{"id":885,"date":"2012-02-03T13:00:00","date_gmt":"2012-02-03T13:00:00","guid":{"rendered":"http:\/\/starthostunlimiteddmffassi-ss.stackstaging.com\/bondworld.ch\/home\/sites\/20b\/7\/760c69a11c\/public_html\/investmentworld.ch\/index.php\/2012\/02\/03\/forex-markets-euro-to-stay-under-pressure-until-the-greek-deadlock-is-overcome\/"},"modified":"2012-02-03T13:00:00","modified_gmt":"2012-02-03T13:00:00","slug":"forex-markets-euro-to-stay-under-pressure-until-the-greek-deadlock-is-overcome","status":"publish","type":"post","link":"https:\/\/www.investmentworld.eu\/ch\/forex-markets-euro-to-stay-under-pressure-until-the-greek-deadlock-is-overcome\/","title":{"rendered":"Forex markets: Euro to stay under pressure until the Greek deadlock is overcome"},"content":{"rendered":"<p style=\"text-align: justify;\">Central banks also in the spotlight next week. If the ECB, which is not   expected to cut rates, fails to reassure the markets on its role in   managing the euro area debt crisis, the single currency may drop back   below..<span lang=\"EN-GB\">&#8230;<\/span><strong><span lang=\"EN-GB\">&nbsp;<\/span><\/strong><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<ol><\/ol>\n<ol><\/ol>\n<ol><\/ol>\n<ol><\/ol>\n<hr \/>\n<p> <\/p>\n<div style=\"text-align: justify;\">&#8230;EUR\/USD  1.3000. The BoE, on the other hand, is expected to expand the APF  again: while the size of the expansion is uncertain, the move should in  any case weaken the pound. The Riserve Bank of Australia is also due to  meet: expectations are for another rate cut. Consequently, we have  revised downwards our projections for the Australian dollar. Canadian  dollar expected to outperform the Australian dollar in the course of the  year.<\/div>\n<div style=\"text-align: justify;\"><strong>EUR <\/strong>\u2013  Uncertainty tied to the debt crisis in the euro area is still the hot  topic on the currency markets. The European Council summit failed to  solve the crucial issues and the Greek deadlock still awaits a solution.  Rumours initially hinted that a positive outcome would be achieved in a  matter of days, but no serious progress has been made as yet. In fact,  concerns of possibile complications are starting to arise. If so, the  euro \u2013 which this morning stayed below last Friday\u2019s high of EUR\/USD  1.3234, fluctuating between 1.30 and 1.31 \u2013 would slip back to below  EUR\/USD 1.3000. Next week\u2019s other major event is the ECB meeting. In the  absence of a rate cut, if the central bank fails to send a reassuring  message to the markets on its role in tackling the crisis (in its  broadest sense), the euro would face greater downside risk. By contrast,  any signal\/initiative testifying to a more active role of the ECB would  help the euro.<\/p>\n<p><strong>GBP \u2013 <\/strong>This week sterling decoupled  somewhat from the euro against the dollar, and appreciated on the whole,  rising from GBP\/USD 1.56 to 1.58 (a level last seen at the end of  November). The positive correlation previously shown by the GBP\/USD and  EUR\/USD exchange rates was essentially slackened by economic data  releases in the UK, namely the January manufacturing and services PMIs,  which surprised on the upside, beating expectations. This will not make  life easier for the Bank of England, which like the ECB will also  announce its monetary policy decision next Thursday, 9 February. In line  with consensus, we expect the BoE to expand the APF on occasion of this  meeting, by GBP 50Bn, stepping up the amount appropriated for the  purchase of assets from 275 to 325 billions. However, many expect a  larger rise, in the order of GBP 75Bn. As we believe sterling to be  overvalued above GBP\/USD 1.55, and in light of its asymmetrical  reactions to data (little\/no downside reaction on poor data, strong  upside reaction on positive data), a GBP 50Bn expansion of the APF  should in any case push the pound down, at least back towards GBP\/USD  1.55. If the increase is larger, then the expected depreciation could  also be more significant (acceleration towards GBP\/USD 1.54-1.52).<\/p>\n<p><strong>JPY \u2013<\/strong> The yen strengthened this week, stopping just short of USD\/JPY 76.00.  