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26 Feb 2013
Forex Flash: EUR crosses under pressure post Italian election - Societe Generale
Sebastien Galy, Senior FX Strategist at Societe Generale notes that EUR crosses came under pressure as Italian polls suggest a split vote with each chamber held potentially by a different party, whereas laws need to be approved by both chambers.
He sees that rising FX volatility has not yet mutated into a full blown correction, though the correction is deep. He writes, “USD/JPY remains a buy on the 90 handle and EUR/USD should hopefully hold above 1.30.” Nonetheless, he feels that gyrations in FX and now in equities are increasingly severe. He comments, “Such tendency for sharp corrections seen as opportunities to buy on dips are similar to the market behavior in 2007 as we advanced ever deeper into the sub prime crisis. The next key test will be the sequester decision in the US which does not seem to be going in an encouraging correction.”
He sees that rising FX volatility has not yet mutated into a full blown correction, though the correction is deep. He writes, “USD/JPY remains a buy on the 90 handle and EUR/USD should hopefully hold above 1.30.” Nonetheless, he feels that gyrations in FX and now in equities are increasingly severe. He comments, “Such tendency for sharp corrections seen as opportunities to buy on dips are similar to the market behavior in 2007 as we advanced ever deeper into the sub prime crisis. The next key test will be the sequester decision in the US which does not seem to be going in an encouraging correction.”