FBS_analytics
FBS Representative
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25/08/10 & 26/08/10
Russia, BIS, Asian sovereign sell euro (25.08.10)
EUR/USD presently trades at 1.2690. Russia has apparently joined in the selling. Stops just above the 1.2720/30 sell orders. Reports BIS and a large Asian sovereign have both been selling into the EUR/USD rally. So the pair back at 1.2700 from session high at 1.2725.
Moreover, Russia said to be buying cable in recent trade. Now the GBP/USD at 1.5430. Sell orders seen clustered up at 1.5480/00, stops probably not far north of there.
UBS AG: risk-averse investors are buying the franc (25.08.10)
The Swiss national currency increase to a new record against the united European currency after Ireland’s credit rating was cut to AA- by Standard & Poor’s. Investors seek the Swiss currency as a haven.
The Swiss franc advanced 0.4% against the euro to 1.2987 — the highest level since the single currency was introduced in 1999, and now it trades at 1.3030.
Since the beginning of 2010, the Swiss franc has appreciated more than 13% versus euro.
“Risk-averse investors are buying the franc as we have a mix of negative news,” said currency analyst at UBS AG. “Ireland has been downgraded, yesterday’s data from the U.S. were disappointing. In addition, stock markets are easing.”
Ireland’s credit rating was cut one step by Standard & Poor’s yesterday to AA-, the lowest since 1995, on concern the rising cost of supporting the country’s struggling banks will swell the budget deficit. In the U.S., sales of existing houses plunged by a record 27 percent in July, yesterday’s data show.
The franc has been pushed higher after Swiss National Bank President Philipp Hildebrand said that the bank’s ability to counter currency gains are “limited.” The central bank in June stopped purchases of foreign currencies after quadrupling holdings over the previous 15 months to bolster exports and fight deflation.
Stiglitz: European Economy at Risk of Double-Dip Recession (25.08.10)
Joseph Stiglitz, Nobel Prize-winning economist, think the European economy is at risk of falling into a recession as governments cut spending to reduce their budget deficits.
“Cutting back willy-nilly on high-return investments just to make the picture of the deficit look better is really foolish,” said Stiglitz.
Euro-area governments stepped up efforts to cut their deficits to below the European Union limit of 3% of gross domestic product after the Greek crisis earlier this year eroded investor confidence in the 16-member currency union. While the economy expanded at the fastest pace in 4 years in the II quarter, the recovery is showing signs of weakening.
“Because so many in Europe are focusing on the 3% artificial number, which has no reality and is just looking at one side of a balance sheet, Europe is at risk of going into a double-dip,” Stiglitz said.
Growth in Europe’s services and manufacturing industries slowed more than economists forecast in August and German investor confidence slumped to the lowest in 16 months. Moody’s Investors Service said yesterday that “risks to economic growth are clearly to the downside” in the euro-region economy.
The average budget deficit in the euro area will probably widen to 6.6% of GDP this year from 6.3% in 2009, the European Commission forecast in May. The Greek government aims to pare its shortfall, the region’s second largest, from 13.6% of GDP last year to 8.1% this year and to within the EU limit in 2014, it has said. The country has cut wages and pensions and increased taxes to stave off a default.
At 14.3% of GDP, Ireland had the highest deficit in the euro region last year. The shortfall will narrow to 11.7 percent this year, excluding the cost of bank bailouts, the commission forecast.
“Obviously, Ireland by itself is too small to determine what happens to Europe as a whole,” Stiglitz said. “But if Germany, the U.K. and other major countries follow this excessive austerity approach, Ireland will suffer.”
Stiglitz said that with companies still cutting jobs, he doesn’t expect economic growth to strengthen anytime soon.
“The problem is that we aren’t getting out of this current crisis very quickly,” he said. “What we’re doing is setting ourselves for a longer-term Japanese-style malaise of weak growth for an extended period of time. It’s very disturbing that people are talking about a new normal” with unemployment as high as 10 percent “which would be devastating.”
