EUR/USD (1.4290) World Bank chief Robert Zoellick warned on Saturday that the world is entering a new economic ‘danger zone’, with confidence in leadership slipping. Mr Zoellick said we are in the early moments of a new and different economic storm, with the eurozone’s sovereign debt problems being more troubling than the medium and long-term funding problems that led to the US credit downgrade. He therefore urged economic leaders to ‘get ahead’ of the current issues before a crisis in confidence spreads to other, presently sustainable players in the global economy. In contrast, Mr Zoellick believes the US doesn’t face an imminent problem. However, the University of Michigan consumer sentiment index released on Friday suggests that confidence in the US is anything but inspiring. The number published was far worse than expected, revealing the lowest confidence in the US economy in 31 years. Two-thirds of those surveyed felt that the economic situation had taken a downturn, and three-quarters reckon there are worse times ahead. Meanwhile, Gallup revealed yesterday that the US President’s approval rating has slipped to an all-time low of 39 percent.
The stock markets further distanced themselves from Wednesday’s lows on Friday, pulling the euro higher in their wake. However, the single-currency remains within a consolidation zone between 1.4110 and 1.4415, with the key support at 1.4050. Better resistance stands at 1.4540.
Market Bias Index
The extreme overvaluation bias that the Swiss franc was carrying has diminished all but completely, and now traders likely perceive only the yen to be overvalued.
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Deutsche Bank
Fixed Income Research – Global