FXstreet.com (Barcelona) - Strategists Jens Nordvig and Saeed
Amen have taken a look at how the Euro crisis could play out in
The begin by noting that the FOMC minutes this week indicated that
a change in how the Fed conveys its forward rate is on its way, but
unlikely to arrive in December. On the political font, following
President Obama's victory there have been indications of some
willingness to compromise on measures to avert the fiscal cliff
leading to a dollar rally against G10 and EM with equities
generally falling lower.
Looking at the Euro crisis in 2013, they note that the eurozone
premium risk has declined following the ECB's OMT programme was
announced. They write, "This comes despite negative news, such as
the renewed tensions on Greece and the delays in Spain asking for a
bailout. However, the stabilisation in sovereign funding costs,
albeit at relatively high levels, has not translated into an easing
of financial conditions in Spain."
On a broader basis, they note that Eurozone growth has not been
able to bounce, as evidenced by the continued weakening in Eurozone
PMIs. Furthermore, they suspect that Eurozone growth is likely to
remain weak going forward and as such, maintain the view that there
will be a larger downside into 2013.
From a short term tactical perspective, however, they are not
inclined to chase the recent move lower, as a Spanish application
for aid could see EUR/USD bounce to around 1.2900. Looking at
USD/JPY, they are looking to enter long on dips and in the
Antipodes they are fundamentally bullish NZD and are selling
AUD/USD on the recent spike. Looking to Asia, they have paid
attention to the impending Korea elections and are expecting
USD/KRW to decline toward 1060 over the next six months.