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World Bank: East Asian economic prospects
China: the economists expect soft landing – the nation’s GDP growth will ease down from 9.1% on 2011 to 8.4% in 2012. The nation’s inflation rate will decline from 5.3% this year to 4.1% the next year.
Asia: economic growth of developing East Asia (without Japan, Hong Kong, Taiwan, South Korea, Singapore and India) will slow down from 8.2% in 2011 to 7.8% the next year.
According to the World Bank, Asia will be able to withstand the negative effects coming from the euro zone’s debt crisis with help of their high reserves and current account surpluses.
Credit Suisse: the climax for euro area is approaching
Analysts at Credit Suisse believe that in order to save the single currency European leaders –primarily, France and Germany – will have to reach by the middle of January “a momentous deal” to increase the degree of integration and transform the monetary bloc into the fiscal and political union.
The specialists expect that in this case the ECB will agree to cut its benchmark rate and provide banks with longer-term funds and do all it can to prevent euro’s collapse.
In their view, during the most critical moment the Italian and Spanish 10-year bond yields may surge above 9% and French yields may bounce above 5%.
Bloomberg reports that for the hints on the euro zone’s future one should pay attention to the European Commission’s recommendations on euro-area debt which are to be published this week and by the French President Nicolas Sarkozy’s speech next month on the 20th anniversary of the Maastricht Treaty.
MIG Bank, KBC Bank: euro’s gaining versus pound
The single currency is gaining versus British pound for the third day in a row as the market expects the Bank of England’s November meeting minutes (released tomorrow at 9:30 GMT) to show that the policymakers are inclining to more monetary stimulus to encourage the nation’s weak economic growth – UK Prime Minister David Cameron claimed yesterday that the growth figures are unsatisfactory.
As a result, investors’ pound-negative sentiment didn’t fade even as the Office for National Statistics reported that the country’s net excluding support for banks contracted from 7.7 billion pounds a year earlier to 6.5 billion pounds in October.
Analysts at MIG Bank note that the outlook for the pair EUR/GBP will turn bullish if manages to hold above 0.8652.
Strategists at KBC Bank claim that support for the single currency lies at 0.8595, 0.8553 (this week’s minimum) and 0.8518 (November 15 minimum), while resistance is seen at 0.8665 (50-day MA).
JPMorgan Chase: forecast for USD/JPY
Analysts at JPMorgan Chase believe that the greenback may renew record minimums versus Japanese yen in 2012.
In their view, in the first half of the next year USD/JPY will stay range bound due to the recession in Europe and weak economic growth in the rest of developed world.
In the second half of 2012 global economy will start stabilizing and the euro zone’s crisis will be moving to the resolution. As a result, the risk sentiment will improve. The economists think that the demand for US dollar as a safe haven will fall and it will go down versus the most of its counterparts including Japanese currency.
The strategists claim that the next year the pair may hit the levels of 70-72 yen. According to JPMorgan Chase, the risk of the Bank of Japan’s interventions aimed to weaken the national currency won’t prevent investors from buying yen as their effect will still be too short-lived.
Deutsche Bank: 2012 forecast for GBP/USD
Analysts at Deutsche Bank expect British pound to lose versus the greenback in the first half of the next year. At the same time, the specialists underline that sterling’s decline will be contained by $1.5100.
According to the bank, the pair GBP/USD will slide to $1.5300 in the first 3 months of 2012, and then fall to $1.5100 in the second quarter before rebounding to $1.5700 by the year-end.
Deutsche Bank: 2012 forecast for EUR/USD
Analysts at Deutsche Bank believe that the single currency will keep declining versus the greenback in the first half of 2012 as the European Central Bank will be under pressure to ease its monetary policy to help the region combat the debt crisis.
The specialists think that EUR/USD will go down to $1.3000 in the first quarter of the next year, then hit $1.2500 by the middle of the year and recover to $1.3500 by the year-end.
Consensus Economics: seasonal effect on euro
Consensus Economics, a macroeconomic survey firm, notes the demand for the single currency tends to pick up in December. It happens because portfolio managers buy euro as the riskier asset trying to get more profit to make their holdings look better ahead of the year-end.
According to the data processed by the company, the European currency usually gains about 0.4% and US dollar retains its value, while Canadian dollar and British pound weaken.
Strategists at BMO Capital Markets, however, underline that the euro zone’s debt crisis may change the situation and doubt that in the current circumstances euro will be able to get a lift from the seasonal effect.
Some experts say that taking into account everything mentioned above, the market’s pressure on the ECB to ease policy will play the role of euro's rate determinant.
Societe Generale: commodity currencies are to decline
Analysts at Societe Generale warn that the failure of US Congressional supercommittee to agree on the debt-reduction measures will heavily weight on American economy affecting the rest of the world.
The specialists believe that the forced automatic spending cuts of $1.2 trillion will result in the fiscal drag of 1.5%. In other words, if US GDP growth is projected to be 1%, then the nation will face economic contraction. This combined with the European crisis will have a very negative impact on the global economy. As a result, the bank expects that commodity currencies which depend on the economic growth will get under pressure, while the greenback will restore its safe haven status.
Societe Generale is bearish on Canadian dollar as Canada’s economy is closely tied to the US one and Australian dollar which will suffer as the situation in the US and China deteriorates.
The strategists advise selling AUD/JPY being cautious about the Bank of Japan’s intervention risk. In their view, one may also open shorts AUD/USD and longs on USD/CAD.
Commerzbank: comments on GBP/USD
Technical analysts at Commerzbank note that British pound fell versus the greenback below the $1.5615 level representing 61.8% Fibonacci retracement of its October advance. In their view, the outlook for GBP/USD is bearish.
The specialists believe that the pair’s on its way down to $1.5463 (78.6% Fibonacci retracement) and $1.5271 (October 6 minimum). In the longer term, the downside target will be found at the uptrend line from 2009 to 2011 at $1.5050. This support level will likely hold the initial attack of the bears.
According to the bank, resistance levels are situated at $1.5888 (November 18 maximum) and $1.6026 (downtrend line).
Barclays Capital: survey about euro zone’s future
Analysts at Barclays Capital conducted survey among 1,000 of its clients asking their opinion about the euro area’s future.
The survey showed that the number of investors expecting at least one country to leave the currency bloc increased in 2 times since September: almost 50% of the respondents now think that this will happen the next year.
The majority of the surveyed believe that if some nation quits it would be Greece. 5% of the bank’s clients say that all 5 troubled peripheral nations – Greece, Portugal, Ireland, Italy and Spain – will desert the monetary union.
The region’s economic prospects are perceived as pessimistic: 70% of the respondents claim that Europe will fall into recession.
Barclays underlined that investors don’t think that Greece’s leaving will stop the debt crisis. The bank’s clients expect the European Central Bank to act helping euro zone’s economy with additional stimulus.