Forex Flash: EUR/USD could decline to 1.27 year-end – Scotiabank

The shared currency keeps the negative tone around the mid 1.3300s on Friday, after a failed attempt to break above 1.3375/80
Weak economic fundamentals have slapped the euro in the current week, taking a toll on the cross mainly after the lackluster GDP prints in the euro zone and its members.

Camilla Sutton, Chief Currency Strategist at Scotiabank commented, “We would suggest there are limits to EUR appreciation as the fundamental economic consequences are a concern; accordingly any further upside EUR pressure will be met with stronger political commentary and pressure on the ECB to soften its stance… We hold a relatively bearish call on EUR, expecting it to close the year at 1.27”.

Feb 15, 2013

Forex Flash: Gilts look increasingly unattractive following break lower – RBS

According to Dmytro Bondar, a Technical Markets Strategist at RBS, “From safe havens, Gilts look far less attractive, as a break of the recent ranges brought he market to the 114.58 retracement level (50% of 2012 extremes), while the former support of 116.00 has now turned into resistance. The overall bias is for a range of 114.60-116.60 with a possible recovery towards 117.80 if the latter is broken. However, this is unlikely to happen in the near-term. For the next week, we favor a range trade between 114.60 and 116.60. A break of 114.58 triggers a move to 114.00 and 113.14 – an upside break points to recovery towards 117.82.

Forex Flash: Tracing the impact of bonds on equities – Goldman Sachs

In practice the precise level at which bond yields start to impact negatively on equities is difficult to estimate. According to the Economics Research Team at Goldman Sachs, “A rise of 200 bp from current levels may be perceived very differently from such a rise when bond yields were at 5% or more. Ultimately, much will depend on the reasons why they are rising.”