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Bullish Bias RemainsTitle:
Fitch Fires Another Round
Forex News and Events:
Fitch downgraded Japan by two notches yesterday afternoon from AA to A+ with outlook negative. The agency justified the credit rating cuts by saying that the Japanese government isn’t reactive enough in tackling its “high and rising public debt ratios”. The move came in a few hours after the OECD urged Japan to prioritize the implementation of a fiscal consolidation plan, as debt-to-GDP ratio exceeds 200 percent, and budget deficits are forecast at 10 percent of GDP for the current year. PM Yoshihiko Noda has staked his political career on a law to increase sales tax to 10% with the goal of offsetting rising social security costs mainly due to the fast ageing of the population. But the opposition that controls the upper house is refusing to negotiate and is ...
Title:
The Endgame of the Greek Crisis
Forex News and Events:
It has taken two-and-a-half years, and nearly USD 300bn of IMF/EU funds for markets to finally weigh in a more probable than not exit of the debt-laden country. Greece’s EMU exit is imminent for the second time in the last six months. Surprisingly though, the trigger for the recent gloomy expectations for Greece was not exclusively of an economic nature but also politics. During May 6 elections, the Greeks expressed their unwillingness to abide by the agreed-upon austerity measures. It wouldn’t have been a very dangerous position had Greece been solvent, but regardless of EU officials’ reassurance of continued help for Greece throughout the process, the country would run out of funds for the next installments due end of June and early July. In addition to markets ...
Title:
Dukascopy Morning Forex Overview : 22/05/2012
Fundamental Analysis
EUR
"Inevitably there is going to be an element of bargain hunting as investors look to top up their holdings on the basis of slightly lower prices"
- Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers
European stocks edged higher on Monday on China’s pledge to boost growth.
USD
"Equity prices have gotten oversold"
- Mark Luschini, chief investment strategist for Janney Montgomery Scott LLC
U.S. equity market edged higher on Monday on China stimulus hopes and after German and French officials said they would cooperate to keep Greece in the monetary union.
GBP
"Obviously, as the euro depreciates, the U.K. gets slightly more expensive"
- Miles Shipside, Rightmove commercial director
U.K. national house prices stagnated in March, announced the ...
Title:
Pessimism is to infiltrate after a vulnerable pullback
Markets rebounded slightly with the start of week on a pullback that is expected to be short lived among the mounting concerns over Greece exit, where no one is certain over the outcome of such an event if happened.
The negativity should continue to dampen risk appetite; where the EUR/USD has started to pare earlier gains trading at 1.2745 after kicking off the session at 1.2762, where it printed a high at 1.2812 previous low and key short term resistance. Stochastic has completed a bearish crossover hinting we may see another downside attempt to resume the bearish trend towards 1.2625 lows.
The GBP/USD is fluctuating around 1.5800, also attempting to regain the bearish momentum, eying another test of 1.5730 recent low. The bearish bias is expected to remain evident so long as 1.5840 ...
Title:
Safe-Haven Dollar
Forex News and Events:
Friday’s trading session was mostly uneventful with all the focus shifted to Facebook’s IPO. Many markets that had been freefalling these last two weeks caught a breather, with gold, silver, and the EUR gaining 1.12%, 2.57% and 0.63% respectively against the USD. The reversal has been attributed to a weak Philly Fed reading on economic activity in a sign that the world’s reserve currency is riskier than panicked markets are pricing. The weak number raised speculation over a new round of interventions from the part of the Fed in order to boost its economy. WTI however, was not able to profit from this reversal as it dropped to a six-month low before closing at 91.33. A 22-year high in inventory levels for the US could explain the decoupling of oil from the rest of ...
Title:
Majors climb to session highs against greenback
With the lack of market thrillers, risky assets rebound on a normal pullback after the recent savage selloff looking with an eye of hope towards the world’s leaders meeting (G8) today.
Markets woke up on sharp selloff with the start of the trading session, where majors printed new lows against the greenback before rebounding. The EUR/USD reached 1.2640 just above 2012 low at 1.2621, currently baring earlier losses trading around 1.2713. Stochastic has provided an early sign of recovery in the form of a bullish divergence and currently regaining the bullish momentum. However the upside remains limited as markets jitters are far from over. Thus 1.2660 should form an intraday ceiling today, as trading ranges will get thinner approaching the weekend.
The British pounds rebounded sharply ...
Title:
Downgrades Day
Forex News and Events:
In a race for downgrades, rating agencies took action targeting the two most burdened countries in the EMU. Moody’s confirmed today a rumor about the downgrade of 16 Spanish banks after having downgraded four Spanish regions, which added more pressure to the the Spanish economy. The increase in risk was reflected by 4-year Spanish Bonos yields, higher at 5.106% against a previous 4.319%. Fitch took over the Greek front by downgrading the country to CCC, adding that all EU countries would be on “Rating Watch Negative” if no pro-bailout government were formed following the elections on June 17. What’s more, while Greek banks are struggling for liquidity from EUR 700mn withdrawals since the elections and Greek central bank governor Provopoulos expecting EUR 100mn more, ...
Title:
Dukascopy Morning Forex Overview : 05/18/2012
Fundamental Analysis
EUR
"Spain, once again, is where the confidence game is played"
- Sebastian Paris Horvitz, strategist at HSBC Private Bank Suisse
Spain sold the maximum targeted amount of debt, 2.5 billion euros, during yesterday’s auction with spiking borrowing costs. The interest rate of three-year bonds rose to 4.373% from April’s figure of 2.89% while interest rate of five-year bonds surged to 5.106% from 3.374 in March.
USD
"What we’re seeing in foreign-exchange markets is strong demand for the U.S. dollar"
- Steven Saywell, head of foreign-exchange strategy for Europe at BNP Paribas SA
Latest US initial unemployment claim data was released yesterday – 370 000 Americans demanded their jobless benefits last week versus a 368 000 consensus forecast. The Labor Department revised ...
Title:
Greece + Spain
Majors resumed the bearish tone against the greenback after a slight recovery with the start of the trading session, where the U.S dollar headed to new highs and continues to bag meaty gains against its major counterparts. The overall scene is clearly derived by Greek jitters, while a care-taker government leads the country until June’s fresh elections. It seems that markets have already started the pricing process of a Greece exit; if that is true, the selloff we have seen is just the beginning.
Spain weighed on markets as well, the country dipped technicaly into recession as the economy contracted by 0.3% in the first quarter which is the second consecutive contraction. while Moody`s rating agency plans an immenent yp to 21 Spanish banks downgrades according to Spanish newspaper ...
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