Dukascopy Fundamental Analysis
EUR
“Everyone is concerned [about France’s credit rating], not just France. It’s all the euro zone countries”
– Francois Baroin, French Finance Minister
Standards & Poor’s credit rating agency may downgrade France’s top notch triple A rating within next ten days, a French newspaper La Tribune reported on Monday. “It could happen within a week, perh aps 10 days.” S&P officials in Europe rejected to comment on rumors.
USD
“Consumers appear to be entering the holiday season in better spirits, though overall readings remain historically weak”
– Lynn Franco, director of The Conference Board Consumer Research Center
U.S. consumer confidence rose the most in more than 8 years in November as consumers became more optimistic on the outlook of the country’s economy, the Conference Board Inc. said on Tuesday. An index of sentiment advanced to 56 points in November from 40.9 points in October.
GBP
“House prices have remained surprisingly resilient in recent months, despite the deterioration in the economic outlook”
– Robert Gardner, the Nationwide’s chief economist
House prices in U.K. edged higher for a third consecutive month in November, said the Nationwide Building Society on Tuesday. Average home price rose 0.4 per cent to £165,798, 1.6 percent higher than a year ago.
CHF
“The good news is that someone actually wants to buy Italian bo nds”
– Henrik Henriksen, chief investment strategist at PFA Pension A/S
Swiss stocks rose modestly on Tuesday, after Italy has successfully placed all of its debt at above 7 per cent during an auction the same day.
JPY
“With the number of jobs in manufacturing falling, we’re already starting to see the impact of the global economic slowdown”
– Yoshimasa Maruyama, an economist at Itochu Corp.
The number of unemployed Japanese surged more than expected in October, adding pressure on the Bank of Japan to introduce additional stimulus to support the country’s economy.
Dukascopy Technical Analysis
EUR/USD
“The situation in Europe and the world has significantly worsened over the past few weeks. Market stress has intensified”
– Christian Noyer (based on Reuters)
From above EUR/USD is capped by an extremely tough resistance level at 1.3440 which is unlikely to be breached soon. In case support area located at 1.3265/50 fails to underpin the pair, dips may extend down to 1.3210, en route to 1.3150.
EUR/JPY
“The yen will likely draw demand as a relatively safe currency as risk aversion increases among global investors”
– Kiyohiko Nishimura, BoJ Deputy Governor (based on CNBC)
The Euro – Japanese Yen currency pair is anticipated to trade within a narrow corridor formed by resistance area at 104.75/105.00 from above and 100.77 from below, as support at 103.08 has been recently breached.
GBP/USD
“The outcome of the euro-zone crisis will determine whether Mr. Osborne has to overhaul his plans”
– WSJ
GBP/USD currency couple is currently moving upward, but is expected to struggle at 1.5700. The pair, nevertheless, may rise up to 1.5870. Since the price is rather bullish, supports are less likely to be tested, although in case of dips they will halt the price at 1.5570, 1.5535 or 1.5290.
USD/JPY
“Japanese policymakers must take resolute action if currency market moves are out of line with economic fundamentals”
– Kiyohiko Nishimura, BoJ Deputy Governor (based on Reuters)
USD/JPY continues to accelerate its bullish momentum. The next target is located at 78.40 ahead of 79.00. Though at first the initial resistance at 78.05 should be overcome. From below the pair is supported by a strong line at 77.50.
USD/CHF
“I am skeptical that further asset purchases will produce much gain in terms of increased economic activity”– Dennis Lockhart (based on Bloomberg)
Test of a strong res istance situated at 0.9341/99 has triggered a sell off down to 0.9173, though an extension of this move is not expected. Eventually, attempts of USD/CHF are likely to succeed and the pair will finally climb over 0.9341/99.
Expert Commentary
“The debt sovereign crisis is a community problem which can only be solved by all members moving from preconceived conditions.”
Dukascopy has interviewed Brian Lucey, Professor of Finance at the prestigious School of Business in Trinity College Dublin, to discover how Ireland is doing in light of the debt crisis in Europe. Professor Lucey gives his view on the troika ruling, Germany’s behaviour in the Eurozone and provides advice on how to rectify the turmoil.
What To Read Today
Europe
Public sector strike set to be largest for a generation
Up to two million public sector workers are staging a strike over pensions in what is set to be the biggest walkout for a generation. Schools, hospitals, airports, ports and government offices will be among sites disrupted, as more than 1,000 demonstrations are due across the UK.
USA
S&P Cuts Credit Ratings on Several Large Banks
Standard & Poor’s reduced its credit ratings on 15 big banking companies, mostly in the Europe and United States, on Tuesday as the result of a sweeping overhaul of its ratings criteria.
Asia & Pacific
BOJ’s Nishimura warns of risk of broad credit crunch
There is no quick fix to Europe’s debt woes that threaten to escalate into a more widespread credit crunch, Bank of Japan Deput y Governor Kiyohiko Nishimura warned on Wednesday, voicing policymakers’ growing concern about the deepening damage from the crisis.