{"id":919,"date":"2012-03-02T15:00:00","date_gmt":"2012-03-02T15:00:00","guid":{"rendered":"http:\/\/starthostunlimiteddmffassi-ss.stackstaging.com\/bondworld.ch\/home\/sites\/20b\/7\/760c69a11c\/public_html\/investmentworld.ch\/index.php\/2012\/03\/02\/forex-markets-sterling-has-effectively-decoupled-from-the-euro\/"},"modified":"2012-03-02T15:00:00","modified_gmt":"2012-03-02T15:00:00","slug":"forex-markets-sterling-has-effectively-decoupled-from-the-euro","status":"publish","type":"post","link":"https:\/\/www.investmentworld.eu\/ch\/forex-markets-sterling-has-effectively-decoupled-from-the-euro\/","title":{"rendered":"Forex markets: Sterling has effectively decoupled from the euro"},"content":{"rendered":"<p style=\"text-align: justify;\">Own vulnerability of the euro evident last week, resulting in a correction of the single currency<span lang=\"EN-GB\"> <\/span><span style=\"font-family: arial,helvetica,sans-serif;\"><span style=\"font-size: 10pt;\"> <\/span><\/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><span lang=\"EN-GB\"><\/span><span lang=\"en-GB\"> <\/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><\/p>\n<p>  <!--more-->  <\/p>\n<ul> <\/ul>\n<ol><\/ol>\n<ol><\/ol>\n<ol><\/ol>\n<ol><\/ol>\n<hr \/>\n<div style=\"text-align: justify;\">from almost 1.3500 into the EUR\/USD  1.32 area. Conditions for a further drop, at least towards 1.3000, seem  to be in place. Sterling has effectively decoupled from the euro, and  barring positive surprises from UK economic data, this should aid  preparation for a correction.<br \/>Downtrend of the yen confirmed (against  the dollar), with an easing of the positive correlation between the yen  and risk aversion. In addition to the ECB and BoE meetings, which are  not expected to have major market impacts, the Bank of Canada will also  meet on Thursday.<br \/>(Australian and New Zealand central bank meetings on Monday and Tuesday).<\/div>\n<div style=\"text-align: justify;\"><strong><br \/>EUR<\/strong> \u2013 Last week  we wrote that the euro had reached a point from which it was not clear  whether it was ready to leap upwards or turn back down. However, we  concluded by stating that we had a slight preference for the view that a  short correction phase was in the making.<br \/>This has proved to be the case.<br \/>From  last Friday\u2019s high of EUR\/USD 1.3487 \u2013 a level it was no longer able to  overcome, and at which it set a triple top, the euro has corrected,  dropping back into the 1.32 area. This area is important, as the  1.3233-1.3165 corridor defines the upper limit of the downside front  starting at 1.25-1.26. The exchange rate was pushed downwards by the  further dragging on of the issues which \u201cmake up\u201d the Greek situation.  The fact that the exchange rate dropped while sovereign spreads  tightened, suggests a certain degree of own vulnerability of the single  currency, emphasised by the failed attempt to test 1.3500.<br \/>Technically, compared to a week ago, the configuration has become skewed to the downside.<br \/>As  the main issue of the Greek situation, i.e. assessment of the state of  advancement of the PIS deal, has been pushed back to the end of next  week (presumably to Friday, 9 March), at least an attempt to break  through the 1.3233-1.3165 on the downside could take place. Downside  targets below 1.3165 are: 1.3030 \u2013 1.2827 \u2013 1.2624. The ECB meeting on  Thursday should not<br \/>represent a major market mover this time around.<\/div>\n<div style=\"text-align: justify;\"><\/div>\n<div style=\"text-align: justify;\"><strong>GBP<\/strong> \u2013 Sterling has  effectively decoupled from the euro, breaking a months-long positive  correlation between the GBP\/USD and the EUR\/USD. Indeed, the pound rose  against the dollar,<br \/>while the euro wakened.<br \/>Two simultaneous  factors led to this behaviour: (i) the vulnerability of the euro, (ii)  the mixed nature of data on the UK economy. As the latter did not show a  clear deterioration, sterling climbed to just shy of GBP\/USD 1.6000  (reaching a high at 1.5993). At this level, however, it is overvalued,  even only in a very-short-term perspective.<br \/>However, univocally  negative data would seem to be necessary to activate a correction  towards GBP\/USD 1.56-1.55. Important releases next week will be the  services PMI (Monday) and output data (Friday), all expected on the  decline (our estimates are more pessimistic than consensus).<br \/>On the  other hand, we do not expect changes in terms of monetary policy  parameters, nor particular news from the BoE meeting on Thursday.<br \/>As  regards the exchange rate against the euro, barring positive surprises  from data on the UK economy, sterling could at least in part correct  (returning into the 0.84 EUR\/GBP area), especially<br \/>in the wake of this week\u2019s sharp rebound from EUR\/GBP 0.85 to 0.83.<\/div>\n<div style=\"text-align: justify;\"><strong>JPY<\/strong> \u2013 Against the  dollar, the yen, while stabilising at between USD\/JPY 80 and 81,  maintained its underlying downtrend. The easing positive correlation  between the Japanese currency and risk aversion has started to emerge  more clearly. <br \/>Against the euro it dropped to just shy of EUR\/JPY 110, and then stabilised back at EUR\/JPY 108.<br \/>In  the very short term, the direction of the EUR\/JPY could depend on the  EUR\/USD, in the sense that a potential further retracement towards  EUR\/JPY 106 would in all likeliness be due to a further correction of  the EUR\/USD, rather than to a drop in the USD\/JPY.<\/div>\n<div style=\"text-align: justify;\"><strong><br \/>CAD<\/strong> \u2013 Next  Thursday the Bank of Canada will also meet. Expectations are for stable  rates at 1.00%, in the coming months as well. However, it will be  important to verify whether in its press release the BoC will prove less  pessimistic with regards to the prospects for domestic economic growth  this year. In mid-January, it had expressed expectations for a slowdown  in the months ahead, in light of the deterioration of the global  picture. More in detail, the central bank forecast a slowdown in growth  to 2.0% this year, and a subsequent recovery to 2.8% next year.<br \/>Barring  an improvement in the scenario, the Canadian dollar could shed this  week\u2019s gains (appreciation against the US dollar from USD\/CAD 1.00 to  0.98) and ease back to around parity.<br \/>In the opposite case, the strengthening should continue, with a target set at around USD\/CAD 0.9725.<\/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.  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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>Own vulnerability of the euro evident last week, resulting in a correction of the single currency ..&#8230;<\/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-919","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\/919","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=919"}],"version-history":[{"count":0,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/posts\/919\/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=919"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/categories?post=919"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmentworld.eu\/ch\/wp-json\/wp\/v2\/tags?post=919"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}