Morgan Stanley ended a bet against the euro (25.08.10)
Morgan Stanley ended a bet against the euro as U.S. economic weakness may “take a while” to influence Europe while the Federal Reserve moves closer to easing policy further.
“While we have been very vocal in recent weeks calling for dollar strength against the euro, the risk-reward has deteriorated and the risks of further easing measures by the Federal Reserve on September 21 are perhaps building,” analysts wrote today. “While it is likely that European data will eventually slow if the current bout of weakness in U.S. data continues, it might take a while to feed through.”
The short euro-dollar bet had a 20% weighting in the strategy team’s portfolio of trade recommendations and was ended with a profit of 326 basis points, or 3.26% points, the analysts wrote.
Roubini: U.S. economy increase will be “well below” 1% in the III quarter (26.08.10)
Nouriel Roubini, who predicted the global financial crisis, supposed U.S. economy increase will be “well below” 1% in the III quarter 2010. He said the possibility of a renewed recession at 40%.
Roubini said his forecast assumes the government will lower its estimate for growth in the II quarter to an annual rate of 1.2% “at best.”
“All the growth tailwinds of the first half of the year become headwinds in the second half,” Roubini said, including the government’s $814-billion stimulus plan, hiring for the census, and incentives such the cash-for-clunkers program and tax credits for first-time home buyers.
Economist expects an “anemic, sub- par, below-trend U for many years given the need and process of deleveraging” by households, governments and the financial system.
“With growth at a stall speed of 1% or below, the stock markets could sharply correct, and credit spreads and interbank spreads widen while global risk aversion sharply increases,” he said. “Thus a negative feedback loop between the real economy and the risky asset prices can easily then tip the economy into a formal double-dip,” he said, referring to two recessions in a quick succession.
The Commerce Department may report revised figures on Friday showing the economy grew at a 1.4% pace in the II quarter (earlier estimate was at 2.4%), because of a widening trade deficit, a smaller buildup of inventories and weaker construction.
On-line analytics from FBS always is available on: Free Forex Charts, Fundamentsl Forex Market Analysis, Live Forex Trading Charts, Forex Technical Analysis, Forex Forecasts - Analytics and market news - FBS
Russia, BIS, Asian sovereign sell euro (25.08.10)
EUR/USD presently trades at 1.2690. Russia has apparently joined in the selling. Stops just above the 1.2720/30 sell orders. Reports BIS and a large Asian sovereign have both been selling into the EUR/USD rally. So the pair back at 1.2700 from session high at 1.2725.
Moreover, Russia said to be buying cable in recent trade. Now the GBP/USD at 1.5430. Sell orders seen clustered up at 1.5480/00, stops probably not far north of there.
UBS AG: risk-averse investors are buying the franc (25.08.10)
The Swiss national currency increase to a new record against the united European currency after Ireland’s credit rating was cut to AA- by Standard & Poor’s. Investors seek the Swiss currency as a haven.
The Swiss franc advanced 0.4% against the euro to 1.2987 — the highest level since the single currency was introduced in 1999, and now it trades at 1.3030.
Since the beginning of 2010, the Swiss franc has appreciated more than 13% versus euro.
“Risk-averse investors are buying the franc as we have a mix of negative news,” said currency analyst at UBS AG. “Ireland has been downgraded, yesterday’s data from the U.S. were disappointing. In addition, stock markets are easing.”
Ireland’s credit rating was cut one step by Standard & Poor’s yesterday to AA-, the lowest since 1995, on concern the rising cost of supporting the country’s struggling banks will swell the budget deficit. In the U.S., sales of existing houses plunged by a record 27 percent in July, yesterday’s data show.
The franc has been pushed higher after Swiss National Bank President Philipp Hildebrand said that the bank’s ability to counter currency gains are “limited.” The central bank in June stopped purchases of foreign currencies after quadrupling holdings over the previous 15 months to bolster exports and fight deflation.
Stiglitz: European Economy at Risk of Double-Dip Recession (25.08.10)
Joseph Stiglitz, Nobel Prize-winning economist, think the European economy is at risk of falling into a recession as governments cut spending to reduce their budget deficits.
