Saturday 14 July 2012
European Economic Outlook Dims With Italy And Greece Facing Increased Scrutiny
(GR) Troika has found some “serious shortcomings” in Greece’s reforms
– Rheinische Post Citing unnamed German govt sources that the
Greek Government failed to fulfill 210 of the 300 budget savings
requirements. Efforts to implement privatization this year have resulted
in only two measures with a volume in the low two-digit millions of
euros. Germany planning to reject Greece’s request for a 2-yr delay in
its budget savings targets; will only have a maximum delay of a few
weeks for implementation of its deficit targets. Follow Up: IMF Chief
Lagarde: Too premature to discuss extending Greek bailout agreements.
(IT) MOODY’S DOWNGRADES ...
Greek Crisis Creeps Back To The Center Stage…
(GR) Press reported that the next tranche for Greek aid may be
delayed until the middle of September. The EU/IMF/ECB Troika draft
indicated that the program there is completely off track. There is no
political will to extend the fiscal program. The report indicated that
there will be no funds for internal needs until program on track, and no
Greek concessions until the full Troika report. (GR) Greece Fin Min
Stournaras: Greece requires additional €3B in measures for 2012;
measures must be decided in weeks. No new decisions expected before
Sept. It is very unlikely that Greece will receive an ...
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Been Following the EURO Now for Over 3 Months - and as all The data has Shown this pair (EUR/USD) is not out of the water yet - So some real good oppertunitys to Trade - and come out on the Piping Side.
Forex Flash: EUR/USD to continue to trend lower in the coming week – BBH
Things Don't seem to be Looking up for the EUR/USD - It will be a Tough week for the EURO - Look To go SHORT on any Rallys.
FXstreet.com (Córdoba) - The BBH analyst team looks for the euro to continue to trend lower in the coming week. "We often find that the euro is well-correlated with the US-German 2-year interest rate differential", they say. "The premium the US offers over Germany is hovering around 28 bp, best since late 2007. It has also increased nearly 10 bp since late June, as German yields have fallen sharply due to safe haven demand".
"The focus remains on Spain and Italy. In exchange for additional time to reach its deficit targets, the Spanish government agreed to new austerity measures, which were announced earlier this week", they explain. "Spain's 10-year yield has nonetheless retraced nearly 50% of the move since June 28/29 Summit and the negative feedback of a deeper recession will likely feed into the next round of cuts".
"Spain will issue bills on Tuesday and bonds on Thursday, which will be important watch to gauge the market's demand for Spanish debt. Lastly, ZEW surveys out July 17 are likely to point to continued euro zone weakness", they add.
According to BBH key levels for EUR/USD on the upside are seen near $1.2340, $1.2460, says BBH while supports come near $1.2150, $1.1880.
FXstreet.com (Córdoba) - The BBH analyst team looks for the euro to continue to trend lower in the coming week. "We often find that the euro is well-correlated with the US-German 2-year interest rate differential", they say. "The premium the US offers over Germany is hovering around 28 bp, best since late 2007. It has also increased nearly 10 bp since late June, as German yields have fallen sharply due to safe haven demand".
"The focus remains on Spain and Italy. In exchange for additional time to reach its deficit targets, the Spanish government agreed to new austerity measures, which were announced earlier this week", they explain. "Spain's 10-year yield has nonetheless retraced nearly 50% of the move since June 28/29 Summit and the negative feedback of a deeper recession will likely feed into the next round of cuts".
"Spain will issue bills on Tuesday and bonds on Thursday, which will be important watch to gauge the market's demand for Spanish debt. Lastly, ZEW surveys out July 17 are likely to point to continued euro zone weakness", they add.
According to BBH key levels for EUR/USD on the upside are seen near $1.2340, $1.2460, says BBH while supports come near $1.2150, $1.1880.
Tuesday 10 July 2012
Here’s Why Euro Was Dumped After ECB Press Conference…
ECB decided today to move its main refinancing rate at a historical low level and explained the central banks action in the ECB Press Conference that followed, here are some highlights: (EU) ECB Chief Draghi (Prepared Speech): Economic growth in the euro zone remains weak, heightened uncertainty is weighing on confidence. Inflation pressure over the policy horizon has been dampened further ECB retains its full ability to maintain price stability by acting in a firm and timely manner. Q2 euro zone GDP showed continued economic weakening, euro zone economy will recover gradually. Credit conditions, balance sheet adjustments, debt crisis and high unemployment ...
