{"id":1047,"date":"2012-06-18T06:10:00","date_gmt":"2012-06-18T06:10:00","guid":{"rendered":"http:\/\/starthostunlimiteddmffassi-ss.stackstaging.com\/bondworld.ch\/home\/sites\/20b\/7\/760c69a11c\/public_html\/investmentworld.ch\/index.php\/2012\/06\/18\/forex-markets-tough-tests-lie-ahead-for-the-euro-first-the-elections-in-greece-then-possibly-all-the-rest\/"},"modified":"2012-06-18T06:10:00","modified_gmt":"2012-06-18T06:10:00","slug":"forex-markets-tough-tests-lie-ahead-for-the-euro-first-the-elections-in-greece-then-possibly-all-the-rest","status":"publish","type":"post","link":"https:\/\/www.investmentworld.eu\/ch\/forex-markets-tough-tests-lie-ahead-for-the-euro-first-the-elections-in-greece-then-possibly-all-the-rest\/","title":{"rendered":"Forex markets: Tough tests lie ahead for the euro: first the elections in Greece, then \u2013 possibly \u2013 all the rest."},"content":{"rendered":"<p style=\"text-align: justify;\"><span lang=\"EN-GB\">FOMC: Fed also in the trenches. Bank of England and  Chancellor of the Exchequer working towards a support scheme for the  British economy UK in case of an escalation of the euro area crisis:  downside risks weighing on the pound reduced as a result, even in the  event of quantitative easing.<\/span>..<span lang=\"EN-GB\">&#8230;<\/span><strong><span lang=\"EN-GB\"> <\/span><\/strong><span lang=\"EN-GB\"> <\/span><span lang=\"en-GB\"> <\/span><span lang=\"en-GB\"><\/span><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<div style=\"text-align: justify;\">\n<p class=\"MsoNormal\" style=\"text-align: justify;\"><span lang=\"EN-GB\">Next  week will in many ways be a crucial one. Its outset will be marked by  the markets\u2019 reaction to the outcome of the elections in Greece, which  will be followed by the G20 summit. In the United States, the Fed will  be called to take a stance at Wednesday\u2019s FOMC meeting. At the beginning  of the weekend, the Eurogroup and Ecofin will start preparing the  European Council summit scheduled at the end of the month. The euro area  crisis will be as topical as ever, stealing the limelight from an  important round of data releases referred to June, both in Europe and in  the United States.<\/span><\/p>\n<p class=\"MsoNormal\" style=\"text-align: justify;\"><span lang=\"EN-GB\"><strong>USD <\/strong>(nominal  effective exchange rate) \u2013 Very important data releases in the US will  probably be overshadowed by the outcome of the FOMC. If a new  quantitative easing phase is announced, or opened, the dollar\u2019s impact  reaction could be negative. However, this should rapidly turn into a  positive response. The dollar\u2019s decline this week should also help in  this direction, together with the possible rise in risk aversion tied to  next week\u2019s events and their impact on the euro area crisis (unless the  outcome of these events is positive, of course).<\/span><\/p>\n<p class=\"MsoNormal\" style=\"text-align: justify;\"><span lang=\"EN-GB\"><strong>EUR <\/strong>\u2013  The euro rose throughout the week, from EUR\/USD 1.24 to 1.26. The  initial thrust was provided by the bailout of Spanish banks by the  EFSF\/ESM. No positive developments followed, however, nor was the  exchange rate supported solely by the financial aid guaranteed to Spain,  as this is considered far from sufficient to solve all the country\u2019s  problems. In a context of record-high short euro exposure, the movement  may have been helped by short-covering flows ahead of more decisive  events. <\/span>The first will be the election in Greece. <span lang=\"EN-GB\">If  the outcome is unfavourable, the euro may shed all the gains made over  the past few days. Lacking encouraging developments on occasion of the  G20 summit on Monday and Tuesday, downside may extend to between EUR\/USD  1.2400 and the recent low of 1.2288. Subsequent events and data  releases may make no difference, unless a potentially negative outcome  of the election is followed by \u201cconstructive\u201d action being taken at the  European level. On the whole, the situation is extremely delicate,  therefore risks are skewed to the downside (possible new lows below 1.22  and around 1.2000).<\/span><\/p>\n<p class=\"MsoNormal\" style=\"text-align: justify;\"><span lang=\"EN-GB\"><strong>GBP <\/strong>\u2013  Important news from the United Kingdom: the Bank of England and the  Chancellor of the Exchequer are working on a scheme to support the  British economy, in the event of an escalation of the area euro crisis.  King said that the chances of a new round of quantitative easing being  implemented have increased. Many other initiatives are also being  planned, ranging from credit easing measures, which should be  operational in a matter of weeks, to the concession of multiyear funds  to banks \u2013 at lower than current market rates \u2013 to spur lending to  businesses and households. Implementation of the scheme should support  sterling, containing its correction margin should the APF effectively be  expanded on occasion of the next monetary policy meeting\/s. Next week  will in any case be rife with events. Data will be released on  inflation, the labour market, and retail sales, and the CBI industrial  sector survey will also be published. In case of disappointments,  sterling would in any case stay exposed to drops to between GBP\/USD 1.54  and 1.52, although downside should be smaller than for the euro \u2013 also  thanks to the aforementioned scheme \u2013 with the result that the effect on  the EUR\/GBP cross rate could be temporarily negative (return  towards\/below 0.8000). Also, on Wednesday the minutes of the latest BoE  meeting will be published. It will be interesting to verify whether the  decision to leave the APF unchanged again this month was taken based on  the previous majority of 8-1, or if a wider split has started to emerge.  If so, the pound would correct, but more so (or exclusively) against  the dollar.<\/span><\/p>\n<p class=\"MsoNormal\" style=\"text-align: justify;\"><span lang=\"EN-GB\"><strong>JPY <\/strong>\u2013  The yen stayed put in the USD\/JPY 79 area, and subsequently  strengthened to USD\/JPY 78, after another BoJ meeting at which no new  measures were announced to weaken the exchange rate. Shirakawa said that  the central banks are keeping in close touch with each other, and the  BoJ may well have opted to at least await the outcome of the Greek  elections before trying to guide the market\u2019s autonomous trend. In case  of excessive turbulence, the central bank would be ready to intervene.  On October 31 2011, the authorities waited for the exchange rate to hit  the 75 mark before acting.<\/span><\/p>\n<\/p><\/div>\n<\/p><\/div>\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>FOMC: Fed also in the trenches. 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