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| Action Insight Weekly Report | Markets Snapshot |
Euro Rebounded Strongly but Sustainability Doubtful, Risk Appetite to ExtendEuro overcame the impact of S&P's massive downgrade of nine Eurozone states and strengthened broadly last week. Investors expressed their confidence in Eurozone sovereign bonds with solid demand seen in debt auctions while yield also dropped significantly. ECB's three year LTRO operation seemed to be working well in reducing stress in the the region's money markets as three-month dollar Libor dropped for consecutive nine days. In the FX markets, European majors outperform commodity currencies as Canada, Australia and New Zealand released some weak data over the week, and also on short covering in respective crosses. In stocks, US is clearly outperforming other regions with DOW extending recent strong rally and closed above 12700 level. Nonetheless, at the time of writing, the negotiation between Greece and private sector on the debt swap deal is not concluded yet and is posting some uncertainty for the week ahead. Also, technically, EUR/USD and EUR/JPY faced strong resistance from 1.3 and 100 psychological level respectively. EUR/GBP and EUR/AUD showed sign of renewed weakness just before the week closed. It's a bit doubtful whether the common currency could extend last week's rebound. |
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| Featured Technical Report | |
EUR/GBP Weekly OutlookEUR/GBP's consolidation from 0.8221short term bottom continued last week and edged higher to 0.8378, but failed to sustain gain there. After all, more consolidative trading could be seen in near term first. But rebound attempt should be limited by 38.2% retracement of 0.8830 to 0.8221 at 0.8454. We'd anticipate resumption of the larger decline from 0.9083 after the current consolidation. Below 0.8254 will be the first signal of fall resumption and should send EUR/GBP through 0.8221 low to 0.8067 key support. |
| Special Report |
China Watch: Shift To Monetary Easing Should Support Chinese Growth In 2012The Chinese economy grew +8.9% y/y in 4Q11, down from +9.1% in the prior quarter. Despite the slowdown, the result beat consensus and brought relief to those who worried that growth would have slipped below 8%. Expansion in the fourth quarter was driven by surge in industrial production and retail sales. For full year 2011, GDP growth reached +9.2%, in line with market expectations. The question now comes to how the world's second largest economy would perform in 2012 given external headwinds and domestic slowdown. In our opinion, a soft landing is a likely scenario and the chance of sub-8% growth is quite low as policy easing by the government helps limit the downside risks to growth. We expect GDP will grow by mid-8% in 2012. |
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