Dukascopy Fundamental Analysis
EUR
The incapability of European officials to stop debt crisis has reintroduced Franco-German clash over the role of European Central Bank as well as increased investor doubt over policy makers’ competence. As Greek debt holder began talks of accepting 50% of losses, German and French counterparties unexpectedly showed resistance and bond yields outside Germany reached euro-era highs.
USD
On Thursday US equities experienced substantial losses as borrowing costs in Spain and France increased. Investor anxiety erased gains from reported improvements in jobs and housing statistics. S&P 500 lost 1.7% or 20.74 points to 1,216.18, Dow Jones Industrial Average fell 1.1% or 134.64 points reaching 11,770.95 while Nasdaq Composite dropped 2% or 51.62 points to 2,587.99.
GBP
British banks drastically cut loans to Greece, Italy and Spain as confidence in these countries’ ability to resolve financial difficulties remains low. The biggest UK banks decreased loans to peripheral countries by 24% to 10.5 billion pounds over Q3. HSBC the largest banks by number of loans slashed its exposure by 40% as reported by Financial Times.
JPY
Japanese equities lost ground today, as main car part makers were impacted by an industry credit rating decrease. Nikkei 225 slid by 1.2% to 8374.91 at closing time. In total, Nikkei has lost 1.6% this week.
CHF
Official SNB exchange rate for EUR/CHF is at CHF 1.2360 today; 3-month LIBOR CHF remains at 0.05% (within target range of 0.00-0.25). Yields for 10-year Swiss Confederation bonds slid to 0.90% today. SMI stock index has lost 0.24% since opening bell, and is currently fluctuating around 5631 points.
Dukascopy Technical Analysis
The third resistance at 1.3706 might be tested next by bullish investors while bearish investors should be aware of support lines at 1.3404, 1.3355 and 1.3237 respectively. The daily stance is bullish.
All support (103.25; 102.94; 102.18) levels remained untapped today, while a breach of resistance 1 at 104.00 paves the way to the next levels at 104.46 and 105.22 if the bullish bias occurs. The daily trading signals point at a bullish momentum.
The support (1.5688; 1.5628; 1.5507) levels remained intact today whereas the third resistance level at 1.5992 might be tested as the market stance is bullish for the rest of the trading day, according to the daily trading signals.
Investors should be aware of the resistance levels at 77.05/15/31; all support levels have been tested successfully during Friday trading sessions. The daily outlook remains strongly bearish.
Support 3 at 0.9034 is the last daily support level, whereas all resistance (0.9253; 0.9286; 0.9370) levels remained intact. The daily trading signals point at a continuation of the bullish trend ahead.
As the economic turmoil in Europe is enduring, Dukascopy is seeking the reasons for the current debt crunch. We have interviewed the experts who have investigated the issue for a while and are willing to share their point of view.
Professor G. Grant Amyot, Professor of Economics and Political Economy at Queen’s University, Canada, is providing his opinion on the recent news from troubled Italy, while Professor Ricardo Cabral, Assistant Professor, Center of Competence for Social Sciences, University of Madeira, is looking at the roots of the sovereign debt crisis.
Europe
Draghi Pushes EU Governments to Act on Crisis
European Central Bank President Mario Draghi pushed back against politicians and investors asking him to do more to end the sovereign debt crisis, expressing impatience with leaders’ failure to act.
USA
U.S. Economy Growing at Fastest Pace of the Year
The U.S. economy may end 2011 growing at its fastest clip in 18 months as analysts increase their forecasts for the fourth quarter just a few months after a slowdown raised concern among investors.
Asia & Pacific
China House Inflation Hits Year Low, Prices Fall
China’s average home prices in October ticked lower for the first time this year, official data showed on Friday, a victory in Beijing’s fight against inflation but also a challenge if prices fall too sharply and stoke further social unrest.