“Cutting back willy-nilly on high-return investments just to make the picture of the deficit look better is really foolish,” said Stiglitz.
Euro-area governments stepped up efforts to cut their deficits to below the European Union limit of 3% of gross domestic product after the Greek crisis earlier this year eroded investor confidence in the 16-member currency union. While the economy expanded at the fastest pace in 4 years in the II quarter, the recovery is showing signs of weakening.
“Because so many in Europe are focusing on the 3% artificial number, which has no reality and is just looking at one side of a balance sheet, Europe is at risk of going into a double-dip,” Stiglitz said.
Growth in Europe’s services and manufacturing industries slowed more than economists forecast in August and German investor confidence slumped to the lowest in 16 months. Moody’s Investors Service said yesterday that “risks to economic growth are clearly to the downside” in the euro-region economy.
The average budget deficit in the euro area will probably widen to 6.6% of GDP this year from 6.3% in 2009, the European Commission forecast in May. The Greek government aims to pare its shortfall, the region’s second largest, from 13.6% of GDP last year to 8.1% this year and to within the EU limit in 2014, it has said. The country has cut wages and pensions and increased taxes to stave off a default.
At 14.3% of GDP, Ireland had the highest deficit in the euro region last year. The shortfall will narrow to 11.7 percent this year, excluding the cost of bank bailouts, the commission forecast.
“Obviously, Ireland by itself is too small to determine what happens to Europe as a whole,” Stiglitz said. “But if Germany, the U.K. and other major countries follow this excessive austerity approach, Ireland will suffer.”
Stiglitz said that with companies still cutting jobs, he doesn’t expect economic growth to strengthen anytime soon.
“The problem is that we aren’t getting out of this current crisis very quickly,” he said. “What we’re doing is setting ourselves for a longer-term Japanese-style malaise of weak growth for an extended period of time. It’s very disturbing that people are talking about a new normal” with unemployment as high as 10 percent “which would be devastating.”
Morgan Stanley ended a bet against the euro (25.08.10)
Morgan Stanley ended a bet against the euro as U.S. economic weakness may “take a while” to influence Europe while the Federal Reserve moves closer to easing policy further.
“While we have been very vocal in recent weeks calling for dollar strength against the euro, the risk-reward has deteriorated and the risks of further easing measures by the Federal Reserve on September 21 are perhaps building,” analysts wrote today. “While it is likely that European data will eventually slow if the current bout of weakness in U.S. data continues, it might take a while to feed through.”
The short euro-dollar bet had a 20% weighting in the strategy team’s portfolio of trade recommendations and was ended with a profit of 326 basis points, or 3.26% points, the analysts wrote.
Roubini: U.S. economy increase will be “well below” 1% in the III quarter (26.08.10)
Nouriel Roubini, who predicted the global financial crisis, supposed U.S. economy increase will be “well below” 1% in the III quarter 2010. He said the possibility of a renewed recession at 40%.
Roubini said his forecast assumes the government will lower its estimate for growth in the II quarter to an annual rate of 1.2% “at best.”
“All the growth tailwinds of the first half of the year become headwinds in the second half,” Roubini said, including the government’s $814-billion stimulus plan, hiring for the census, and incentives such the cash-for-clunkers program and tax credits for first-time home buyers.
Economist expects an “anemic, sub- par, below-trend U for many years given the need and process of deleveraging” by households, governments and the financial system.
“With growth at a stall speed of 1% or below, the stock markets could sharply correct, and credit spreads and interbank spreads widen while global risk aversion sharply increases,” he said. “Thus a negative feedback loop between the real economy and the risky asset prices can easily then tip the economy into a formal double-dip,” he said, referring to two recessions in a quick succession.
The Commerce Department may report revised figures on Friday showing the economy grew at a 1.4% pace in the II quarter (earlier estimate was at 2.4%), because of a widening trade deficit, a smaller buildup of inventories and weaker construction.
On-line analytics from FBS always is available on: Free Forex Charts, Fundamentsl Forex Market Analysis, Live Forex Trading Charts, Forex Technical Analysis, Forex Forecasts - Analytics and market news - FBS