This is a critical level, as it falls in the \u201cintervention area\u201d: on 31  October 2011, the Japanese authorities intervened at USD\/JPY 75.35 to  halt the appreciation of the national currency. Domestic concerns have  increased in recent days over the risks posed by an excessively strong  exchange rate. The main factor keeping upside pressures high on the yen  is probably the uncertainty tied to the Greek deadlock. Should the  situation deteriorate on this front, the exchange rate may breach  USD\/JPY 76.00 on the downside. This would not automatically trigger a  BoJ\/MoF intervention, as the critical factors would be the strength and  duration of the movement. In any case, the authorities are ready to  intervene if necessary. We stick to the view that positive developments  in terms of the euro area crisis would help initiate the yen\u2019s  long-awaited downside reversal.<\/p>\n<p><strong>AUD <\/strong>\u2013 Next week (Tuesday, 7  February) the Reserve Bank of Australia will also meet. Consensus  expectations are for a further interest rate cut (from 4.25% to 4.00%).  The RBA opened the accommodative cycle in October (lowering the  benchmark rate from 4.75% to 4.50%) and cut rates again at the December  meeting (from 4.50% to 4.25%). The prospect of a slackening of monetary  policy conditions in a context of stronger downside risks to growth,  given the Australian economy\u2019s strong exposure to the global cycle (not  only the US but also China) is one of the main reasons that prompted us  to revise downwards our projections for the Australian dollar from  AUD\/USD 0.96-1.01-0.97 to AUD\/USD 0.96-0.95-0.94 respectively on a  3m-6m-12m horizon (see table). Expectations for a weakening of the AUD  in the course of the year are also tied to its strong appreciation  between 2010 and 2011, which in our view has pushed into overvaluation  territory. The lack of a scenario pointing to a further uptrend in the  prices ofcommodities this year \u2013 in particular those exported by  Australia \u2013 is another factor on which we base our expectations for a  weakening of the Australian dollar. The main risk to the central  scenario for the AUD is a delay in the start of the correction \u2013 i.e. in  the second half of the year rather than in the first.<\/p>\n<p><strong>CAD \u2013<\/strong> By contrast, we have revised upwards the Canadian dollar\u2019s profile,  from USD\/CAD 1.03- 1.00-0.98-0.96 to USD\/CAD 1.01-0.98-0.96-0.94. The  expected trend is still an appreciation. This is because contrary to the  RBA, the Bank of Canada has not eased, nor does it intend to ease,  monetary policy conditions, as indicated on occasion of the latest  monetary policy meeting on 17 January (see WEM, 20 January 2012). It is  also possible that the BoC start raising rates next year. This offers an  advantage in terms of rate-yield differentials over the United States.  In relative terms this is also true with regards to Australia, as  Australian rates, while higher than the Canadian (official rate in  Canada: 1.00%), are on the decline. Another advantage the CAD has over  the AUD is its correlation to oil, which, among the various commodities,  is the one still set to show the strongest upside tension, at least in  the first half of this year. Lastly, coming to the direct comparison  between CAD and USD, the Canadian economy\u2019s strong dependence on the  performance of the US economy means that a potential round of QE3 in the  United States aimed at supporting US growth would indirectly support  also the Canadian economy. The main risk to the central scenario for the  CAD is a blander strengthening of the Canadian dollar than expected.  The next BoC meeting is scheduled on Thursday, 8 March.<\/div>\n<hr \/>\n<p style=\"text-align: justify;\"><strong>Appendix<br \/>Analyst 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>Central banks also in the spotlight next week. If the ECB, which is not expected to cut rates, fails to reassure the markets on its role in managing the euro area debt crisis, the single currency may drop back below..&#8230;&nbsp;<\/p>\n","protected":false},"author":2,"featured_media":3456,"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-885","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\/885","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=885"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/885\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media\/3456"}],"wp:attachment":[{"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/media?parent=885"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=885"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=885"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}