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  #121  
Old 11-02-2011, 10:20
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[COLOR="Green"]10/02/11

ANZ: buy AUD/USD on dips[/COLOR]

Currency strategists at ANZ claim that investors’ interest in Australian dollar declined after the employment data release.
The country added 24,000 jobs in January compared with the forecast level of 15,000, though the number of full-time workers declined. The unemployment rate stayed unchanged at 5%.
The pair AUD/USD eased down from 1.0100 ahead of the jobs data publication to the 1.0070 area. The specialists, however, note that earlier Aussie has already bounced around support at 1.0120 and then 1.0080. In their view, the most preferable strategy now is still buying on dips.

[COLOR="green"]RBS: comments on NZD/USD[/COLOR]
Currency strategists at RBS note that New Zealand’s dollar declined versus its US counterpart as investors’ risk appetite slightly weakened on negative dynamics of offshore equity markets. In addition there’s the lack of local data – the next release will be the publication of the retail sales on Monday.
The specialists draw investors’ attention to the Bank of England's interest rate statement later today. If British monetary authorities decide to increase the benchmark interest rate it will have negative impact on risk sentiment and, consequently, on New Zealand’s currency. If rates in the UK stay unchanged, kiwi will trade in its usual manner.
According to RBS, support level is found at 0.7665, while resistance is situated at 0.7788.

[COLOR="green"]Mizuho: USD/JPY momentum may turn bullish[/COLOR]
The greenback rose from Friday’s minimums versus Japanese yen at 81.10 to 82.70 levels today. Technical analysts at Mizuho Corporate Bank note that the pair USD/JPY reached the downtrend resistance line.
In their view, if dollars manages to close above the apex of a large “triangle” overcoming this barrier and a very thin daily Ichimoku Cloud, momentum will switch to bullish.
According to Mizuho, resistance levels are found at 82.72, 83.00 and 83.22, while support levels are situated at 82.34, 82.20 and 81.77.

[COLOR="green"]Citigroup: GBP/USD trading recommendations[/COLOR]
Strategists at Citigroup advise investors to buy GBP/USD on dips though they don’t think that the rate’s decline will be significant or last long.
The bank of England’s likely to leave the rates unchanged that will have only small negative impact on sterling.
The pair will reverse upwards after the central bank releases UK inflation report and the MPC minutes on February 16 and 23 respectively.

[COLOR="green"]Axel Weber probably won’t fight to become the ECB President[/COLOR]
The market’s speculating about the idea that Bundesbank President Axel Weber may not seek reappointment when his current term expires in April 2012. This means that the top candidate for the ECB president position quitted the game.
The focus is now turning on Italian central banker Mario Draghi, Luxembourg’s Yves Mersch, Erkki Liikanen of Finland and Germany’s Klaus Regling to replace Jean-Claude Trichet.
Weber’s retreat was a reminder that politics, not central banking ideology, will determine who succeeds Trichet. Economists at Barclays Capital say that whoever it will be may not much change the tone of ECB policy making, which is set by the consensus of a 23-member Governing Council. The ECB’s history shows that while the personnel changes the institution remains keen on the clearly defined mandate of maintaining price stability.
In any case German Chancellor Angela Merkel will have to persuade a skeptical German population that has so far disappointed in the single currency that bailing out indebted European nations and saving the euro is worth the cost.
Weber, who avoided commenting on the matter, will speak in Vienna today at 12:00 GMT.

[COLOR="green"]UBS: inflationary threat in developing economies[/COLOR]
Currency strategists at UBS note that the reason why emerging markets’ assets underperform versus developed markets’ ones during the major part of last two and a half months is that investors are worried about inflation.
Severe inflationary pressure in the emerging economies is created by 3 factors: food price inflation, high oil prices due to the instability at the Middle East and low interest rates of many developed nations’ central banks. As for the food prices the specialists believe that in case of another price shock they could increase exponentially from here as there’s no buffer for them right now. As food prices tend to follow oil prices, if the latter go up, there’ll be the second surge wave in the food prices as well.
According to UBS, developing countries have to stop worrying about their currencies and currency wars. The real war is fighting domestic inflation, underline the analysts, so emerging nations should normalize interest rates policies and let their currencies modestly appreciate, so that inflation could calm down. Unfortunately, they are doing exactly the opposite of that focusing just on the quantitative policy and hiking reserve ratios, while reluctant to raise interest rates. And that in the next 6-12 months emerging markets’ inflation may rise to new maximums.

