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| Action Insight Weekly Report | Markets Snapshot |
Euro Extended Fall after Black Friday Downgrade, EUR/USD Heading to 1.25Euro attempted a rebound last week following successful bond auctions in Spain but then selloff resumed after S&P downgraded nine Eurozone countries on a Black Friday. EUR/USD's recovery was limited well below 1.3 psychological level and is back heading towards 1.25. Meanwhile, EUR/AUD continued to make record low and broke 1.23. EUR/CHF is also weakened back below 1.21 as markets are aiming at testing SNB's determination to defend 1.2. Risk rally extended mildly further with DOW breached 12500 level but failed to sustain gains on European concerns. Thus, AUD/USD's rally attempt was limited below recent high and is still stuck in consolidation. Dollar index benefited from selloff in EUR/USD and closed the week strongly at 81.51. |
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| Featured Technical Report | |
EUR/JPY Weekly OutlookEUR/JPY recovered to 98.80 last week but upside was limited by 4 hours 55 EMA and the cross then dipped sharply. The break of 97.27 support in the end suggests that recent fall is resuming. Initial bias is on the downside this week for 61.8% projection of 102.53 to 97.27 from 98.80 at 95.54 next. On the upside, break of 98.80 resistance is needed to signal short term bottoming. Otherwise, near term outlook will remain bearish even in case of recovery. |
| Special Report |
2012 Forecast: Sterling Has Potential to Weaken Against EuroSimilar to the euro, the British pound will likely weaken against the US dollar amid risk aversion in the first half of the year. Against the euro, the pound had gained for 3 consecutive years since 2009 although the magnitude has been declining. In 2011, EURGBP has been on a down trend since the EU summit as pessimism that EU finance leaders would not be able to derive effective measures to resolve the sovereign debt crisis has made sterling a safe-haven asset in the short-term. We do not expect this to continue this year as the UK has its own fiscal and economic problems to struggle. The disaster these might cause is not less than the debt problems in the17-nation region. An option to alleviate the economic problems would be monetary easing. Without the need of majority vote, the BOE may deliver more dovish stance on the monetary outlook than the ECB in 2012. This would then weaken the British pound. |
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| Suggested Readings | ||
2012 Outlook
The Week in Review and Outlook | ||
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