Currency May Ultimately Weigh

FUNDAMENTAL OUTLOOK at 0800 GMT (EDT +0400) USD After yesterday’s rather uninspiring performance by the heads of government of France and Germany, investor attention will turn to the Swiss government, along with the SNB, to see whether measures will be announced to counter franc appreciation. Although no specific times or measures have been flagged, press reports point to a possible exchange rate floor. Dow Jones wires reported yesterday that the Swiss government may hold a press event today. After yesterday’s Franco-German summit which did not yield any increases to the size of the EFSF or mention Eurobonds as a specific short term solution, there is an added impetus for the Swiss to act and failure do so will weigh on EURCHF. Yesterday Sarkozy and Merkel announced the creation of an ...

The Week Ahead Highlights Risks remain high amid debt and growth concerns Cracks appear in the EU debt deal UK's growth picture not as bleak as expected Asia/Pacific FX - Rising inflation in Oceania and rising intervention risks in Japan Key data and events to watch next week Risks remain high amid debt and growth concerns Uncertainty remained elevated and markets were on edge as debt problems on both sides of the Atlantic dominated headlines. Safe havens such as the JPY, CHF, and gold were beneficiaries amid market jitters. The Swiss franc reached new record highs gaining over 4% this week against the greenback and roughly 3.73% against the euro at the time of writing. In Europe, peripheral yields moved higher as the euphoria over the previous week's EU summit wore ...

The Weekly Bottom Line HIGHLIGHTS OF THE WEEK United States Another week has gone by and U.S. lawmakers have yet to reach a deal to raise the statutory debt ceiling. The U.S. government is just three days away from exhausting its authority to borrow. If there is no progress over the weekend, the U.S. Treasury will have to give further details on a contingency plan for how it would to deal with its funding shortage. As if all of these was not enough bad news, this morning real U.S. GDP came out well below expectations, with an annualized quarterly expansion of 1.3% in the second quarter. Furthermore, first quarter growth was revised down sharply from 1.9% to 0.4%. This is a stark reminder of the weakness of the U.S. economy. Canada With investors moving towards "safe" ...

(Reuters) - There may be a point at which global investors get indigestion from U.S. money printing. A fresh round of U.S. monetary easing may even do more harm than good for long-term investors as another flood of easy money into fast-growing emerging economies risks refueling oil and commodity price inflation, sapping consumption and growth. Prospects for a third round of the Federal Reserve's quantitative easing program (QE3) grew this month after Chairman Ben Bernanke said the central bank was prepared to ease further if economic growth and inflation falter again. Nearly in one in two fund managers surveyed by Bank of America Merrill Lynch this month said QE3 was likely. The temptation for risk-loving investors is to rub their hands with glee. Traditionally risky or high-yielding ...

The Week Ahead Highlights Risk is back from the brink US debt debate hits an impasse The ECB to stick to its hawkish path Sovereign debt concerns far from over Sterling losing its luster Gold looks down and out, but may offer a buying opportunity longer-term Key data and events to watch next week Risk is back from the brink At the end of the prior week many key markets were sitting just above major breakdown levels and the risk was for a severe move lower. But just one week later, risky assets have rebounded and show a potential resumption of trends higher. Is all suddenly well in the world? Far from it in our opinion, and so we view the past week's rebound with a fair dose of skepticism. The sharp rebound in risk appetite was in large part a relief rally as ...

The Weekly Bottom Line HIGHLIGHTS OF THE WEEK United States The austerity measure passed in Greece on Wednesday was crucial for avoiding a default which would have threatened the integrity of the global financial system Greek debt is concentrated in a handful of French and German banks; the subsequent failure of any one of them could affect U.S. banks as well While the current approach to Greece does nothing to fix the country's long-term solvency issues, it does buy time for European financial institutions to shore up their capital positions While the U.S. does not face an imminent fiscal crisis, coming up with a credible plan to tackle its own fiscal imbalances is critical for minimizing the risk of one. Canada Looking back at the first few months of the year, ...

The Week Ahead Highlights Fresh signs of global slowing keep risk down All eyes on Greece, again IEA emergency reserve release - Transitory or permanent influence on crude oil prices? UK data releases evidence a stagnant economic recovery Important technical levels to watch in the week ahead Key data and events to watch next week Fresh signs of global slowing keep risk down Markets received fresh signals this past week that global growth is moderating further, suggesting potential for further declines in risk assets (stocks and commodities) in the weeks ahead. Stocks in the US did not lose much ground, but attempts to rebound were rejected, highlighting our view that sellers remain dominant. Commodities, using the CRB index as the proxy, posted much sharper ...

The Week Ahead Highlights Markets consolidate before The End of the World Greek problems get worse before they get better? The euro hinges on Spain Japan's economy still in a 'very severe' state The Loonie may see weakness ahead Key data and events to watch next week Markets consolidate before The End of the World This past week saw most major asset markets and currencies essentially consolidate around recent lows following the sell-off in the first half of May. Incoming data, however, continues to suggest increasing sluggishness in the major economies. In the US, housing data weakened further, both the Philadelphia and Empire manufacturing indexes declined, industrial production flattened, and the index of leading indicators dropped for the first time in 10 ...

Previous session overview U.S. dollar price action was largely mixed on Tuesday, but the greenback may come under pressure during the North American trade as the rebound in risk appetite gathers pace. As equity futures foreshadow a higher open for the U.S. market, currency traders may diversify away from the dollar. The British Pound managed to maintain the upward trend from earlier this year as the exchange rate bounced back from a low of USD1.6325. European Central Bank board member Ewald Nowotny said Greece may get an extension to pay back the EUR 110B bailout package during a radio interview, but noted that the current indications suggest the government will not be able to refinance itself via the market next year' as the scale of the debt crisis appears to have been ...