{"id":1019,"date":"2012-05-18T07:00:00","date_gmt":"2012-05-18T07:00:00","guid":{"rendered":"http:\/\/starthostunlimiteddmffassi-ss.stackstaging.com\/bondworld.ch\/home\/sites\/20b\/7\/760c69a11c\/public_html\/investmentworld.ch\/index.php\/2012\/05\/18\/forex-markets-the-euro-has-virtually-reached-our-downside-targets\/"},"modified":"2012-05-18T07:00:00","modified_gmt":"2012-05-18T07:00:00","slug":"forex-markets-the-euro-has-virtually-reached-our-downside-targets","status":"publish","type":"post","link":"https:\/\/www.investmentworld.eu\/ch\/forex-markets-the-euro-has-virtually-reached-our-downside-targets\/","title":{"rendered":"Forex markets: The euro has virtually reached our downside targets"},"content":{"rendered":"<p style=\"text-align: justify;\"><span lang=\"EN-GB\">The failed attempt         to form a new government in         Greece has compressed the euro to well below EUR\/USD 1.30.<\/span><span lang=\"EN-GB\">..<\/span><strong><span lang=\"EN-GB\"> <\/span><\/strong><span lang=\"EN-GB\"> <\/span><span lang=\"en-GB\"> <\/span><\/p>\n<p>  <!--more-->  <\/p>\n<ul> <\/ul>\n<hr \/>\n<p> <span style=\"font-family: arial,helvetica,sans-serif;\"><span style=\"font-size: 10pt;\"> Sign up for our free newsletter to receive weekly news from BONDWorld<br \/><a href=\"index.php?option=com_acymailing&#038;view=user&#038;Itemid=107\"><strong>Click  here to register for your free copy<\/strong><\/a><\/span> <span style=\"font-size: 10pt;\"><a href=\"index.php?option=com_acymailing&#038;view=user&#038;Itemid=1023\"><strong> <\/strong><\/a><\/span><\/span>  <\/p>\n<hr \/>\n<p style=\"text-align: justify;\"><span style=\"font-family: arial,helvetica,sans-serif;\"><span style=\"font-size: 10pt;\"><strong>For professional investors and advisers only<\/strong><\/span><\/span><\/p>\n<hr \/>\n<div style=\"text-align: justify;\">\n<p class=\"MsoNormal\" style=\"text-align: justify;\"><span lang=\"EN-GB\">For         the time being,         we confirm our short-term downside target of 1.25, although         fears of a Greece         potentially exiting EMU could hold further downside. We have not         revised         sterling upwards, as the Inflation Report was unequivocally         dovish and the BoE         has singled out the euro are crisis as the main downside risk to         UK growth.<\/span><\/p>\n<p class=\"MsoNormal\" style=\"text-align: justify;\"><span lang=\"EN-GB\"><strong>EUR \u2013<\/strong> The euro has         virtually reached our         downside targets, finally dropping below EUR\/USD 1.3000: it has         broken through         the first technical target at 1.2827 and has almost reached the         second         (1.2624). This all happened this week, on the failed attempt to         form a         government in Greece. Now new elections have been called on 17         June, and the         markets are starting to fear that Greece could exit EMU. <\/span>The       G8 summit       will also take on the Greek crisis. <span lang=\"EN-GB\">If no encouraging developments emerge, the         euro risks weakening further:         downside in the EUR\/USD 1.25 area, a level confirmed as our         central 1m         projection. However, in light of the latest developments on the         Greek front,         increased risk of Greece actually exiting EMU has heightened the         risk of a deeper         decline of the euro, to below 1.25. It is no easy task to         quantify the downside         tied to such an event, as there are no historical precedents.         However, an         initial hypothesis could be a depreciation into the 1.25-1.18         range. This is         because on occasion of the \u201cfirst\u201d Greek crisis in the opening         months of 2010,         the exchange rate plunged from 1.35 to 1.18 (punctual low on 7         June 2010:         1.1877) in less than two months, between April and June.         Considering that the starting         point of the recent downswing is more or less in line, we do not         think it         unreasonable to expect a similar movement. As regards next week,         PMI, IFO and         confidence indices will be released, all referred to May. Should         the data         surprise positively (although expectations are for <span> <\/span>the contrary) the euro\u2019s         current slide could         temporarily stop, barring unfavourable developments on the         crisis.<\/span><\/p>\n<p class=\"MsoNormal\" style=\"text-align: justify;\"><span lang=\"EN-GB\"><strong>GBP<\/strong> \u2013 We have not         revised upwards our         projections for the pound as the Inflation Report revised         downwards the UK         economy\u2019s growth projections, singling out the euro area crisis         as the main         downside risk. In his opening remarks, Governor Mervyn King let         on that the BoE         still hasn\u2019t definitively closed the door on further         quantitative easing. As a         result, and given the decline of the EUR\/USD, sterling corrected         sharply,         dropping from GBP\/USD 1.61 to 1.56. Therefore, we have confirmed         our 1m-3m         projections, which allow for the possibility of a foray in the         GBP\/USD         1.55-1.50 range, mostly due in our view to (1) a drop of the         euro below <\/span><\/p>\n<p class=\"MsoNormal\" style=\"text-align: justify;\"><span lang=\"EN-GB\"><strong>EUR\/USD<\/strong> 1.25,         and\/or (2) the announcement of a         further expansion of the APF (next BoE meeting on 6-7 June).         