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Technical analysis: Euribor Futures

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Euribor – December 2009

Thu, Jul 23 2009, 08:43 GMT
by Nicole Elliott

Mizuho Corporate Bank  |  View company's profile


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Comment: Reuters’ Financial Crisis Poll this week has the overwhelming majority (80 analysts) suggesting the US government needs no further economic stimulus packages because the recession has ended or will end this year. Tempering this view they see the financial sector remaining in a mess for another 12 months, so that bank lending will not resume in earnest for another year or two. This goes some way to explain why Euro interbank yields are under the ECB’s 1.00% target on all maturities out to six months. Euribor futures have inched up to new record highs, front Sep to 99.140, and red months should outperform over the coming month. While there is little to stop futures contracts nudging even higher still, we remind that the mix of record low rates/record futures prices and a shaky banking system mean sudden slips and slides are highly likely.

Strategy: Attempt small longs at 98.975, adding on a drop to 98.895; stop well below 98.780. Upside target 99.000/99.065 short term and probably 99.250 medium term.


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