Video

#SaxoStrats
Today's edition of the Saxo Morning Call features the SaxoStrats team discussing the continuing weakness of the US dollar as commodity prices recover ground and in the wake of key US equity indices hitting all-time highs Thursday.
Article / 19 November 2012 at 12:14 GMT

When PIIGS become FISH: The woes of France-Italy-Spain-Holland

Head of Trading / The ECU Group plc
United Kingdom

“Looking for FISH, don’t climb a tree” - Chinese proverb

Fish to pig In a week that has the potential to be very quiet for financial markets, with the Thanksgiving holidays damping volume and activity towards the end of the week, the Bank of Japan (BoJ) policy meeting and the Bank of England (BoE) policy meeting minutes are likely to grab attention.

The focus of the week is likely to be the Eurogroup meeting tomorrow, where I would expect some further positive sounds towards the Greek aid tranche. The risks perhaps are that the discussions move at a slightly faster pace and that there is an announcement about the formalisation of a Greek plan. That is perhaps not the central expectation but I would suggest that the risks for the EUR are very modestly skewed to the upside in the very short term.

In the bigger picture the situation for the eurozone continues to decline. The Q3 GDP data are very significant in this regard. This weeks Economist has a special feature on France which it describes as “The time-bomb at the heart of Europe”. While Spain and Italy saw their respective pace of economic declines slow, the Netherlands saw a very sharp and unexpected contraction. While in the short term I see the balance of risks as marginally positive for the EUR, the longer term risks are becoming increasingly negative and perhaps most significantly emanating from outside the periphery.

In 2008 until now, eurozone weakness has been epitomised by the troubles of the PIIGS {Portugal, Ireland, Italy Greece and Spain}; 2013 will likely see that focus shift to the FISH {France, Italy, Spain and Holland}.    

7y
fxtime fxtime
Holland IMHO is definately an economy to watch.....we see a hung tenuous government ready to scrap more fiscal largesse for Greece and frequently align themselves with Finland by suggesting Greece must go. Holland could well be the black swan event by demanding the above or demanding a referendum on the supposed budgetary increase currently being reviewed for 2014-2020...at present they too want a controlled tight budget probably at the expense of Greece as keeping their votive powers is proving hard in Holland. If they fail then yet another Dutch election looms.

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Tradingfloor.com permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Tradingfloor.com and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Tradingfloor.com is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Tradingfloor.com or as a result of the use of the Tradingfloor.com. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through Tradingfloor.com your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. Tradingfloor.com does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail