Indices:
EURUSD: 1.3989 - 1.3898.
USDCHF: 0.9629 – 0.9555.
GBPUSD: 1.5925- 1.5847.
EURJPY: 115.68 – 115.19.
USDJPY: 83.03 – 82.34.
DowJones: 10’967.65 +0.21%
NASDAQ:  2’380.66 -0.80%
S & P 500: 1’159.97 -0.07%
Nikkei: 9’684.81 -0.07%
Shanghai: 2'655.6577 +1.72%
Gold: $ 1'357.8    
Crude Oil: $ 83.65

Comments:

EUR/USD has traded in the range of 1.3898 -1.3990 earlier this morning, this bullishness comes on the back of USD weakness. EUR/USD has managed to go beyond the 61.8% retracement from the Dec ’09 highs to Jun’10 lows, and even beyond the 200-wk moving average at around 1.3920.

Despite the sovereign issues, and yesterday’s credit rating downgrade for Ireland, the Euro seems immune and the pair has managed to secure the 1.3900 level during Asian trading, shooting another 50 to 60 pips in the hour prior to European open.

US Dollar weakness still present today, as the prospects of the Fed’s easing might be seen as early as next month, at least that is what the market seems to think – especially after yesterday’s disappointing ADP National employment report from the US, which came out at -39k as opposed to the expected +20k.

Two major events are on the Economic calendar today with the ECB, and BoE due for an interest rate decision today. Analysts are not expecting any major changes today from the ECB, and neither from the BoE, although there is rising expectation for the prospect of further QE for the UK economy, but probably not today.

The Aussie seems to be the star currency today, as it shot up after a surprisingly strong employment report raised expectations for RBA rate hikes again. Australia is not in easing mode like other major economies are and does not have the fiscal problems other countries have – hence support is seen to remain.


Good day,


Rudolf Muscat
Trading desk

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