Dukascopy Fundamental Analysis
EUR
“Today’s financial problems reflect public budget policies of past years”
– Ignazio Visco, Governor at the Bank of Italy
Italian borrowing costs rose to record highs since the creation of the European Monetary Union with investors demanding up to 7.814 per cent for 2-year government bonds during an auction on Friday.
USD
“Businesses are very cautious so they’re not hiring and they’re not distributing their profits to consumers”
– Michelle Meyer, a senior U.S. economist at Bank of America Corp.
U.S. consumer spending may decline in upcoming months amid worse than expected income gains and only modest improvement in employment, show the data published by the Commerce Department.
GBP
“We don’t see any significant improvement or a change in conditions coming soon”
– Ross Walker, an economist at Royal Bank of Scotland Group Plc.
The outlook on real estate market in the U.K. remains bearish amid faltering economic growth and rising unemployment, said the Centre for Economics and Business Research on Friday.
CHF
“European markets remain immensely fragile and at the mercy of the sovereign-debt crisis”
– Jonathan Sudaria, a trader at London Capital Group
Swiss stocks rose on Friday after six consecutive days of losses amid rumours the European member countries may drop involvement of private investors from their permanent rescue mechanism.
JPY
“It’s highly probable that consumer prices will keep falling at a moderate pace”
– Yoshiki Shinke, a senior economist at Dai-Ichi Life Research
Japan’s year on year consumer prices decreased 0.5 per cent in October, for the first time since June, said the Statistics Bureau on Friday. Inflation data shows the country is unlikely to emerge from deflation.
Dukascopy Technical Analysis
EUR/USD
“No euro-denominated safe haven is available“
– Commerzbank (based on Reuters)
For some time 1.3145 will provide sufficient support, although in the long-term it is expected to be eroded.
EUR/JPY
“[Our] central scenario remains that the euro area will be preserved without further widespread default“
– Moody’s Investors Service (based on Bloomberg)
Penetration of a support at 103.80 implies a possible slide down to 100.77, where the currency couple is likely to consolidate.
GBP/USD
“The [U.K.] economy has taken a turn for the worse“
– Scotia Capital (based on WSJ)
Although bearish impetus is weakening for now, GBP/USD is anticipated to reach a mark of 1.50 within the next 3 months.
USD/JPY
“There is no reason that Japan should be regarded as a safe haven“
– Takehiko Nakao, Japanese Vice Finance Minister (based on Marketwatch)
Indicators suggest further advancement of the pair while it is supported by strong levels at 76.82/63 and 76.22.
USD/CHF
“The exchange rate must go in the direction of purchasing-power parity which currently lies at around 1.38 francs per euro“
– Swissmem (based on CNBC)
The focus is on 0.9341/99 which should be breached in order for the pair to carry on climbing up, although it is not expected to be done effortlessly and at a first attempt.
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.
“The level of private debt is too high to be isolated from what is happening in the debt markets around the world.”
As the Eurozone countries are still struggling with the debt crisis, Dukascopy is persisting to interview the experts in finance to learn information from the inside. Today we talked to José García-Montalvo, Professor of Economics at the University Pompeu Fabra, Spain, who shared his opinion on the recent news from Spain
What To Read Today
Europe
Euro area crisis threatens EU sovereign ratings: Moody’s
Moody’s Investors Service warned on Monday the rapid escalation of the euro zone sovereign and banking crisis threatens the credit standing of all European government bond ratings.
USA
Morgan Stanley Cuts 2012 Global Growth Forecast Again
The continuing uncertainty over debt troubles in Europe and the U.S. has increased the downside risks to global growth, according to Morgan Stanley.
Asia & PacificEurope
Japan warns of more forex intervention: report
A senior Japanese finance ministry official said his nation could conduct further solo intervention in the foreign-exchange market and suggested that the yen is overvalued, according to a Dow Jones Newswires report Monday.