EU Morning Report - The outlook remains unclear

The Bank of England and the European Central Bank kept all interest rates unchanged yesterday, in line with expectations. During his latest press conference, Mario Draghi (President of the ECB) gave no hints that any further stimulus measures are to be expected, despite the recent weakness in Eurozone data. Draghi emphasised that monetary policy had already been accommodating but he, however, maintained a downbeat and unclear outlook on his economy. Greece remains top of an overloaded agenda, with finance ministers due to hold further EcoFinance meetings on Monday, rumours remain in the air of a Greek exit. Across the Atlantic Ocean, President Barack Obama has the US fiscal cliff to keep him occupied for the coming months. Clarity around the globe may give rise to a relief rally that can not come soon enough.

§ The euro (EUR) ended another day slightly weaker against the US dollar (USD) with a 0.12% daily fall. A range has now been established between 1.2775 and 1.2725, we must be careful of a break out in either direction.

§ The US dollar (USD) versus the Japanese yen (JPY) continues to be interesting battle, as the US fiscal cliff weighs down on the dollar strength. The JPY has now won 2 days in a row as the pair moved from 79.93 to 79.49 with a 0.62% daily decline.

§ Gold (XAU) found some power late on in the US trading session yesterday to hit a high of 1734.80; the next target of 1742 could now be challenged.

§ The UK 100 (FTS) continued to slump for another day from 5797 to 5741.5. We will wait to see today if UK market can avoid a weekly loss. 

§ The US 500 (SPI) experienced further declines yesterday falling from 1393.60 to 1376.60, a 1.20% decline.

Stay in tune throughout the day with foreign exchange bullets!