[COLOR="green"]Commerzbank: euro’s going down towards $1.3101[/COLOR]
Technical analysts at Commerzbank regard euro’s recovery versus US dollar from the minimum in the 1.3500 area as a correction. In their view, the pair EUR/USD will fall to 55-day MA at 1.3400 on its way towards 200-day MA at 1.3101.
The specialists believe that as long as euro’s trading below resistance at 1.3750/85 it’s going to stay under bearish pressure.
If EUR/USD manages to overcome the 1.3785 level, it will likely gain enough strength to retest 1.3862 and, possibly, 1.3978/1.4000.

[COLOR="green"]Barclays Capital: USD/JPY may rise to 85.90[/COLOR]
Analysts at Barclays Capital are bullish at the pair USD/JPY as it managed to break above the resistance in the 82.50 zone created by the daily Ichimoku Cloud.
According to the specialists, if the greenback closes the day above these levels, positive outlook for American currency will confirm and it will go up to 83.25, the range maximums at 83.70 towards highs at 85.20 and 85.90 reached after Bank of Japan’s September intervention.


[COLOR="green"]On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets[/COLOR]
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  #122  
Old 16-02-2011, 09:07
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Default 15/02/11

[COLOR="Green"]15/02/11

China’s inflation rate grows below the forecast[/COLOR]

According to Chinese data released today, the country’s inflation pace grew less than it was expected.
In January China’s CPI gained 4.9% from the 2010 level after adding 4.6% in December, while the economists forecasted 5.4% advance.
Analysts at Barclays Bank say that the lower inflation figures will ease market concerns about aggressive tightening from the Chinese central bank.
The specialists also note that the risk sentiment improved after China’s inflation data release and the demand for safer assets lowered, so Japanese yen’s declining versus the majority of its main counterparts. The pair USD/JPY reached 83.56 approaching the recent maximum at 83.66.

[COLOR="green"]French and German GDP growth is week [/COLOR]
According to the data released today, French economy gained only 0.3% in the fourth quarter, while the economists were looking forward to 0.6% increase. German GDP also didn’t justify the market’s expectations: it rose by 0.4% versus 0.5% projected, down from 0.7% in the third quarter of 2010.
Mizuho Corporate Bank claims the single currency fell to the intraday minimum at 1.3469 after French Finance Minister Lagarde commented that she is not concerned about any sustained return to inflation.
These less hawkish remarks hinted that the euro zone authorities see no need for the rate hikes putting bearish pressure on the single currency.

[COLOR="green"]AUD/JPY rose to 9-month maximum[/COLOR]
Australian dollar rose to 9-month maximum versus Japanese yen at 83.86 yen on the surging demand for higher-yielding assets after China’s inflation rate added less than it was expected.
In January China’s CPI gained 4.9% from the 2010 level after adding 4.6% in December, while the economists forecasted 5.4% advance.
It’s also necessary to take into account that, according to minutes of the Reserve Bank of Australia’s February 1 meeting released today, a bit restrictive monetary policy suits the current situation as the country’s incomes increase due to the rising commodity prices.
Credit Suisse AG index based on swaps shows that the RBA will increase its 4.75% benchmark rate over a year by 33 basis points. The specialists at Citigroup advise investors to buy the Aussie on dips.

[COLOR="green"]Mizuho: comments on EUR/USD[/COLOR]
Technical analysts at Mizuho Corporate Bank note that the single currency went down from last week's maximum versus the greenback at 1.3745 and consolidated below the neckline of a potential small “head and shoulders” pattern.
According to the specialists, the mentioned model means that the pair EUR/USD may fall inside a fairly large daily Ichimoku Cloud getting down at least to 1.3300.
Never the less, Mizuho underlines that the technical picture seems to be mixed as euro’s still trading above the 26-day MA that points at long positions.

