FXstreet.com

Euro Compass

1

0

What a rebound! For how long?

Fri, Oct 16 2009, 08:31 GMT
by UniCredit Research

UniCredit Group


  • After five quarters of contraction, eurozone GDP will resume growing in 3Q. We see GDP up 0.4% (with risks for an even stronger outcome), which we consider to be broadly in line with the area’s growth potential after the crisis. The industrial sector leads the way up, as the export revival and inventory rebuilding leave their mark. However, GDP should decelerate already in 4Q and for 2010 we confirm our 0.8% forecast. Euro appreciation increasingly looks like a threat to the recovery.
  • The credit crisis has severely impacted euro area residential investment, which started to decline fast in spring 2008. Housing investment is unlikely to recover in the near term because both supply and demand indicators continue to look weak. We see another leg of correction in residential investment that will last for the whole of 2010, though the pace of contraction is set to ease progressively. House prices, which follow with a lag and probably started declining outright at the beginning of this year, should continue to fall throughout 2010, though in an orderly way.
  • Oil prices are on the rise, but we confirm both our CPI forecasts (0.3% this year and 1.3% in 2010) and the risk scenario, still seen as broadly balanced. We argue that downside risks to our medium-term food inflation outlook allow our CPI projections to absorb temporary spikes in oil prices (within a rising trend) without the need for substantial revisions.
  • The final months of the year are traditionally characterized by demand for liquidity as investors square their books. That’s a supportive factor for the shorter maturities. In addition, inflation remains low, and central banks are in no hurry to start talking about rate hikes. The environment should be supportive mainly for the 2/5-year sector.
  • More risk appetite and higher stock markets should continue to support a firmer EUR-USD, but this alone will not be enough to boost EUR crosses, like EUR-JPY, EUR-CHF and EUR-GBP, as USD behavior across the board will be critical as well.


Archive

UniCredit Group  | Via A. Specchi, 16 00186 Roma
http://www.unicreditmib.eu/ | communication@unicreditgroup.eu

Legal disclaimer and risk disclosure

The content of the Investor Relations section (hereinafter, Investor Relations) of the UniCredit website is the property of UniCredit. No prior authorization is required to store the content of the section in any format, or to reproduce or consult the said content exclusively for personal use. The data, opinions and special sections (dates of assemblies, dates of board meetings, press releases, presentations, etc.) appearing in Investor Relations are included exclusively for the purpose of providing information on the activities of the UniCredit banking group, Gruppo Bancario UniCredit. The said data, opinions and special sections are not to be understood in any way as an incitement to saving on the part of the general public or as a means of promoting any specific form of investment or trading activity. Furthermore, the said data and information are not to be understood as a means of promoting or placing financial instruments, investment services, or banking/financial products/services. The information may be used for personal investment decision-making purposes entirely at the user's risk. Before terminating any operation directly or indirectly based on the information presented in Investor Relations, users are advised to contact their bank or other authorized financial broker for confirmation of the validity and accuracy of the said information and of the appropriateness of any such operations, as described in Investor Relations, in view of the user's personal needs, income, and economic or financial conditions. The information contained in Investor Relations is produced by internal Gruppo Bancario UniCredit sources. UniCredit reserves the right to modify the said information and the functional and operational use specifications applying to Investor Relations as and when it chooses to do so, at its own discretion and with no forewarning. UniCredit will do its utmost to ensure that the information presented in Investor Relations fully conforms to the requisites of reliability, truthfulness and accuracy, and that the said information is fully updated. UniCredit accepts no responsibility for any errors or imprecision in the content of Investor Relations resulting from circumstances that cannot be ascribed to UniCredit. Furthermore, UniCredit accepts no responsibility for any untoward consequences of brief or prolonged interruptions, delays or dysfunctions in the provision of the Investor Relations service due to power blackouts, telephone line failures, Internet failures or circumstances beyond the control of UniCredit. For all further information or explanations, please contact the operators indicated by the "Contacts" section of Investor Relations.


Interested in forex trading? forex brokerage firms!


FOREX.com
Contact the broker/FDM
Open a demo account
ACM Advanced Currency Markets SA
Contact the broker/FDM
Open a demo account
MIG INVESTMENTS SA
Contact the broker/FDM
Open a demo account
CitiFX Pro
Contact the broker/FDM
Open a demo account
Deutsche Bank
Contact the broker/FDM
Open a demo account

GET CASH BACK FOR YOUR TRADES!   Learn more about the Pip Rebate Program

Note: All information on this page is subject to change. The use of this website constitutes acceptance of our user agreement. Please read our privacy policy and legal disclaimer.

Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any doubts.

Opinions expressed at FXstreet.com are those of the individual authors and do not necessarily represent the opinion of FXstreet.com or its management. FXstreet.com has not verified the accuracy or basis-in-fact of any claim or statement made by any independent author: errors and Omissions may occur.

Any opinions, news, research, analyses, prices or other information contained on this website, by FXstreet.com, its employees, partners or contributors, is provided as general market commentary and does not constitute investment advice. FXstreet.com will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information.

©2009 "FXstreet.com. The Forex Market" All Rights Reserved.