EU Morning Report - Markets awaiting further deficit cuts of up to $6.5 (Eur4.8 bln) bln in Greece!

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Markets awaiting further deficit cuts of up to $6.5 (Eur4.8 bln) bln in Greece!

•  The session yesterday saw a weakening dollar across the board as no major financial data releases were due and focus was on the GBP and EUR. The DJIA initially gained 54 pts and then immediately gave up some of those gains to close flat. Oil and gold also gained yesterday with Oil hitting $79.69 and XAUUSD touching $1136.50 oz. In other developments we had rhetoric coming from Kansas City Fed president Hoeing saying that zero rates are unsustainable and that lower for longer could cause problems in the future. The 2year US yield traded at the 0.8% support which also helped to keep the USDJPY grounded for most of the session. USDJPY price action yesterday was between 89.36 - 88.54.
•  In Europe the Greek Prime Minister George Papandreou said he will announce further deficit cuts today. The cuts are reported to be as much as $6.5 billion and following the news markets across the board remained elevated on hope of some good news. EU CPI yesterday was 0.9% year on year which beat expectations of 0.7%. On a more technical perspective the record short sellers currently betting against the Euro are likely to be nervous today ahead of Papandreou’s budget cuts. Stops are reported to lay around 1.3690 - 1.3710 and if these levels are hit we can expect significant short covering. EURUSD price action yesterday was between 1.3433 - 1.3653
•  In Canada yesterday we had the monthly policy rate decision which remained unchanged at 0.25%. The rhetoric which followed the decision came across as hawkish as references to ”having flexibility at low rates” were left out. Overall the USDCAD traded lower to 1.0306.
•  Today’s financial calendar will release Germany’s retail sales and PMI services reports both of which are expected to decline. In the US the highlight of the day will be the ADP employment report which is expected to show a loss of 20,000 jobs for February. ISM non manufacturing is also out today with a slight improvement in the index expected.

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.3685 with a preference to enter into short positions at 1.3675
• § The USDJPY pivot point is at 89.25 with a preference to enter short positions at 89.20

 Today’s calendar and market movers:

• § Germany Retail sales for January expected to drop by -0.4%
• § Euro Zone PMI services for January expected to fall to 52
• § United States ADP National Employment for February expected to fall by -20K jobs

 Equity Markets:

•  US equities closed positive yesterday with the DJIA and the SP500 closing 0.02% and 0.23% respectively.  The European bourses were positive yesterday with the FTSE up 1.45 % the DAX and the CAC closing at 0.00% and 1.12% respectively.  The NIKKEI and the HSI at the time of writing is 0.31% and 0.08% respectively.