[COLOR="green"]Credit Agricole: major currencies outlook [/COLOR]
Currency strategists in Credit Agricole outline the prospects for the major currencies in 2011.
JPY
The specialists say that Japanese economy seems to be doing reasonably well and will show growth above trend – that’s not a lot because trend growth for Japan is only around 1%. There’s a lot of pressure on the Bank of Japan to end deflation and the deflationary problem is going to persist throughout the whole year. That will mean more aggressive policy steps of the central bank. Perhaps, the BOJ will have to increase JTB buying unsterilized or even set an inflation target. The measures counter deflation may also require weaker Japanese yen.
Euro
According to Credit Agricole, although there is some support for euro at the beginning of the year on the more significant buying of the euro zone’s debt from the ECB, the overall 2011 outlook for the single currency is negative. The pair EUR/USD will end the year at $1.25 or even lower as the euro zone’s tensions will keep worrying the markets. The analysts draw investors’ attention to the still high growth diversion between Northern Europe and Germany, on the one side, and the southern countries, on the other side. Debt problems and fiscal austerity measures are going to weaken the growth even further, claims the bank.
USD
US economy will be rebounding and Credit Agricole looks forward to 3% growth. The big problem is still the labor market and high unemployment. Core inflation will continue to be very benign and there’s still the risk of QE3. All in all, the economists expect that the greenback will strengthen against many of its counterparts on higher US yields.

[COLOR="green"]Peter Bofinger: the EBC shouldn’t raise rates in 2011[/COLOR]
German government economic adviser Peter Bofinger claims that the European Central Bank should not raise rates this year. On the contrary, the ECB has to maintain expansionary policy, says the economist. In his view, in the medium-term German inflation won’t exceed 2%, while the country’s recovery in 2011 is likely to be weaker than expected. Bofinger also notes that Greece won’t be able manage to recover from debt crisis if it keeps realizing the current austerity plans.

[COLOR="green"]Demand for US assets fell in December[/COLOR]
According to the US Treasury Department, in December global demand for American stocks, bonds and other financial assets has decreased.
Net buying of long-term declined from $85.1 billion in November to $65.9 billion in December. Including short-term securities such as bills and stock swaps, foreigners purchased a net $48.2 billion compared with net buying of $35.6 billion in the previous month.
Total foreign purchases of Treasury notes and bonds were $54.6 billion in December compared with purchases of $61.7 billion in November. China, the biggest foreign holder of US Treasuries, reduces its investments in the US debt from $895.6 billion in November to $891.6 billion in December.

[COLOR="green"]Technical levels of GBP/USD[/COLOR]
British pound rose from the day’s minimum at 1.6005 to the week’s maximum at 1.6170. The pair GBP/USD has started to correct downwards at the beginning of the US session but is likely to hold above 1.6100.
Support levels are found at 1.6120, 1.6060 and 1.6010. Resistance levels are situated at 1.6185, 1.6220 and 1.6260.

[COLOR="green"]On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets [/COLOR]
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  #123  
Old 17-02-2011, 16:56
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Default 17/02/11

[COLOR="Green"]17/02/11

Fundamental factors for some major currencies[/COLOR]

EUR/USD
The greenback weakened as the minutes of the Federal Reserve’s January meeting released yesterday showed that although US monetary authorities sounded more optimistic about the prospects of US economy, they regard situation at the labor market as still very difficult and underline the necessity of quantitative easing.
USD/JPY
The decline of Japanese currency was limited as investors seem to be concerned about the unrest in the Middle East increasing their demand for safer assets such as yen and Swiss franc. This week there were demonstrations in Bahrain, Yemen and Libya after the autocratic ruler in Egypt and Tunisia were overthrown by popular movements. The pair USD/JPY climbed from the minimum at 83.12 hit on February 4 but got stopped by the 83.96 level.
AUD/JPY
Australian dollar approached the 9-month maximum trading versus Japanese yen as Reserve Bank of Australia Assistant Governor Philip Lowe claimed that global commodity prices will likely remain at the maximal levels for a long time, so the RBA will have to raise rates acting counter inflation. In addition, yen’s being under pressure because of the widening rate differentials with the rest of the world: the Bank of Japan’s likely to keep the rate at 0.1%, while the RBA’s rate is currently at 4.75%.