Tuesday 3 July 2012
EUR/USD consolidates above Fibo support
FXstreet.com
(San Francisco) - Monday saw the EUR/USD pair peel back slightly after
EU summit-inspired rallies late last week, although it appears market
pessimism might be creeping in.
The U.S. dollar advanced against most of trading counterparts overnight, fueled by negative manufacturing readings in the US, with the ISM PMI having signaled its first contraction (below 50.0) since July 2009.
On the other side of the coin, the euro encountered selling interest after news that Finland and the Netherlands are opposing plans to give the ESM the option to buy government bonds.
“The EUR/USD fell to find support around 1.2570, 23.6% retracement of this year slide, and consolidates nearby in a tight range,” comments Valeria Bednarik, Chief Analyst at FXstreet.com.
The analyst adds: “The downside is favored if price breaks below mentioned Fibonacci support, while only a clear recovery above the [4-hour 200 EMA] should point for a short term bullish rally in the EUR/USD.”
EUR/USD sits quietly around the 1.2580 mark in early Asia after closing New York a 1.2575 vs. 1.2655 late Friday. To the downside, further support is noted at 1.2520 and 1.2490, while resistance levels lie at 1.2625, 1.2680 and 1.2710.
The U.S. dollar advanced against most of trading counterparts overnight, fueled by negative manufacturing readings in the US, with the ISM PMI having signaled its first contraction (below 50.0) since July 2009.
On the other side of the coin, the euro encountered selling interest after news that Finland and the Netherlands are opposing plans to give the ESM the option to buy government bonds.
“The EUR/USD fell to find support around 1.2570, 23.6% retracement of this year slide, and consolidates nearby in a tight range,” comments Valeria Bednarik, Chief Analyst at FXstreet.com.
The analyst adds: “The downside is favored if price breaks below mentioned Fibonacci support, while only a clear recovery above the [4-hour 200 EMA] should point for a short term bullish rally in the EUR/USD.”
EUR/USD sits quietly around the 1.2580 mark in early Asia after closing New York a 1.2575 vs. 1.2655 late Friday. To the downside, further support is noted at 1.2520 and 1.2490, while resistance levels lie at 1.2625, 1.2680 and 1.2710.
EUR/USD Jul 03 at 03:27 GMT
1.2592/92 (0.11%)
H1.2600 L 1.2574
| S3 | S2 | S1 | R1 | R2 | R3 |
|---|---|---|---|---|---|
| 1.2454 | 1.2485 | 1.2517 | 1.2630 | 1.2661 | 1.2693 |
| Trend Index | OB/OS Index |
|---|---|
| Data updated on Jul 03 a 02:30 GMT (15-minute timeframe) | |
| Slightly Bullish | Extremely Oversold |
4 Reasons Why the EU Summit Rally Might Reverse
European Union (EU) leaders rocked the markets last week with a set
of plans designed to put an end to the euro zone's debt crisis. Word
through the grapevine is that top EU officials stayed up all night just
to put their differences aside and come up with potential solutions for
their economic problems.
Among these proposals are plans to allow financially troubled banks to receive bailout funds directly instead of doling them out to governments and increasing their debt burdens in the process. Another proposal involved combining the ESM and EFSF in order to bail out bond markets. EU leaders also decided to create a 120 billion EUR economic growth pact aimed at supporting euro zone economies and preventing a rerun of the debt crisis later on.
Markets took the news positively as most major pairs skyrocketed by nearly a couple hundred pips. But did traders simply overreact to the announcements? Here are four reasons why the EU Summit euphoria might not last:
1. Traders set the bar so low.
Traders have been so used to hearing nothing more than vague plans from EU leaders during their previous meetings, and it didn't help that German Chancellor Angela Merkel seemed unwilling to yield to other EU leaders' demands prior to the recent summit. Because of that, market participants were bracing themselves for the worst and were expecting either more bickering or further inaction this time around.
Although traders were initially overjoyed about the announcements made after the recent EU Summit, they could realize later on that the results weren't that much different from the previous summits. Once that happens, the rallies could reverse quickly as traders might grab the opportunity to reenter their short positions at better prices.
2. No concrete steps were taken at all.
Taking a closer look at the EU leaders' announcements would reveal that, at the end of the day, no concrete action was taken and that all they came up with are plans.
