MORNING BRIEFING: Market expects interest rate hike in the US, degradation of the Irish sovereign note

[RTFX-Trading]

MORNING BRIEFING: Market expects interest rate hike in the US, degradation of the Irish sovereign note

What‘s new?
Euro zone: Degradation of the Irish sovereign note.
United States: Rising bond yields.
United States: Supreme Court suspends the sale of Chrysler to Fiat led group.
IMF: The ECB should consider the possibility of lowering rates.
Germany: Factory orders unchanged in April.
Switzerland: Unemployment rate fell to 3.40% in May.

Today:
08h45 France: Trade balance April, exp -4.5B, previous -4.884B.
12h00 Germany: Industrial production April, exp 0.00%, previous 0.00%.
16h00 United States: IBD Economic optimism index June, previous 48.6.
16h00 United States: Wholesale inventories, exp -0.50%, previous -2.40%.
16h30 United States: Treasury Secretary Geithner speaks.

Overnight Rates and Indices:
EURUSD: 1.3938 – 1.3852.
USDCHF: 1.0953 – 1.0890.
GBPUSD: 1.6097 – 1.5987.
EURJPY: 137.33 – 135.69.
USDJPY: 98.56 – 97.88.
DowJones: 8'764 +0.02%.
NASDAQ: 1’842 -0.38%.
S&P 500: 939 -0.10%.
Nikkei: 9’783 -0.83%.
Gold: $950

Comments:
 
The EURUSD continued to fall yesterday and completed the ‘Head and Shoulders’ (see messages on our forum) configuration. The degradation the Irish Sovereign note by Standard & Poor's for the second time in less than three months has weighed heavily on the euro. The International Monetary Fund (IMF) said that the European Central Bank should consider the possibility of further reducing its refinancing rate and that the recovery measures initiated by the countries of the euro zone are sufficient for now but may not be enough to support the financial system after the crisis.
        
From the US Dollar perspective, it has benefited from the rise of US bond yields that have accelerated after the publication employment statistics for May on Friday. The greenback also benefits from the consolidation of the US labor market in May for the first time in 16 months. According to the trends in the labor market calculated by the Conference Board, which increased to 89.9 in May compared to 89.7 in April.
   
The US Dollar also benefits from market expectations that an increase in official interest rates in the United States is more likely; an overall increase of 50 basis points is expected by the end of the year, an increase in the rate by 0.25 % is expected on 4th November, followed by a further increase of 0.25% on 16th December.

Good Day

Emman Xuereb

RTFX Ltd
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