Sentiments recovered as the week started on the back of record Black Friday sales in US and IMF's Italian bailout rumor. According to the data from US National Retail Federation released Sunday, retail sales over the four-day weekend following Thanksgiving jumped 16% to $54.2b, affirming the view that US's recovery is still having some momentum. It's reported that the IMF was preparing a bailout package for Italy after the country's benchmark 10 year yield continued to stay above the unsustainable 7% level. The package would amount to up to EUR 600b and there were discussions on what form of support could be offered. However, the rumor was later dismissed by IMF as it denied of any discussions on bailout program for Italy.
Moody's warned that the current sovereign debt crisis is now "threatening the credit standing of all European sovereigns." The rating agency noted that according to its "central scenario", the "euro area will be preserved without further widespread defaults". But even in that case, there are still "very negative rating implications in the interim period". Meanwhile, the probability of "multiple defaults" is "no longer negligible". And "a series of defaults would also significantly increase the likelihood of one or more members not simply defaulting, but also leaving the euro area."
BoJ Governor Shirakawa noted that the "most significant risk" to the Japan's recovery is the sovereign debt problem in Europe. The "shrinking market confidence in its fiscal state is heightening concern about the stability of the region's financial system, which in turn is affecting the economy." Meanwhile, Shirakawa also noted that the "rises in the yen may hurt Japan's economy by reducing exports and corporate profits as well as by worsening business sentiment". Shirakawa said the bank will "strive to ease aggressively, both in terms of interest rates and the amount of liquidity". But he also noted that "to believe that deflation could be solved by printing money alone would be to take a too simplistic view of the problem".
Technically, the recovery in major currencies, or the retreat in dollar is so far too weak to warrant a reversal in the near the risk aversion trend. We'd stay cautiously bullish in the dollar index as long as 77.53 minor support holds. Also, the index is now pressing neckline resistance of a medium term head and shoulder bottom pattern (ls: 75.63, h: 72.69, rs: 74.72). And, sustained break of 79.84 will have very bullish implication for 82.58 fibonacci level and above.
Moody's warned that the current sovereign debt crisis is now "threatening the credit standing of all European sovereigns." The rating agency noted that according to its "central scenario", the "euro area will be preserved without further widespread defaults". But even in that case, there are still "very negative rating implications in the interim period". Meanwhile, the probability of "multiple defaults" is "no longer negligible". And "a series of defaults would also significantly increase the likelihood of one or more members not simply defaulting, but also leaving the euro area."
BoJ Governor Shirakawa noted that the "most significant risk" to the Japan's recovery is the sovereign debt problem in Europe. The "shrinking market confidence in its fiscal state is heightening concern about the stability of the region's financial system, which in turn is affecting the economy." Meanwhile, Shirakawa also noted that the "rises in the yen may hurt Japan's economy by reducing exports and corporate profits as well as by worsening business sentiment". Shirakawa said the bank will "strive to ease aggressively, both in terms of interest rates and the amount of liquidity". But he also noted that "to believe that deflation could be solved by printing money alone would be to take a too simplistic view of the problem".
Technically, the recovery in major currencies, or the retreat in dollar is so far too weak to warrant a reversal in the near the risk aversion trend. We'd stay cautiously bullish in the dollar index as long as 77.53 minor support holds. Also, the index is now pressing neckline resistance of a medium term head and shoulder bottom pattern (ls: 75.63, h: 72.69, rs: 74.72). And, sustained break of 79.84 will have very bullish implication for 82.58 fibonacci level and above.