Well Euro held in there well yesterday after a punishing 10 previous days. Plenty of chat and headlines around China and Italy support but as seen before the support for Spain did not amount to anything decent. Italy’s auction will be watched closely. Valentin Marinov (Strategy) notes that proposed EFSF issuance of EUR25bn to year-end may offer Beijing a more attractive AAA-alternative to BTPs. Thoughts on Euro from here Citi Tech still think 1.3750 shorting zone before a re look lower to the 1.3475/85 region. Before hand intra day we look at 1.3575 below and resistance 1.3700/10.
Eur/Chf still looks softish compared to other Eur/XXX in last 24 hours….
Fed officials Fisher and Bullard both sounded skeptical about the merits of further easing steps.
Aud supported again o/n but view here until 200DMA breaks at 1.0385 short side still has value.
Usd /Asia saw short covering again as PBOC set fix at 6.3982 (up 60 pips).
Citi Economics-Sovereign Ratings Outlook
We expect a series of sovereign ratings downgrades among euro area countries in the next 3-6 months, including Italy, Spain, Greece, Portugal and Cyprus. We also expect Italy, Spain, Portugal and Ireland to be downgraded further over the longer term (next 2-3 years). Over the next 2-3 years, we also expect that France and Austria are likely to be put on negative outlook, with Belgium at risk of a single notch downgrade.
(Full piece can be seen below)
Orderbook
Eur-Topside stops 1.3695 to 1.3720 then sellers higher to 1.3925. Below stops initially 1.3675 then again 1.3650 to 1.3620 with buyers controlling lower to 1.3410.
Eur/Chf-No surprise buyers ahead of 1.2000 stops below (reminds me of the good old days when BOJ was defending 100 in usdjpy-That all ended in tears)
Sovereign Ratings Outlook: September 2011
- This is a new regular publication which aims to anticipate changes in sovereign credit ratings, and ratings outlook, for advanced economies.
- We expect a series of sovereign ratings downgrades among euro area countries in the next 3-6 months, including Italy, Spain, Greece, Portugal and Cyprus. We also expect Italy, Spain, Portugal and Ireland to be downgraded further over the longer term (next 2-3 years). Over the next 2-3 years, we also expect that France and Austria are likely to be put on negative outlook, with Belgium at risk of a single notch downgrade.
- Over the longer term (next 2-3 years), we also expect that the sovereign ratings of the US and Japan will be downgraded in response to adverse medium-term fiscal trends.
- We do not currently expect the UK to be downgraded or put on negative outlook in the next few months or the longer term. But the UK is a relatively weak “AAA”, given the sharp rise in the fiscal deficit over recent years, surging public debts, large banking system, weak economic outlook and prospect that the deficit will overshoot official forecasts. The UK’s rating could be at risk if the coalition falls apart or eases up on the fiscal consolidation programme.
- We regard the smaller European countries (Switzerland, Sweden, Denmark and Norway) as fairly solid AAAs for now, albeit with some concerns over the rising fiscal deficit, sluggish housing market and poor export performance in Denmark.
- We do not expect any ratings upgrades among advanced economies, either over the next few months or the next 2-3 years.
Click here to read the full report:
http://www.easyforexnews.net/wp-content/uploads/2011/09/HKUG.pdf
Citi Investment Research & Analysis