Forex Forecast

Spanish Bank Deposits Decline Further The ECB’s bank deposit data showed Spanish bank deposits dropping 1.1% m/m in August (their lowest since April 2008), another timely reminder of the problems facing the banking system ahead of today’s presentation of a structural reform plan and 2013 budget to the EU later today.

Spanish Budget Due The euro managed to stay aloft overnight despite Spanish yields rising over 30 bp on Wednesday as concerns grew about the developing fiscal, political, and social situation in the country.

Spain In Focus Again Spanish 10y yields rose by 32bp to breach the 6.0% level yet again as risk assets sold off on Wednesday. Negative sentiment following the joint statement on ESM guidelines issued by the Finance Ministers of Germany, the Netherlands and Finland, and uncertainty about the early elections in Catalonia continued to weigh […]

Spain In The Spotlight Spanish ten year yields touched 6% again and the euro traded on a soft note on Wednesday, after a series of negative developments in the Eurozone.

Eurozone Clouds Gather The euro struggled overnight as the Financial Times reported that the Eurozone’s current deal over the bank bailout deal ruled out the ESM being allowed to provide recapitalization for ‘legacy assets’.

High On Confidence Data in the US surprised to the upside on Tuesday. The consumer confidence index recorded the highest reading since February, rising to 70.3 in September from 61.3 and beating a consensus estimate of 63.1.

S&P Talks SNB Ratings agency S&P released a study on the wider impact of the SNB’s intervention policy. The study said the bank may have bought EUR80 bn of core Eurozone bonds in the 7 months to July, a policy which has helped push core Eurozone bond yields lower.

Japan Warns (Again) On FX USDJPY spent the entire Asia session sub-78.00, prompting Finance Minister Azumi to warn he stands ready to deal with speculative FX moves as long as he is in office.

Risk Appetite Softens USD and JPY gained across the board as investor risk appetite remained subdued overnight. A weak German IFO report triggered a selloff in EUR crosses, especially EURJPY and EURUSD, that continued in the New York session.

IFO Hits Euro As expected, German officials quickly poured cold water over on an article in Der Spegel suggesting that there are plans to leverage up the ESM to give it an effective lending capacity of EUR 2 trn.

Yen Nudging Higher USDJPY inched lower overnight amid anticipation that Japanese life assurance companies will repatriate ahead of fiscal mid-year-end on Sept 30.