[COLOR="green"]Marc Faber: global stock markets will correct down in 2011[/COLOR]
Marc Faber, publisher of the Gloom, Boom & Doom report, who is known for forecasting correctly many significant moves of the market seen in the recent years, believes that in 2011 the global stock markets will survive downward correction.
In his view, during the last 18 months we saw huge capital flow in Asia. As a result, the markets became overbought and inflationary pressure has dramatically strengthened. The more such events as those in Egypt occur, the more people start doubting about investing in the emerging economies. According to Farber, money inflows will come back to the developed markets and the US may outperform the emerging economies’ stock markets in the next 3 months. The economist forecasts that MSCI Emerging Markets Index will lose 30% in 2011.
As for the US, the S&P 500 index will decline this year by 10%, says Farber. US stocks will be affected by the rising commodity prices, especially oil. The index won’t decrease much as the stocks of oil companies will show strong growth.


[COLOR="green"]Investors adjust estimates of the BoE rates hike time[/COLOR]
The inflation forecast that the Bank of England released yesterday made the economists adjust their forecasts about the terms of the potential rate hike. Generally investors’ expectations of the coming rate hike wave weakened.
According to British central bank, inflation will peak at 4.4% this year and before easing to the 2% target level by the middle of 2012 and then even lower. The outlook is based on BoE benchmark interest rate rising from a record low of 0.5% to 1% this year and 2% by the end of 2012.
However, the market was still fully pricing in a rate hike by June 9 with at least two 25 basis point rate hikes seen by the end of the year and a 96% chance of rates being 75 basis points higher by January 5, 2012.
Some economists also believe that the rate hike will occur sooner than they were thinking earlier. Strategists at Barclays, for example, changed the prediction for the first rate increase from November to May, while the Daiwa Capital Markets change forecast from November to August. It’s not likely that the BoE will raise rates by more than 50 basis points taking into account the country’s weak economic growth, say the specialists.


[COLOR="green"]The pair USD/CAD hit 3-year minimum[/COLOR]
Canadian currency reached today the maximal level since March 2008 at 0.9814 versus its US counterpart. Loonie was helped by the surge of the crude oil price that approached the 2-year maximum as the political tension in the Middle East intensified creating concerns that shipments will be disrupted.
Then, however, Canadian wholesale sales were released and the market got disappointed – in December the indicator gained only 0.8%, while the market was looking forward to the 1.3% increase.
As a result, the pair USD/CAD has now returned to the 0.9830 area. Analysts at TD Securities don’t think that the pair’s decline is sustainable and will extend much. US dollar’s fall will confirm if it gets down below the 0.9800 mark.
It’s necessary to note that among the positive factors for Canada’s currency there are significantly higher oil prices and widening out in Canada/US short-term rate spreads. However, stronger Canadian dollar will be without doubts noticed by the Bank of Canada. In January the country’s central bank underlined that high-flying Canadian dollar was having a negative impact on the recovery of the export sector, the foundation of the Canadian economy.

[COLOR="green"]Overnight borrowing flies up to 20-month high[/COLOR]
According to the data released today, emergency overnight borrowing from the European Central Bank surged to the 20-month maximum rising above 15 billion euro. The last time it got higher than 10 billion was on June 24, 2009, when it reached 28.7 billion euro.
Usually overnight borrowing from the ECB is far below 1 billion euro. It has exceeded this mark twice this year and both times it happened this week.
The markets got agitated as the dealers tried to determine whether a bank had made an error in reserves maintenance and tomorrow return to normal levels or if this was an indication of serious problems.

[COLOR="green"]Goals and agenda of G20 in 2011[/COLOR]
2011 is the year of France’s presidency of G20. The goal for this year set by the group’s leaders at last year’s summit in Seoul is to reach agreement in the first half of 2011 on a list of “indicative guidelines” for quantifying imbalances to prevent a repeat of the global economic crisis. To solve this problem is the main objective of this week's meeting in Paris.
In addition, France has more priorities for the year: firstly, to agree on tougher regulation to curb volatility in food and fuel prices and here come the antagonisms between the nations who produce and export commodities and those who seem to the biggest consumers of commodities. Secondly, to negotiate the inclusion of China's yuan in the basket of currencies underpinning the IMF's Special Drawing Rights (only if China meets convertibility conditions and liberalizes its current account).

