Connexion
/ Inscription
Mon espace
Questions de gestion
ABONNÉS
Partager par Linked-In
Partager par Xing
Partager par Facebook
Partager par email
Suivez-nous sur feedly

What Have Global FX Markets Been up to?

By  Angus Campbell, Head of Market Analysis at Capital Spreads.

You won't win any prizes for guessing that the euro is the most popular currency to trade at the moment and it has held onto its popularity crown for a considerable amount of time. The single currency has been a topic of conversation ever since the banking crisis of 2008 morphed into the sovereign debt crisis of 2010, and now two years on we are still talking about the eurozone every day with little end in sight.

Most recently the President of the ECB, Mario Draghi said that he would do "whatever it takes" to save the euro which triggered a prolonged rise in risk assets and in particular a recovery by the single currency. This was an exceptionally bold statement for any central banker to make, especially since it was during a speech that was outside of any official policy meeting and regular press conference but it got investors pressing the buy button faster than you can say "bid". This took EUR/USD to the 1.2400 level which many had not expected to happen since only a few weeks ago the calls were growing for a return to 1.1800 and even 1.1500. A short squeeze many might say but a least those clients who had been trying to pick the bottom of the bearish euro move were happy to see the bounce.

So now we've seen this bounce within a clearly bearish medium to long term trend, is there room for more upside or will the calls of sub 1.2000 be right.

The concern is that Mr Draghi's comments were carefully planned and designed to prevent a catastrophe. We know that in the past he's done that with his Securities Markets Program (SMP) and Long Term Refinancing Operation (LTRO) which meant another banking crisis had narrowly been avoided, so what was he so scared of this time? Was Spain about to go kaput?

Was Greece about to exit or was Italy's Prime Minister about to pick up the telephone to request a bailout? We are unlikely to ever know but it is very possible that something was amiss otherwise he wouldn't have said it and to date so spectacularly misled the markets as he hasn't backed his words with actions.

 The general consensus is that the euro is well supported over the near term and any other talk of protecting it from Mr Draghi could put more pressure on the mass of shorts that are still expectant of a euro collapse.

But over the longer term the view is that the trend still has a southward tinge to it and the sticky plasters will not prevent the inevitable. Whatever happens in the coming months we will still be talking about the euro for a long time to come.

Next up for our clients is GBP/USD or more commonly referred to as "cable". Sterling has been impressive in recent months in its resilience, and in general it is still perceived as a safe haven currency. But many argue that with the UK's growth prospects continually being downgraded and record low interest rates of 0.5% which could even be slashed further later this year, the days of sterling strength are numbered. Let's face it the debt mountain that the coalition government have been at pains to reduce has barely had a dent put in it.

Against the euro the Great British pound also seems to be defying gravity and in this instance there are few who would bet against the euro making much ground against GBP due to the continual woes affecting the eurozone and single currency. But where clients are expecting the real action when it comes to sterling is in GBP/USD as sellers of cable have been creeping in. There are rather a few bears of sterling against the dollar, but the greatest challenge to their view is that no matter how poor the UK's fiscal position looks, if the US starts ramping up the stimulus measures again this could easily send the dollar tumbling again.

 Last but not least the Aussie dollar is another favourite for clients.

Down under the Australian economy continues to boom and the Reserve Bank of Australia has got interest rates way above those of Western central banks.

Whilst they have gradually been bringing that base rate down in the past year, their currency remains strong against the US greenback. The parity level remains a force to be reckoned with and for now those commodity bulls remain in the ascendency. As is the case mentioned with cable above, if the Federal Reserve does get QE3 underway then this could precipitate another sudden move higher for AUD/USD.

It would seem that whatever happens in the currency markets for the rest of this year there are two major events that could impact them - the euro and the Fed. We will watch and wait to see how things unfold.

Lire la suite...


Articles en relation