Next week, in the         meantime, there may be room for a further weakening in the event         of poor data         releases (which include inflation, retail sales, the CBI survey         of the industrial         sector, and the second estimate of Q1 GDP) and BoE minutes         (Wednesday)         revealing a serious split on the APF.<\/span><\/p>\n<p> <span lang=\"EN-GB\"><strong>JPY <\/strong>\u2013 The         yen strengthened from USD\/JPY 80 to 79 on mounting risk aversion         tied to the         Greek crisis. If sentiment does not improve, the exchange rate         could attempt to         reach USD\/JPY 78. <\/span>However, on Wednesday the BoJ will       meet, and is ready       to act to contain any further thrusts below USD\/JPY 80.<\/div>\n<p> <\/p>\n<div style=\"text-align: justify;\"><\/div>\n<p style=\"text-align: justify;\"><span style=\"font-family: arial,helvetica,sans-serif;\"><strong> <\/strong><\/span><\/p>\n<hr \/>\n<p> <span style=\"font-family: arial,helvetica,sans-serif;\"><strong> <\/strong><\/span> <\/p>\n<p style=\"text-align: justify;\"><strong><span style=\"font-family: arial,helvetica,sans-serif;\">Appendix<br \/>An<\/span>alyst Certification<\/strong><br \/>The financial analysts who prepared this report, and whose names and roles appear on the first page, certify that: (1) The views expressed on companies mentioned herein accurately reflect independent, fair and balanced personal views; (2) No direct or indirect compensation has been or will be received in exchange for any views expressed. Specific disclosures: The analysts who prepared this report do not receive bonuses, salaries, or any other form of compensation that is based upon specific investment banking transactions.<\/p>\n<p><strong>Important Disclosures<\/strong><br \/>This research has been prepared by Intesa Sanpaolo S.p.A. and distributed by Banca IMI S.p.A. Milan, Banca IMI SpA-London Branch (a member of the London Stock Exchange) and Banca IMI Securities Corp (a member of the NYSE and NASD). Intesa Sanpaolo S.p.A. accepts full responsibility for the contents of this report. Please also note that Intesa Sanpaolo S.p.A. reserves the right to issue this document to its own clients. Banca IMI S.p.A. and Intesa Sanpaolo S.p.A. are both part of the Gruppo Intesa Sanpaolo. Intesa Sanpaolo S.p.A. and Banca IMI S.p.A. are both authorised by the Banca d&#8217;Italia, are both regulated by the Financial Services Authority in the conduct of designated investment business in the UK and by the SEC for the conduct of US business.<br \/>Opinions and estimates in this research are as at the date of this material and are subject to change without notice to the recipient. Information and opinions have been obtained from sources believed to be reliable, but no representation or warranty is made as to their accuracy or correctness. Past performance is not a guarantee of future results. The investments and strategies discussed in this research may not be suitable for all investors. If you are in any doubt you should consult your investment advisor. <br \/>This report has been prepared solely for information purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any financial products. It should not be regarded as a substitute for the exercise of the recipient\u2019s own judgement.<br \/>No Intesa Sanpaolo S.p.A. or Banca IMI S.p.A. entities accept any liability whatsoever for any direct, consequential or indirect loss arising from any use of material contained in this report. <br \/>This document may only be reproduced or published together with the name of Intesa Sanpaolo S.p.A. and Banca IMI S.p.A.. Intesa Sanpaolo S.p.A. and Banca IMI S.p.A. have in place a Joint Conflicts Management Policy for managing effectively the conflicts of interest which might affect the impartiality of all investment research which is held out, or where it is reasonable for the user to rely on the research, as being an impartial assessment of the value or prospects of its subject matter. A copy of this Policy is available to the recipient of this research upon making a written request to the Compliance Officer, Intesa Sanpaolo S.p.A., 90 Queen Street, London EC4N 1SA.<br \/>Intesa Sanpaolo S.p.A. has formalised a set of principles and procedures for dealing with conflicts of interest (\u201cResearch Policy\u201d). The Research Policy is clearly explained in the relevant section of Banca IMI\u2019s web site (www.bancaimi.com).