EU Morning Report - Bank of England and European Central bank rate decisions today both …

Posted by admin as Forex News

Bank of England and European Central bank rate decisions today both expected to remain unchanged!

•  The markets had another choppy session yesterday as the mere thought of going long risk currencies proved unnerving for most ahead of the NFP report on Friday. ADP yesterday came as expected at -20000 job losses for the month of February. ADP is much less sensitive to weather conditions compared to the Non Farm payrolls report which is expected to come in at -90K. ISM Non manufacturing was also out yesterday and beat expectations coming in at 53.00 indicating a solid expansion in the US services sectors. Overall the USD weakened on the back of the new austerity measures announced by Greek Prime minister Papandreou. USDJPY price action yesterday was between 89.00 - 88.30.
•  In Europe the main story was Greek Prime minister George Papandreou announcement of EUR 4.8 bln in spending cuts and tax increases. New measures include reductions in public salaries, hikes in VAT, hikes in taxes on goods such as alcohol and tobacco. Civil unrest is a big issue now for the Greek government and may pose further risks to the economy. Following the announcement Papandreou said that ‘we now justifiably expect EU support” however Angela Merker said that the measures are welcome and should do a lot to improve investor confidence without committing to a bailout package for Greece. EZ PMI came out at 51.8 just below expectations and the EZ retail sales meeting expectations at -0.3% for the month. EURUSD price action yesterday was between 1.3590 - 1.3735.
•  Today we have two Central bank policy decisions by the BoE and the ECB. We saw 2 policy decisions already by the RBA and the BoC. RBA hiked the rates by 0.25bp and BOC followed the decision with hawkish statements. The key focus for the ECB rate decision will likely be on more details in regards to the ECB’s exist strategies. The BoE decision however is likely to be more volatile as the key focus will be on QE and if the BoE will resume its operations in the bond markets.

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.3740 with a preference to enter into short positions at 1.3730
• § The USDJPY pivot point is at 88.75 with a preference to enter long positions at 88.70

 Today’s calendar and market movers:

• § Euro Zone GDP Q4 expected at 0.1%
• § BoE Rate Decision for March expected unchanged at 0.5%
• § ECB Rate Decision for March expected unchanged at 1%

 Equity Markets:

•  US equities closed mixed yesterday with the DJIA and the SP500 closing -0.09% and 0.04% respectively.  The European bourses were positive yesterday with the FTSE up 0.90% the DAX and the CAC closing positive at 0.72% and 0.80% respectively.  The NIKKEI and the HSI at the time of writing is -1.05% and -1.17% respectively.