[COLOR="green"]Here’s the list of main G20 events of this year prepared by Reuters:[/COLOR]
FEB 16-18 — Meeting of the Institute of International Finance and central bankers in Paris. The Eurofi think tank will also hold a parallel meeting, with a panel discussion on Friday featuring Federal Reserve Chairman Ben Bernanke, ECB President Jean-Claude Trichet, the Bank of England's Mervyn King and People's Bank of China's Zhou Xiaochuan.
FEB 18-19 — G20 finance ministers meet in Paris, with their talks expected to focus on the setting of «indicative guidelines» for measuring global imbalances under the G20's Mutual Assessment Programme (MAP).
END-MARCH — Seminar of international experts on reform of the international financial system in China, at which Sarkozy is expected to speak. Date still to be confirmed.
APRIL 14-15 — G20 finance minister talks in Washington ahead of the April 16-17 spring meeting of the World Bank and International Monetary Fund.
MARCH — The Madrid-based International Organisation of Securities Commissions (IOSCO), which comprises regulators from more than 100 countries, is expected to publish a report on physical commodities markets, giving an insight into the effect of speculation on prices.
MAY 26-27 — G8 heads of state and government summit at the seaside resort of Deauville in northern France.
JUNE 22-23 — G20 agriculture ministers meeting in France. French officials hope this can build on a possible European Union conference on commodities regulation, which France is supporting.
SEPT 9-10 — G7 finance ministers due to meet in Marseille, with talks expected to focus on currency issues.
SEPT 23-26 — Possible meeting of G20 finance and development ministers on the margins of the annual IMF and World Bank meetings in Washington, to focus specifically on reforms related to development issues.
SEPT 26-27 — G20 labour ministers meeting in Paris
OCT 14-15 — G20 finance ministers meet in Paris. They are expected to put the finishing touches on the economic reform agenda before the November summit of heads of state and goverment.
NOV 3-4 — G20 leaders summit in Cannes concludes France's presidency. Mexico takes over the stewardship of the group.

[COLOR="green"]On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets[/COLOR]
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  #124  
Old 21-02-2011, 16:13
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[COLOR="Green"]Societe Generale: buy euro at 1.34/38[/COLOR]

Analysts at Societe Generale advise to buy the pair EUR/USD at 1.34 and a sell at 1.38 in the short term. The specialists note that the single currency keeps rebounding from 1.34 helped by the central bank demand.

As the Fed’s chairman Bernanke doesn’t regard inflation as the problem for the United States, the country’s monetary authorities are free to promote weak dollar. This, in its turn, will encourage Asian central banks for further euro purchases in order to diversify their currency reserves.
[COLOR="Green"]
BofT-Mitsubishi UFJ: euro under pressure of Ireland's elections[/COLOR]


Analysts at Bank of Tokyo-Mitsubishi UFJ claim that the single currency may get under negative pressure due to the approaching Ireland's general elections that will take place on Friday. The victory of the opposition Fine Gael party would affect euro’s rate. The specialists think that the pair EUR/USD may fall this week to 1.3450.

As the Fine Gael leader Enda Kenny said so far, the senior bondholders within other banks aside from the nationalized Anglo Irish Bank and Irish Nationwide Building Society could be asked to engage in “burden-sharing” that may lead to the spreading of Ireland's woes elsewhere in Europe.

It’s necessary to take into account that German Chancellor Angela Merkel's party was defeated in the regional election in Hamburg on Sunday as the population doesn’t approve that tax money are used to bailout indebted euro area’s nations.

[COLOR="Green"]Mizuho: sell USD/JPY[/COLOR]

Technical analysts at Mizuho Corporate Bank claim that the greenback went down from this year’s maximum at 83.98 that’s below December’s maximum at 84.51 and closing at the 26-week MA.

The specialists note that all aspects of the weekly chart indicate the necessity to sell US dollars as the pair USD/JPY is consolidating within the “triangle” formation since November.

If American currency drops today below 83.00, it will fall to 82.20/82.00, says Mizuho. The bank advises investors to try small shorts at 83.25, adding to 83.55 and stopping above 84.05.

[COLOR="Green"]Daiwa SB: yen’s rate will weaken[/COLOR]

Japanese yen may weaken as the global economy rebounds encouraging the country’s investors to look forward for higher yielding assets abroad reducing their demand for the national currency, claim the analysts at Daiwa SB Investments Ltd.

The pressure on yen is created due to the widening differential between yields on Treasuries and Japanese government bonds. Investors begin returning to the carry trades borrowing in Japan where the yields are low in order to buy assets in higher-returning countries.