For one thing, the decision to grant financially troubled banks direct access to bailout plans is still dependent on the creation of a centralized banking authority, which the EU leaders plan to put in place at the end of this year. At the rate the debt crisis is escalating, the euro zone can't really afford to wait another six months!
On top of that, EU leaders didn't make any commitments to provide adequate funding to the debt-ridden nations. Bear in mind that the combination of the emergency funds would only amount to 500 billion EUR, which is barely enough to meet Italy's and Spain's debt needs.
3. Germany barely budged.
Italian Prime Minister Mario Monti might have gotten Merkel to agree to direct funding to Spain and Italy, but she's still far from being completely on the bandwagon with the rest of the EU.
Apparently, Germany still isn't sold on the idea of being the lender of last resort, which was basically what most EU nations were hoping for.
Also, you'll notice that while many topics were touched upon in the summit, there was no talk whatsoever of Eurobonds. In the past, Merkel hasn't been shy about voicing her anti-Eurobonds sentiment, so the lack of progress on debt mutualization after a supposedly productive EU summit is certainly concerning.
4. EU leaders simply bought more time.
In a nutshell, the plans that European leaders ironed out basically involve funding debt with more debt, which is merely a band-aid solution instead of a long-term fix. In other words, the EU is simply buying itself more time.
Don't even get me started on the 120 billion growth pact that's supposed to enhance the region's long-term growth prospects. Not only is it PEANUTS, but most of it has already been set aside and budgeted! Think about it: if this same 120 billion looked tiny when it was first proposed, what more now?
Among these proposals are plans to allow financially troubled banks to receive bailout funds directly instead of doling them out to governments and increasing their debt burdens in the process. Another proposal involved combining the ESM and EFSF in order to bail out bond markets. EU leaders also decided to create a 120 billion EUR economic growth pact aimed at supporting euro zone economies and preventing a rerun of the debt crisis later on.
Markets took the news positively as most major pairs skyrocketed by nearly a couple hundred pips. But did traders simply overreact to the announcements? Here are four reasons why the EU Summit euphoria might not last:
1. Traders set the bar so low.
Traders have been so used to hearing nothing more than vague plans from EU leaders during their previous meetings, and it didn't help that German Chancellor Angela Merkel seemed unwilling to yield to other EU leaders' demands prior to the recent summit. Because of that, market participants were bracing themselves for the worst and were expecting either more bickering or further inaction this time around.
Although traders were initially overjoyed about the announcements made after the recent EU Summit, they could realize later on that the results weren't that much different from the previous summits. Once that happens, the rallies could reverse quickly as traders might grab the opportunity to reenter their short positions at better prices.
2. No concrete steps were taken at all.
Taking a closer look at the EU leaders' announcements would reveal that, at the end of the day, no concrete action was taken and that all they came up with are plans.
For one thing, the decision to grant financially troubled banks direct access to bailout plans is still dependent on the creation of a centralized banking authority, which the EU leaders plan to put in place at the end of this year. At the rate the debt crisis is escalating, the euro zone can't really afford to wait another six months!
On top of that, EU leaders didn't make any commitments to provide adequate funding to the debt-ridden nations. Bear in mind that the combination of the emergency funds would only amount to 500 billion EUR, which is barely enough to meet Italy's and Spain's debt needs.
3. Germany barely budged.
Italian Prime Minister Mario Monti might have gotten Merkel to agree to direct funding to Spain and Italy, but she's still far from being completely on the bandwagon with the rest of the EU.
Apparently, Germany still isn't sold on the idea of being the lender of last resort, which was basically what most EU nations were hoping for.
Also, you'll notice that while many topics were touched upon in the summit, there was no talk whatsoever of Eurobonds. In the past, Merkel hasn't been shy about voicing her anti-Eurobonds sentiment, so the lack of progress on debt mutualization after a supposedly productive EU summit is certainly concerning.
4. EU leaders simply bought more time.
In a nutshell, the plans that European leaders ironed out basically involve funding debt with more debt, which is merely a band-aid solution instead of a long-term fix. In other words, the EU is simply buying itself more time.
Don't even get me started on the 120 billion growth pact that's supposed to enhance the region's long-term growth prospects. Not only is it PEANUTS, but most of it has already been set aside and budgeted! Think about it: if this same 120 billion looked tiny when it was first proposed, what more now?
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