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19 Feb 2013
Forex Flash: German ZEW will be main event today - BBH
Brown brothers Harriman analysts notes that the main economic events for this week will be the German ZEW survey today and then the flash PMI´s on Thursday.
Further, they note that the Italian elections this weekend look to be a close contest, and they see a real possibility of a hung parliament. However, aside from those risks, they comment that the future of the euro continues to be closely tied to that of short-term interest rate differentials. They write, “The 2-year US-Germany spread appears to be building a base above 15 bp. We expect caution ahead of the end of next week when European banks can begin paying back funds from LTRO II.”
From a technical perspective, the team feel that it’s worth noting that the 5-day moving average for EUR/USD has crossed below the 20-day moving average last week. They feel that this suggests some scope for a continued trend lower. However, on the other hand, the trend line drawn off the early Jan high is near $1.3440 on Monday and falls toward $1.3350 by the end of the week. They write, “A move above this trend line will help stabilize the technical tone.”
Further, they note that the Italian elections this weekend look to be a close contest, and they see a real possibility of a hung parliament. However, aside from those risks, they comment that the future of the euro continues to be closely tied to that of short-term interest rate differentials. They write, “The 2-year US-Germany spread appears to be building a base above 15 bp. We expect caution ahead of the end of next week when European banks can begin paying back funds from LTRO II.”
From a technical perspective, the team feel that it’s worth noting that the 5-day moving average for EUR/USD has crossed below the 20-day moving average last week. They feel that this suggests some scope for a continued trend lower. However, on the other hand, the trend line drawn off the early Jan high is near $1.3440 on Monday and falls toward $1.3350 by the end of the week. They write, “A move above this trend line will help stabilize the technical tone.”