In 2011 carry trades with yen as a funding currency brought the profit of 23.8%, while from dollar-funded trades investors gained only 2.8%. Rising popularity of the yen-carry trades means that the Japanese currency to be sold.

According to the data from Commodity Futures Trading Commission, for the first time since June futures traders are betting on a drop in yen versus dollar – net shorts for yen were 18,548 February 15, compared with net longs of 36,731 a week earlier.

So, the general trend has reversed from what we’ve seen at the beginning of 2010 when investors were looking for a refuge from Europe’s sovereign-debt crisis propelled yen to 15-year maximum versus the dollar.

According to the Bloomberg’s data, yen lost 8.1% from its August maximum versus the basket of it 9 developed-nation counterparts. In February the pair USD/JPY has gained 1.3%. Economists surveyed by Bloomberg News claim that yen will fall to 86 per dollar by the end of the second quarter and 90 by the end of the year. Currency strategists at Daiwa SB believe that the pair USD/JPY has already hit its lowest point and is now on its way up.

Yen’s depreciation will be very positive for Japanese exporters and may help the Prime Minister Naoto Kan to improve his approval rating that declines last month to 17.8%.

[COLOR="Green"]Commerzbank: USD/CHF will rise to 1.0067[/COLOR]

Last week the pair USD/CHF declined almost by 3% falling to 0.9425 earlier today, the minimal level since February 3.

Technical analysts at Commerzbank note that the greenback may reverse after last week’s decline versus Swiss franc and gain 6% climbing to December maximum at 1.0067.

The specialists believe that US currency will test resistance at 0.9774 centimes (61.8% Fibonacci retracement of the drop from December and January 11 maximum).
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  #125  
Old 22-02-2011, 15:27
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Default Analytics 02/22/2011

[COLOR="Green"]NZD is falling down after the earthquake[/COLOR]

New Zealand’s dollar fell to this year’s minimum versus its US counterpart as magnitude 6.3 earthquake broke out in Christchurch, the country’s second-largest city. The pair NZD/USD slumped from 0.7640 getting below 0.7500.

Analysts at Nomura Australia claim that damage and disruption from today’s earthquake may lower New Zealand’s first-quarter GDP to the flat level, while earlier they projected 0.8% increase. In their view, the Reserve bank of New Zealand will raise its benchmark rate by 25 basis points this year to 3.25%. Earlier they forecasted 3 rate hikes with the first already in April.

Analysts at Citigroup expect New Zealand’s central bank to be on hold for all of 2011 and possibly the first quarter of 2012.
Economists at Australia and New Zealand Banking Group note that this is already the second strong earthquake after the one that happened on September 4, 2010. The specialists believe that there’s the serious risk that New Zealand will be downgraded. In their view, the government may not be able to achieve the goal of a budget surplus by 2014.

[COLOR="Green"]Ueda Harlow: EUR/USD may drop to 1.2867
[/COLOR]

Technical analysts at Ueda Harlow Ltd. claim that the single currency may fall to 5-month minimum versus the greenback.
The specialists note that the pair EUR/USD broke today below the key technical levels – 5-day MA at 1.3628 and the 20-day MA at 1.3641.

The momentum deteriorates and euro’s now moving down towards the trend line connecting January 4 maximum at1.3433 and February 14 minimum at 1.3427. If the European currency drops below this line, it may fall to the 1.2969 level hit on November 30 or to this year’s minimum at 1.2867 tested on January 10. The last time euro traded below 1.2867 was September 14.

UniCredit: strong franc is not an obstacle for exports

Despite the franc’s strength Switzerland's export growth remains strong. According to the data released today, Swiss trade balance surplus reached 1.96 billion francs, while the economists were looking forward to 1.65 billion.

Specialists at UniCredit say that although high demand for franc as a safe haven currency reduces the exporters’ profits, it helps, on the other side, to stem the commodity related rise in input costs.

In addition, Swiss export goods have the advantage of having high quality and, consequently, being less sensitive to the price shifts. As the global economy’s rebounding, the demand for Swiss exports is increasing.
[COLOR="Green"]
Commerzbank: comments on EUR/USD[/COLOR]


The single currency didn't manage to overcome the 1.3715 level on Friday on its way to February 9 maximum at 1.3745. Technical analysts at Commerzbank note that as long as the pair EUR/USD trades below this maximum, it will remain under bearish pressure.

