MARKET BRIEFING – LONDON OPEN 04.08.2015
Standard & Poor’s rating agency revised the European Union’s outlook from “Stable” to “Negative”. The outlook downgrade affects all the current 28 European members, 9 of which do not participate in the Eurozone, therefore using their own currency.
The reason for the downgrade, among other issues is that “the EU will provide first-loss guarantee support for financing connected to the Juncker Plan”, as the agency cited.
The Investment plan, announced last November by the European commission President Jean-Claude Juncker was created to encourage investments in Europe. It was approved by the European Parliament in June. The Juncker stimulus plan is expected to roll out 315 billion euros over three years.
The challenge with the plan is its assumption for the EU to “provide first-loss guarantee support”, therefore will provide financed backup.
The second reason is that the plan brings a significant economic pressure on the three largest EU budgetary contributors – Germany, United Kingdom and France.
Furthermore, “the EU’s repeated use of its balance sheet to provide higher-risk financing to EU member states (most recently including Greece), without the member states’ paying in capital,” was brought up in the press release.
“The negative outlook on the EU also reflects its lack of any paid-in capital, a key difference compared with other multilateral institutions. The EU continues to run a very large negative net asset position, largely reflecting its considerable pension obligations” – the statement continues.
The recently financed part of the Greek bailout, in addition to previous funding of the weaker members such as Spain, Portugal and Cyprus have taken a toll on the EU budget. However, there is not much capital coming in from the 28 member states union.
EURUSD
The intraday technical outlook
Trend 1 hour: Range
Target 1: 1.1050
Target 2: 1.0848
Projected range in ATR’s: 0.0101
Daily control level: 1.1125
GBPUSD
The intraday technical outlook
Trend 1 hour: Range
Target 1: 1.5679
Target 2: 1.5489
Projected range in ATR’s: 0.0095
Daily control level: 1.5670
USDJPY
The intraday technical outlook
Trend 1 hour: Range
Target 1: 124.59
Target 2: 123.45
Projected range in ATR’s: 0.5719
Daily control level: 124.45
USDCHF
The intraday technical outlook
Trend 1 hour: Up
Target 1: 0.9762
Target 2: 0.9614
Projected range in ATR’s: 0.0095
Daily control level: 0.9710
USDCAD
The intraday technical outlook
Trend 1 hour: Up
Target 1: 1.3249
Target 2: 1.3059
Projected range in ATR’s: 0.0095
Daily control level: 1.2910
AUDUSD
The intraday technical outlook
Trend 1 hour: Range
Target 1: 0.7367
Target 2: 0.7199
Projected range in ATR’s: 0.0084
Daily control level: 0.7260
GOLD
The intraday technical outlook
Trend 1 hour: Down
Target 1: 1101.01
Target 2: 1066.57
Projected range in ATR’s: 17.22
Daily control level: 1105.00
OIL
The intraday technical outlook
Trend 1 hour: Down
Target 1: 51.58
Target 2: 48.76
Projected range in ATR’s: 1.414
Daily control level: 55.50
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