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FOREX.com 2Q outlook: Optimism to drain from markets as Eurozone concerns resurface

Publication date: 2 April 2012
Author: FOREX.com

FOREX.com, the retail division of GAIN Capital (NYSE:GCAP), a global provider of online trading services, today released its 2Q Markets Outlook report focusing on major economies’ currency movements as well as across asset classes. Expectation is that market optimism will falter as problems in the Eurozone remain far from resolved.

In 2Q 2012, FOREX.com analysts expect worldwide economic growth to remain fragile, with the US continuing to outperform the troubled Eurozone. They expect the next few months to be a fairly tough economic environment as central banks of Europe and the US limit stimulus measures, which could boost the dollar and other safe havens while denting demand for riskier assets like stocks.
“The first quarter was all about stabilisation in the Eurozone debt crisis and signs of strength in the US economy. The outlook is not as rosy as we enter 2Q. Investors have to grapple with slowing growth in Europe and China, election risks in Greece and France, and continued uncertainty about future global central bank policy,” said Kathleen Brooks, Research Director, FOREX.com. “We believe the yen will continue to trend lower and the euro could be at risk from further downward pressure, especially as we expect the focus to shift from Greece to the growth data coming out of Spain and Portugal. Key risk events over the next few months include a failed bond auction and rising bond yields, which could send the euro flying south.”
Other expectations from the FOREX.com 2Q 2012 Markets Outlook include:
• We expect to see a pick-up in volatility from very low levels in the second quarter, as election fever grips Europe, China emerges from a period of weak growth and shifts in central bank policy cause waves in global financial markets

• Stocks to face a tougher quarter as investors concentrate on growth and the future direction of central bank policy. While stocks won’t fall precipitously, expect some pretty big pull-backs especially in European markets

• Australia to register lackluster growth and the Reserve Bank of Australia will remain on hold, with the direction of the Aussie dependent on what happens in China

• In the commodity sphere, gold to make a bottom before attempting another stab at last year’s highs. Also, will copper finally break out of its range and chase crude oil higher?
The FOREX.com research team also highlights potential price ranges for key pairs, such as EUR/USD, GBP/USD, USD/JPY, USD/CHF, and AUD/USD. Key cross-currency pairs like EUR/JPY and EUR/GBP are also covered.
The FOREX.com Markets Outlook provides commentary and market forecasts with its view of the direction of the world’s major currencies and other key financial markets. The report is prepared by Research Director Kathleen Brooks, Senior Technical Strategists Daniel Hwang, Chris Tevere, CMT, Eric Viloria, CMT, and Research Analyst Chris Tedder.

The full FOREX.com 2Q 2012 Markets Outlook Report is now available at www.forex.com under “Research”.

Forex and spot metals trading involves significant risk of loss and is not suitable for all investors. Contracts for Difference (CFDs) are not available to US residents.

The opinions and information in this report are for general information use and are not intended as an offer or solicitation to any product offered.

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