Morning Briefing
The Morning Briefing is prepared daily at the start of the European Trading session by RTFX’s trading desk. It presents a roundup of the major news headlines occurring within the global economy that may affect the forex market. This news bulletin also includes a view of our forex calendar for the day, highs and lows achieved in the previous sessions from the forex market, global indices and commodities and brief commentary about the economic headlines.
Morning Briefing for Monday, 07 May 2012 (Updated 09:34:33 CET)Markets to digest election weekend; Risk aversion picks up
MORNING BRIEFING: Markets to digest election weekend; Risk aversion picks up
What’s new:
Asia: Risk on the retreat following the French election result. AUD, NZD falling, JPY rising.
Europe: EUR/USD falls to 3-months low after Hollande won the election, triggering concerns for the future of the Euro zone.
United States: Falling unemployment rate despite a drop in Nonfarm payrolls and risk aversion has kept the US dollar bid.
Forex rates in Asia and Indices:
Low High Change
EUR/USD 1.2955 1.3033 -0.56 %
USD/CHF 0.9215 0.9272 -0.54 %
GBP/USD 1.6115 1.6155 -0.04 %
USD/JPY 79.65 79.98 0.01 %
EUR/CHF 1.2009 1.20148 0.01 %
EUR/JPY 103.24 104.05 0.59 %
Dow Jones 13022.34 13205 -1.27 %
Nasdaq 2637.73 2683.25 -2.46 %
S&P 500 1367.96 1391.51 -1.61 %
Nikkei 225 9109.01 9206.45 -2.78 %
Shanghai 2432.736 2450.732 -0.25 %
Gold spot 1634.5 1643.08 -0.21 %
Oil Future 95.34 98.24 -1.43 %
Comments:
The result of the French election was as the markets expected. Hollande took home 52% of the votes and can now take the office in France as the first social democrat in 17 years. The next step is now whether or not the Socialist party will be able to claim majority in the general elections on the 10 and 17 June. The market response to the new political situation has been very clear: Risky assets taking a big hit. Asian equities are down more than 2% on average, the Aussie, Kiwi and commodities tumble despite a positive surprise in Australian retail sales. The US dollar and the Japanese Yen gained with treasuries as investors are looking for safe haven.
On Friday, the US employment for April showed a falling unemployment rate to 8.1% vs. 8.2% expected, which overall is a positive measure. The worrying element is the fact that the change in nonfarm payrolls came out lower than expected at 115k vs. consensus at 160k. This tells us that the US economy is not able sustain job creation for keeping the economy on a positive growth path and questions on the results of the quantitative easing are picking up. Thursday’s initial claims also came out lower than the monthly trend, which confirms this scenario.
Today the market will digest the news from France and also in Greece, where results still are pending. There are no important macro releases today, but Spanish Industrial Production and Swiss CPI could receive some attention is the figures deviate significantly from expectations.
Technically, EUR/USD remains in a bearish mood and with the gap lower on today’s opening, it is now below the 61.8% Fibonacci retracement in the June 2010 lows to 2011 highs at 1.3044. On Friday the pair closed below its 100-day moving average enforcing the bearish mood. Near term support at 1.2921 and resistance at 1.3040/60-zone.
Have a nice day!
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