{"id":1088,"date":"2012-07-27T13:00:00","date_gmt":"2012-07-27T13:00:00","guid":{"rendered":"http:\/\/starthostunlimiteddmffassi-ss.stackstaging.com\/bondworld.ch\/home\/sites\/20b\/7\/760c69a11c\/public_html\/investmentworld.ch\/index.php\/2012\/07\/27\/forex-markets-the-meetings-of-the-fed-and-ecb-could-prove-crucial-in-guiding-the-main-market-trends-in-augus"},"modified":"2012-07-27T13:00:00","modified_gmt":"2012-07-27T13:00:00","slug":"forex-markets-the-meetings-of-the-fed-and-ecb-could-prove-crucial-in-guiding-the-main-market-trends-in-august","status":"publish","type":"post","link":"https:\/\/www.investmentworld.eu\/ch\/forex-markets-the-meetings-of-the-fed-and-ecb-could-prove-crucial-in-guiding-the-main-market-trends-in-august\/","title":{"rendered":"Forex markets: the meetings of the Fed and ECB could prove crucial in guiding the main market trends in August"},"content":{"rendered":"<p style=\"text-align: justify;\">Next week could prove to be crucial, as the Fed and ECB meetings will  guide August trends. The interventions expected from the Fed should help  brighten market sentiment, &#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\">&nbsp;<\/span> <\/p>\n<div style=\"text-align: justify;\">resulting in a slight retracement of  the dollar, after its rise in July. If the ECB does not disappoint the  expectations it has created in the past few days, a drop of the euro  below EUR\/USD 1.20 could be avoided. If the euro area crisis is taken on  more \u201cappropriately\u201d, the market will be willing to show greater  confidence in the single currency, and the resulting easing in risk  aversion would allow the yen to start depreciating.<\/div>\n<div style=\"text-align: justify;\">After  the developments seen in the week ending today, the meetings of the Fed  and ECB \u2013 next Wednesday and Thursday \u2013 could prove crucial in guiding  the main market trends in August.<br \/>USD (nominal effective exchange  rate) \u2013 The deterioration of the picture in the euro area, also as a  result of the crisis, has been one of the main factors behind the  strengthening of the dollar this month in trade-weighted terms. Given  the new measures expected from the Fed at the end of the FOMC meeting of  1st August \u2013 and on condition of the ECB not disappointing the  expectations it has generated on the market in the past few days (see  below) \u2013 the dollar could start to ease back, at least in part.<\/div>\n<div style=\"text-align: justify;\">This  should not be read as signalling weakness for the dollar, as it will in  fact be an effect of an improvement in sentiment, prompted by (1)  brighter prospects for the US economy, thanks to the Fed\u2019s actions, and  (2) fewer concerns over the euro area crisis if the ECB and the other  European institutions do not dwell too long on what they need to do.<\/div>\n<div style=\"text-align: justify;\"><strong>EUR<\/strong> \u2013 After having slipped to a whisker away from our downside target at  EUR\/USD 1.2000, this week the euro unexpectedly, but legitimately,  recovered, rising back up \u2013 during its upswing \u2013 to 1.23. The recovery  was triggered by a set of statements made by ECB officials, which  boosted confidence in the European authorities\u2019 intention\/ability to  intervene appropriately to tackle the crisis. The key statements were  made by Draghi, who exactly one week ahead of the ECB meeting of 2  August, said that the ECB (1) will do whatever it takes, within its  mandate, to preserve the euro, and that (2) \u201cit will be enough\u201d, i.e. it  will work.<\/div>\n<div style=\"text-align: justify;\">Therefore,  we confirm our short-term projection of 1.20 (see table), as (1) if the  ECB delivers on its commitment, and (2) if the other national and  supranational authorities take on swiftly and effectively the crucial  issues of the euro area crisis, the euro could be spared a plunge to  below EUR\/USD 1.2000, starting a gradual consolidation process. Lacking  these conditions, on the other hand, the exchange rate would stay  exposed to the risk of a drop below 1.2000, with potential downside  containable to within 1.15, and the main downside target at 1.1877 (the  low hit in June 2010, during the first Greek crisis). Therefore, the  developments of the crisis will be crucial, essentially in terms of the  actions taken by the institutions, to which the markets seem to be  reacting coherently, as proven by the euro\u2019s reaction movements in the  past few days.<\/div>\n<div style=\"text-align: justify;\"><strong>GBP<\/strong> \u2013 On Thursday the Bank of England will also meet. However, as it  already acted in July by expanding the APF, we believe this time around  it will leave monetary policy conditions unchanged. However, it should  be said that 2Q GDP data published this week were much poorer than  expected (-0.7% q\/q, marking the third contraction in a row), although  this was largely due to one-off factors (festivities for the Queen\u2019s  Jubilee, bad weather, closing of North Sea oil platforms). Also \u2013  contrary to the situation in the euro area \u2013 in the United Kingdom the  Treasury and the central bank have drawn up a rather composite growth  stimulus programme, the Funding for Lending Scheme (FLS), which was  opened in July. At least temporarily, therefore, the BoE should not find  itself alone with the task of supporting the British economy.<\/div>\n<div style=\"text-align: justify;\">Next  week, the BoE\u2019s inaction, as opposed to expectations for moves by both  the Fed and the ECB, could temporarily weaken sterling both against the  dollar and the euro. A drop against the dollar, however, should be read  as an opportunity to re-enter in view of a gradual consolidation and  subsequent strengthening of the pound. A decline against the euro, on  the other hand, could offer an opportunity to bet on a matching of  recent lows for the EUR\/GBP, in the 0.77 area or just below, during  institutional \u201chiatus\u201d phases on the front of the euro area crisis, and  given the more exhaustive and timely anti-crisis scheme launched by the  British authorities.<\/div>\n<p> <\/p>\n<div style=\"text-align: justify;\"><strong>JPY<\/strong> \u2013 Timely and implicitly coordinated action taken in the euro area  against the crisis would be the most effective factor in stopping the  appreciation of the yen, which only strengthened in July, again  abandoning the USD\/JPY 80 mark and stabilising at around USD\/JPY 78.00.  The domestic authorities have expressed more than veiled concern over  the protracted strengthening of the exchange rate, which risks  compromising the recovery of the economy. Finance Minister Azumi has  said that following the publication of GDP data (due out on 13 August),  the government will consider the opportunity of introducing new fiscal  stimulus. The resilience of the yen could also start to be eroded next  week by expectations for the Fed\u2019s decision on occasion of the FOMC. The  resulting improvement in the outlook for the US economy \u2013 on condition  of the ECB not disappointing on the other side of the Atlantic \u2013 should  help reduce risk aversion, which has long been one of the most  supportive factors for the Japanese currency.<\/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>Next week could prove to be crucial, as the Fed and ECB meetings will guide August trends. The interventions expected from the Fed should help brighten market sentiment, &#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-1088","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\/1088","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=1088"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/1088\/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=1088"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=1088"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=1088"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}