{"id":1079,"date":"2012-07-20T13:00:00","date_gmt":"2012-07-20T13:00:00","guid":{"rendered":"http:\/\/starthostunlimiteddmffassi-ss.stackstaging.com\/bondworld.ch\/home\/sites\/20b\/7\/760c69a11c\/public_html\/investmentworld.ch\/index.php\/2012\/07\/20\/forex-markets-euro-vulnerable-and-dollar-not-sufficiently-trustworthy\/"},"modified":"2012-07-20T13:00:00","modified_gmt":"2012-07-20T13:00:00","slug":"forex-markets-euro-vulnerable-and-dollar-not-sufficiently-trustworthy","status":"publish","type":"post","link":"https:\/\/www.investmentworld.eu\/ch\/forex-markets-euro-vulnerable-and-dollar-not-sufficiently-trustworthy\/","title":{"rendered":"Forex markets: Euro vulnerable and dollar not sufficiently trustworthy"},"content":{"rendered":"<p style=\"text-align: justify;\">Euro vulnerable and dollar not sufficiently trustworthy, but the real news of the week is sterling\u2019s decoupling from the euro.. &#8230;..<strong> <\/strong><span lang=\"EN-GB\">&nbsp;<\/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&amp;view=user&amp;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&amp;view=user&amp;Itemid=1023\"><strong>&nbsp;<\/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<p> <span lang=\"EN-GB\"><\/span>Three particularly important aspects emerged in the week which ends today: <\/p>\n<div style=\"text-align: justify;\">1.  Uncertainty at the global level \u2013 first of all over growth \u2013 is not  allowing the dollar to fully benefit from its traditional status as a  safe haven;<br \/>2. this could be the time at which the euro is most vulnerable;<br \/>3. sterling \u2013 and this is the real news \u2013 has started to decouple for the euro.<\/div>\n<div style=\"text-align: justify;\">USD  (nominal effective exchange rate) \u2013 This week the dollar retraced,  after a full month on the rise. What has changed is the US growth  scenario, which has weakened. If before the dollar could benefit from  flight to quality, triggered by uncertainties over global growth and by  the euro area crisis, the current mounting of doubts also over the trend  of the US economy is dampening the greenback\u2019s appeal.<br \/>Next Friday,  2Q 2012 US GDP growth data will be released. Expectations are for a  modest slowdown. A more disappointing reading could penalise the dollar  (against higher yielding currencies, not against the majors).<\/div>\n<div style=\"text-align: justify;\"><strong>EUR<\/strong> \u2013 The euro, on the other hand, has put an end to the decline incurred  in the first half of the month, which led it from EUR\/USD 1.26 to 1.21.  However, it stayed within a range of between EUR\/USD 1.21 and 1.23,  showing signs of a lack of resilience. This is a very vulnerable phase  for the exchange rate, during which lows for the year could be hit. In  fact, while 1.20 is our shortterm downside target, there is some risk of  a temporary foray beneath that threshold (potential downside extends to  the middle of the 1.20-1.15 range).<br \/>The approval of the EU programme  for the bailout of Spanish banks is not considered as sufficient proof  that the worst of the euro area crisis has been overcome. In the context  of a summer market, and lacking important developments in terms of the  crisis, there is little else that can help the single currency. Many  important data releases are due next week (including the July PMI  surveys and the IFO): disappointing data could place the 1.20 threshold  under pressure.<\/div>\n<div style=\"text-align: justify;\"><strong>GBP<\/strong> \u2013 The week\u2019s real news is the decoupling of the pound from the euro.  The pound appreciated despite most of the economic data released proving  poor, and in spite of the fact that the Bank of England, as reported in  the minutes of its latest meeting, considers the growth outlook to have  deteriorated significantly in the past month, mostly due to the  developments of the euro area crisis. However, the opening \u2013 last Friday  \u2013 of the Funding for Lending Scheme by HM Treasury and the BoE,  represents in our view an important factor of greater relative strength  for sterling against the euro.<\/div>\n<div style=\"text-align: justify;\">In  recent months, on the other hand, lacking specific stimulus programmes  for the UK economy, the factors penalising the euro area, and therefore  the EUR\/USD exchange rate, were also detrimental for the UK economy, and  thus for the GBP\/USD exchange rate. Now, the launching in the United  Kingdom of a package designed to counter the euro area crisis, is having  the effect, on the forex market, of minimizing the positive correlation  between the GBP\/USD and the EUR\/USD, or even of inverting it (negative  correlation), leaving open the downside front on the EUR\/GBP cross rate.  In actual fact, the EUR\/GBP cross rate broke through the crucial  support at 0.8000 already two weeks ago, but it has only been a few days  since it breached the EUR\/GBP 0.78 area. The technical target of the  movement under way should be EUR\/GBP 0.76, a low abandoned in 2008.<\/div>\n<div style=\"text-align: justify;\">Next Wednesday, the first estimate of 2Q 2012 GDP growth in the UK will be published.<br \/>Consensus  expectations point to another contraction (the third in a row). Our  estimates are less pessimistic. A disappointing reading should in any  case only penalise in part, and\/or temporarily, the pound, also because  it is already reasonably well priced in: in its minutes, the BoE openly  acknowledged that it expects broadly flat growth this year. As regards  the EUR\/GBP cross rate, maximum downside could in any case express  itself in the wake of a sharp potential drop in the EUR\/USD to 1.20 or  below, in the presence of a further deterioration in the sentiment of  international investors with regards to the euro area.<\/div>\n<div style=\"text-align: justify;\"><strong><br \/> <\/strong><\/div>\n<p> <strong>JPY<\/strong> \u2013 The yen appreciated, distancing itself from USD\/JPY 80 and entering the USD\/JPY 78 area. <\/p>\n<div style=\"text-align: justify;\">One  of the factors that would most aid a permanent return of the exchange  rate in the area above USD\/JPY 80.00 would be the easing of concerns  over the euro area crisis.<\/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","protected":false},"excerpt":{"rendered":"<p>Euro vulnerable and dollar not sufficiently trustworthy, but the real news of the week is sterling\u2019s decoupling from the euro.. &#8230;.. &nbsp;<\/p>\n","protected":false},"author":2,"featured_media":3463,"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-1079","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\/1079","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=1079"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1079\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media\/3463"}],"wp:attachment":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media?parent=1079"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=1079"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=1079"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}