EU Morning Report - US Retail Sales disappoint the markets coming in at -1.2%!

Posted by admin as Forex News

US Retail Sales disappoint the markets coming in at -1.2%!

•  Markets on Friday saw volatility pick up across the board with the EURUSD’s trading range over 100 pips. Retail sales on Friday came in weaker than expected for the month at -1.2% however this is not expected to have a great impact on underlying GDP as the report is ex-auto sales. This report spurred a bout of risk aversion and some USD strength pushing the Euro to 1.2045 lows. As the session went on we had the University of Michigan report come out showing a print of 75.5 beating expectations of 74.5. Markets have also shifted their expectations of the next Fed Rate hike to January 2011 from September 2010 given the Euro zone debt crisis. Stocks in the US closed the session in positive territory almost half a percent higher on continued hope that the US will stubbornly continue to grow despite the happenings on the other side of the Atlantic. USDJPY price action was between 91.17 - 91.96.
•  In Europe on Friday rumors circulated that Spain was considering tapping part of the EU’s stabilization fund which caused part of the initial sell off in the pair. The rumors were discarded as unfounded considering the extreme austerity measures that the country is undertaking. Later in the day we had ECB Member Nowotny say that the Central bank will continue to support the EU debt markets until a certain degree of stabilization is seen. Looking ahead the markets are shifting focus to EU CPI readings as the ECB repeatedly highlights price stability as its main objective. Also focus will be given to Ireland’s debt issue tomorrow of 5 year paper for Eur1-1.5 bio. EURUSD price action is between 1.2044 - 1.2208.  
•  In Japan the 2 day policy meeting begins today were new information should be released regarding the latest BoJ lending scheme which is designed to lend to small business finding it difficult to raise funds. Initial estimates are that the scheme will add as much as 3 trillion Yen to the system. Japans Prime Minister Kan went on later in the day saying that Japan risks defaulting on its debt if Japans fiscal difficulties are not tackled. Kan says that by the end of June hbe will present a medium to long term plan on how to reduce Japans deficit

 Currency to watch out for: EURUSD & USDJPY

• § The EURUSD pivot point is at 1.2125 with a preference to enter into Long positions at 1.2135
• § The USDJPY pivot point is at 91.55 with a preference to enter Long positions at 92.10

Today’s calendar and market movers:

• § Eurozone Industrial Production for April expected at 0.5%
• § Australia RBA minutes
• § Japan BoJ Rate Decision expected to remain unchanged at %0.1

 Equity Markets:

•  US equities closed positive yesterday with the S&P500 up by 0.38% and the DJIA up by 0.44%. The European bourses were mixed yesterday with the FTSE up 0.61% the DAX and the CAC closing at -0.14% and 1.11% respectively. The NIKKEI and the HSI at the time of writing is 1.80% and 0.88% respectively.