Issue link: https://maltatoday.uberflip.com/i/193056
15 BUSINESS & FINANCE maltatoday, WEDNESDAY, 16 OCTOBER 2013 Time for payback has come An outline of the events shaping the moves behind major currencies throughout last week Vincent Pellizzari EUR: Looking at the EUR/USD chart evolution last week, we can notice clearly how nervous the market was. Just like most major Forex currencies, the euro was driven by the debt ceiling negotiations from the US. As no major news came out and the situation looked blocked at the time of writing, the pair's drivers were mostly technical, even though, admittedly, even rumour and speculation left their mark on price action. From a technical point of view, the pair managed to stay above 1.3522 support after having failed to reach yearly high level of 1.3710. EUR/USD trading is choppy and will remain like this until no major news comes out to drive the market. Talking about market drivers, the 17 October debt ceiling deadline will be highly symbolic for the markets. Before that, forex traders will watch closely the German Zew index and the euro zone CPI figures to be released respectively on the 15 and 16 October. Better than expected figures should drive the euro higher given the on-going instability around the US dollar. In case of a debt ceiling raise, the impact on EUR/USD should be similar to August 2011, just after the US debt ceiling raise and its downgrade by but it also suggested that these still was broad support to taper the US Federal Reserve's bond-buying this year. The US Government Shutdown enters into its third week, the outcome of the US debt ceiling will be crucial for the US dollar. Failure to agree on raising the nation's $16.7 trillion debt ceiling by 17 October could potentially see the US government default S&P. The worst scenario, the one every market operator refuses to believe in, would be a US default and this could be much more damaging on the global economy than the effect of the collapse of Lehman Brothers. USD: Despite the USD's slight appreciation on hope of reaching an accord with regards to the debt ceiling issues, the dollar remains exposed to a major risky event, if no deal is reached. For information, the DXY known as the Bloomberg Dollar Index rose by 0.35% from its opening at 80.078 to close the week at 80.362. Failure to agree on raising the nation's $16.7 trillion debt ceiling by the 17 October could potentially see the US government default; as the government will run out of money to pay its bills and service its national debt. According to the International Monetary Fund, if this materializes it would result in higher interest rates for everybody across the world. Another major event last week was the release of the US Federal Reserve Meeting Minutes for September. The minutes revealed that the decision to maintain stimulus was a "close call", GBP: The British pound kept losing ground last week and the GBP/USD ended the week below the 1.60 key level. From a technical perspective we can notice that the 30 days moving average acts like a good support for the price action behind the Cable; which rebounded after posting weekly lows at 1.5914 last Thursday. The UK economic calendar will be quite throughout the course of the current week with some major news such as the Claimant Count Change and the ILO Unemployment rate to be released on Wednesday and the Retail Sales data next Thursday. Encouraging figures could provide a support for the current downtrend seen in the price action for the GBP/USD. AUD: Last week the Aussie appreciated against the US dollar for a second week in a row. Over the week, AUD/ USD gained 0.39% opening at 0.9431 and closing at 0.9468 posting a low of 0.9388. This suggests that there was significant volatility on the pair. This week the Aussie will be driven by many important macro data expected to be released on Friday 18 October. First, the speech of Glenn Stevens, the Reserve Bank of Australia's governor, is scheduled and later on that day we are expecting the release of the Chinese GDP figures for the third quarter of the current year. An optimistic speech and a good GDP could boost the Aussie higher maybe above 0.95 against the Greenback. Gold: On Friday Gold fell to 1263$/ounce in no longer than 30 minutes during the US opening, driven by a rumour of a possible deal between President Obama and the Republican House Speaker. The 1.8% sudden drop was triggered by a massive 2 million ounces of gold in one trade, it was so violent that the CME stopped trading for 10 seconds in search of liquidity to match the offer. From Friday's close of 1270$ an ounce to Monday's open at $1312 an ounce, there was a decline of 3.20%. How will the US Debt Ceiling impact gold and silver prices next week? Vincent Pellizzari is a trader at RTFX Ltd Thomas Smith 'Business is the solution' – Chamber Insurance Brokers Ltd eyes growth Alberto Bisazza Thomas Smith Insurance Brokers have appointed Alberto Bisazza to the position of General Manager. With a long and distinguished career in insurance, Bisazza brings a wealth of experience. Commenting on his appointment, Bisazza said, "It is certainly a great honour to take on the role of General Manager within such an established service group of companies on the island. Following the most recent branch opening of Thomas Smith Insurance Brokers in Mosta, the Brokerage side of Thomas Smith Group aims to grow further, and I am happy to be part of this exciting growth." In close to two decades of insurance experience, Bisazza's sterling career has included top management positions within the broking industry. Bisazza is currently the Vice Chairman of the Association of Insurance Brokers and also represents the insurance industry as Governor on the Board of Governors of FinanceMalta. Bisazza is married and has three children. "Business is not the problem, but rather the solution. Therefore, business has to take centre stage in the new economic plans the EU will be proposing and possibly introducing over the months to come." These were the concluding remarks of the address delivered by David G. Curmi, President of the Malta Chamber of Commerce, Enterprise and Industry at a conference organised by the Employers' Group of the European European Economic and Social Committee and the Malta Chamber of Commerce, Enterprise and Industry and other social partners on 11 October. Curmi opened the Conference 'Lessons from the economic crisis: An employer's perspective' together with Jacek Krawczyk – President of the Employers' Group, EESC. He said that in the Malta Chamber's point of view the current problems in the euro zone were well understood. Some countries needed to strengthen their balance sheets and improve their competitiveness through reform. He said that a number of eurozone countries and their populations were facing the painful effects of a grim reality that caught up with them. These countries had distributed wealth they had not yet earned and the structural debts they accumulated were not sustainable. People were living beyond their financial means with the false sense of comfort that the State was there to protect them. From a local dimension, Curmi said that ever since the emergence of the financial crisis, the Malta Chamber had called for economic direction based on two principles. He said that the Malta Chamber believed that wages must be better aligned to productivity especially when considering that other countries were implementing major reforms to become more productive and cost- competitive. The objective of the conference was to initiate a frank and open debate on the various responses to the financial and economic crisis in EU member states and analyse them from a business perspective. The aim was to encourage an exchange of views, diagnoses and practices between EESC Employers' Group Members and leading Maltese business representatives. Two panel discussions took place. The first dealt with questions from a national point of view and an ex- change of ideas as to how the governments and employers were dealing with the crisis and which best practices were adopted. The first panel was moderated by Vanessa Macdonald and included members of the EESC Employers Group. The second panel was moderated by Stefano Mallia, Vice President of the EESC Employers' Group. It discussed Europe's response to the economic crises and whether the EU was aware of the needs and realities of employers.