A media frenzy followed the report of the death of Osama bin Laden and traders supported the dollar in overnight trading. Silver prices slid 10% before the commodity recovered after futures margins were increased. UK and many European markets are closed today for banking holidays which will leave the FX markets with low levels of liquidity and exaggerate some of the price moves that accompany illiquid trading conditions.
Spot silver sold off sharply following new margin requirements for futures contracts by the CME Group. The price declined to $42.50 and comes close to the short term trend line off of the January low which comes in this week at $41.20. Silver traders may be able to buy the commodity on a rebound as the fundamentals supporting silver prices (rising demand for the commodity and global inflationary pressures) have not changed. Further support is found at the $38 level.
Today’s Market Events:
EUR – Final Manufacturing PMI – 08:00 GMT
Expectations: 57.7. Previous: 57.7.
An uptick in manufacturing data will support the euro as any increase in euro zone economic activity will add more influence for EU inflation hawks. EUR/USD support come in today at 1.4755 followed by 1.4650. Resistance is found at 1.4880 and the 2009 high of 1.5140.
GBP – BOE Gov King Speaks – 13:00 GMT
Governor Mervyn King is set to speak in Brussels today. Should he provide any hint of future British monetary policy the pound should react accordingly. The EUR/GBP is encroaching on the current rising trend line off of the February 18th low which comes in today at 0.8830. A breach of this level and the pair could fall to the support at 0.8715.
USD – ISM Manufacturing PMI – 14:00 GMT
Expectations: 59.9. Previous: 61.2.
Recent positive US data releases have fed into USD selling. However, with the announcement of the death of Osama bin Laden, US traders may be compelled to buy dollars given the patriotic sentiment that often follows such news events.
