Hurts Outlook For Europe

Dukascopy Technical Analysis EUR/USD "With concerns about global growth now weighing on sentiment, the single currency seems to behave like a proper funding currency should do—it rallies against risk-correlated currencies. We suspect that this should remain the case in the near term" - Citigroup (based on Reuters) The pair is attempting to advance further and it is likely to test the 7-month high at 1.3457. EUR/JPY "Over the short term, there appears to be little to jolt markets out of their stupor and if anything, is likely to continue to drift higher according to our short-term quantitative models" - Credit Agricole (based on MarketWatch) A fierce resistance lies ahead of EUR/JPY at 111.57 (intervention high). If EUR/USD fails to advance higher, it will commence a slide back towards ...

Asian stocks dropped for a third day as fears over a Greek default persist ahead of Thursday’s bond swap deadline and the worries over global growth as Australian GDP grew a disappointing 0.4%. The MSCI Asia Pacific Index fell 0.8% at 15:31 in Tokyo. Investors are cautious and seeking safe haven ahead of Thursday’s deadline for the Greek debt-swap deal with private sector bondholders which is essential for ensuring the second bailout loan that will help Greece avoid a default. Although Societe Generale, UniCredit, Assicurazioni Generali and Greece’s six biggest banks confirmed they will take part in the swap, reports suggest that four Greek pension funds refused to take part, fueling worries over the outlook for growth in Europe and demand on exports in Asia. Meanwhile China’s downgrade ...

Weekly Economic and Financial Commentary : 17/02/2012 U.S. Review A Few Disappointments Enter The January Data The tone of U.S. economic releases softened a bit this week, though there is no sign that growth in Q1 is about to hit a brick wall. Advance retail sales for January came in at about half the growth rate the consensus had expected- up 0.4 percent, signaling a U.S. consumer that continues to watch their budgets. U.S. industrial production did not grow at all in January though the manufacturing sector is stronger than the industrial production headline might suggest, since most of the weakness came from utilities and the warmer-than-average weather in January. Is U.S. Weather Skewing the January Data? The latest economic data out of the United States was a bit of a let ...

The Australian dollar jumped against the euro after Standard & Poor’s harmed sentiment about Europe by cutting credit ratings of European countries. The Australian currency managed to erase losses against the US dollar and the Japanese yen despite the resulting pessimism. S&P announced yesterday: We have lowered the long-term ratings on Cyprus, Italy, Portugal, and Spain by two notches; lowered the long-term ratings on Austria, France, Malta, Slovakia, and Slovenia, by one notch; and affirmed the long-term ratings on Belgium, Estonia, Finland, Germany, Ireland, Luxembourg, and the Netherlands. The rating agency explained its decision by the following reasons: Today’s rating actions are primarily driven by our assessment that the policy initiatives that have been taken by ...

The argument for the Fed to begin another round of quantitative easing (QE3) is beginning to form. Economic News USD - Why the Fed will Start QE3 The release of the Fed's meeting minutes from their previous FOMC meeting on November 2nd show that “A few members indicated that they believed the economic outlook might warrant additional policy accommodation,” The meeting minutes also noted that any announcement would be more effective in a future communications initiative. Past comments from Fed Chairman Ben Bernanke have been supportive of additional monetary policy moves. On September 29th in Cleveland, Ohio, Bernanke said, “If inflation itself falls too low or inflation expectations fall too low, that would be something we'd have to respond to because we don't want deflation.” Given ...

European shares hit a five-week low in choppy trade on Thursday as rising sovereign euro zone bond yields raised concerns the currency block's debt crisis could spread to some of the larger and stronger economies. Spain's borrowing costs jumped to 14-year peaks at an auction of 10-year debt, while its 10-year bond yield premium over German benchmarks rose to its highest in the euro's history. In France also, the cost of borrowing over two and four years jumped by around half a percentage point. Banking shares, which have slumped more than 35 percent so far this year due to their huge exposure to euro zone sovereign debt, were among the top decliners. The sector index .SX7P fell 2.6 percent, led by KBC Groep (KBC.BR), down 11.3 percent, and Lloyds (LLOY.L), down 5.2 percent. At 1230 GMT, ...

The Australian dollar pared its yesterday’s decline, but the outlook for the currency is still rather pessimistic. The Australian currency extended its yesterday’s fall against the euro. France and Spain are going to auction debt today. Yield on the Eurozone bonds is the center of attention this week and market participants consider it as an indicator of the situation in Europe. Previously, soaring borrowing costs were negative for market sentiment and it’s very likely that today’s auction will hurt traders’ mood even more. Yet, a positive outcome of the auction may again trigger optimistic mood and risk appetite. The pessimistic outlook makes investors to expect an interest rate cut by the Australian central bank. The Reserve Bank of Australia will decrease the interest rates by 157 ...

The Japanese yen rose today as the escalating sovereign-debt crisis in Europe resulted in more pessimistic outlook for the region’s economic growth. The European Commission estimated that the economic growth in the European Union will almost stall next year. Gross domestic product of the EU and the Eurozone will grow only 0.5 percent through 2012, according to the EC forecast. The main reason for such downbeat outlook, as one may expect, is the credit crisis in the region. The EC said in the forecast: Continued uncertainty in financial markets relating to the sustainability of public finances in some euro area economies as well as fears of contagion affecting the core euro area countries will contribute to subdued growth. The global economy’s weakness, including of some of the most ...

Expert commentary The reform of rating agencies is of course desirable, but difficult" - Philippe Raimbourg In light of the recent massive sovereign countries' and banks' rating downgrades, Dukascopy TV has interviewed and asked opinions on the role and importance of rating agencies of Philippe Raimbourg, Professor of Finance at University of Paris Panthèon Sorbonne. Read more: FULL REPORT - Market expectations Fundamental market overview EUR German Ifo (Information and Forschung) Business Climate has dropped down to a 16-month low value amid the increasing concerns regarding the ability of Eurozone countries to find a mutually satisfying agreement on the solution to currently occurring debt crisis. Ifo Institute for Economic Research reported a level of 106.4, previous data showed ...