<br \/>Member companies of the Intesa Sanpaolo Group, or their directors and\/or representatives and\/or employees and\/or members of their households, may have a long or short position in any securities mentioned at any time, and may make a purchase and\/or sale, or offer to make a purchase and\/or sale, of any of the securities from time to time in the open market or otherwise. Intesa Sanpaolo S.p.A. issues and circulates research to Qualified Institutional Investors in the USA only through Banca IMI Securities Corp., 245 Park Avenue, 35th floor, 10167 New York, NY,USA, Tel: (1) 212 326 1230. Residents in Italy: This document is intended for distribution only to professional investors as defined in art.31, Consob Regulation no. 11522 of 1.07.1998 either as a printed document and\/or in electronic form. Person and residents in the UK: This document is not for distribution in the United Kingdom to persons who would be defined as private customers under rules of the FSA.<br \/>US persons: This document is intended for distribution in the United States only to Qualified Institutional Investors as defined in Rule 144a of the Securities Act of 1933. US Customers wishing to effect a transaction should do so only by contacting a representative at Banca IMI Securities Corp. in the US (see contact details above). <br \/><strong><br \/>Valuation Methodology<\/strong><br \/>Trading Ideas are based on the market\u2019s expectations, investors\u2019 positioning and technical, quantitative or qualitative aspects. They take into account the key macro and market events and to what extent they have already been discounted in yields and\/or market spreads. They are also based on events which are expected to affect the market trend in terms of yields and\/or spreads in the short-medium term. The Trading Ideas may refer to both cash and derivative instruments and indicate a precise target or yield range or a yield spread between different market curves or different maturities on the same curve. The relative valuations may be in terms of yield, asset swap spreads or benchmark spreads.<br \/><strong><br \/>Coverage Policy And Frequency Of Research Reports<\/strong><br \/>Intesa Sanpaolo S.p.A. trading ideas are made in both a very short time horizon (the current day or subsequent days) or in a horizon ranging from one week to three months, in conjunction with any exceptional event that affects the issuer\u2019s operations. In the case of a short note, we advise investors to refer to the most recent report published by Intesa Sanpaolo S.p.A\u2019s Research Department for a full analysis of valuation methodology, earnings assumptions and risks. Research is available on IMI\u2019s web site (www.bancaimi.com) or by contacting your sales representative.<\/p>\n<p>Source: BONDWorld &#8211; Intesa Sanpaolo \u2013 Research Department<\/p>\n<p style=\"position: absolute; left: -10000px; top: 0px; width: 1px; height: 1px; overflow: hidden;\" id=\"_mcePaste\">Normal 0 14       MicrosoftInternetExplorer4<\/p>\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The failed attempt to form a new government in Greece has compressed the euro to well below EUR\/USD 1.30&#8230;<\/p>\n","protected":false},"author":2,"featured_media":3462,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"telegram_tosend":false,"telegram_tosend_message":"","telegram_tosend_target":0,"footnotes":"","_wpscp_schedule_draft_date":"","_wpscp_schedule_republish_date":"","_wpscppro_advance_schedule":false,"_wpscppro_advance_schedule_date":"","_wpscppro_dont_share_socialmedia":false,"_wpscppro_custom_social_share_image":0,"_facebook_share_type":"","_twitter_share_type":"","_linkedin_share_type":"","_pinterest_share_type":"","_linkedin_share_type_page":"","_instagram_share_type":"","_medium_share_type":"","_threads_share_type":"","_google_business_share_type":"","_selected_social_profile":[],"_wpsp_enable_custom_social_template":false,"_wpsp_social_scheduling":{"enabled":false,"datetime":null,"platforms":[],"status":"template_only","dateOption":"today","timeOption":"now","customDays":"","customHours":"","customDate":"","customTime":"","schedulingType":"absolute"},"_wpsp_active_default_template":true},"categories":[22],"tags":[],"class_list":["post-1019","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-makrooekonomische-daten"],"blocksy_meta":{"styles_descriptor":{"styles":{"desktop":"","tablet":"","mobile":""},"google_fonts":[],"version":6}},"_links":{"self":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1019","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/comments?post=1019"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1019\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media\/3462"}],"wp:attachment":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media?parent=1019"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=1019"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=1019"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}