According to the specialists, euro will be poised down to the 1.3396/61 area limited by the 55-day MA and the 50% retracement of the move seen this year.

If EUR/USD climbs above 1.3745, it will rise to resistance line connecting the maximums of November and January at 1.3770 and the recent maximum at 1.3862.

[COLOR="Green"]Sakakibara: yen will rise to the postwar maximum[/COLOR]

Eisuke Sakakibara, formerly Japan’s top currency official known as “Mr. Yen” for his efforts to influence the yen rate through verbal and actual intervention in the currency markets in 1997-1999, expects that yen will rise versus the greenback above the postwar maximum at 79.75. In his view, Japanese currency will stay this year above 80 yen per dollar. Such forecast is based on the structural weakness of the American economy.

Sakakibara notes that the US still faces a balance-sheet problem with businesses saddled with bad loans and households with excess debts. As a result, the economist doesn’t think that the current economic recovery seen in the United States is sustainable.

According to Sakakibara, the pair USD/JPY will remain in the downtrend during the medium or long term. The former official says that Finance Minister Yoshihiko Noda should declare that strong currency is in Japan’s interest.

Yen reached the maximal level since April 1995 on November 1 when it advanced to 80.22 per dollar. Economists surveyed by Bloomberg expect yen to fall to 86 per dollar by the middle of this year ending 2011 at 89 yen per USD.

[COLOR="Green"]Juergen Stark: ECB is ready to fight inflation[/COLOR]

Juergen Stark, ECB Executive Board member, claims that the central bank will raise interest rates if necessary to keep inflation under control. According to Stark, the ECB is ready to “act decisively and immediately” on any indications of a wage-price spiral and higher inflation expectations.

In January inflation euro zone inflation accelerated to 2.4% getting above the 2% ceiling established by the central bank. Stark expects inflation to stay above 2% during 2011 and then ease down in 2012.

Hawkish comments of the EBC officials may be the kind of preparation for the shift in policy at the next meeting of the European officials that will take place on March 3 when the central bank is due to publish its latest inflation forecasts.
[COLOR="Green"]
Yves Mersch: hawkish comments[/COLOR]


ECB council member Yves Mersch claimed today that the European Central Bank will likely make an “exit” statement at the next meeting on March 3 announcing the end of monetary stimulus for the region’s economy. In addition, the official said that the ECB can raise rates even before the peripheral euro area nations have finished conducting austerity measures. According to Mersch, excessively low rates can distort European economy.

Such hawkish comments made the single currency go up compensating the previous losses made as investors’ risk aversion strengthened due to the escalating situation in the Middle East, the earthquake in New Zealand and Moody's downgrade of Japan's debt outlook.

[COLOR="Green"]The pair EUR/USD formed a spike returning above 1.3600.[/COLOR]

MPC minutes will put light on what’s the BoE up to
Tomorrow the Bank of England will publish the minutes of its Monetary Policy Committee’s meeting that will take place on February 10. BoE official Adam Posen will speak today at 5 p.m. Andrew Sentence, David Miles, Charles Bean and Martin Weale will also speak this week.

The MPC members have different views on the suitable monetary policy, but the tone of the central bank seems to turn more hawkish, so the market wonders if Sentance and Weale who propose to lift up the benchmark rate have been joined by a third member.

Economists at BNP Paribas say that if the minutes show a third official voted for an increase, the market will have no more doubts about the coming rate hike from the current 0.5% level. In their view, although the rate increase will make it harder for the British economy to recover, it won’t completely derail the rebound.

Analysts at Standard & Poor’s believe that the MPC will take more time to make out how strong economic growth will be in the first half of the year. However, the specialists added that as this is the question of credibility for the BoE’s ability to fight inflation, UK central bank will increase rates by autumn or even sooner.

[COLOR="Green"]Analysts on the efficiency of G20 finance ministers’ summit[/COLOR]

Group of 20 finance chiefs convinced China in the necessity of developing an early warning system to detect when economic fault lines are opening that may affect global growth. Among the yardsticks to monitor there are, for example, budget deficit levels, the external imbalance and private savings rates.

The officials signaled concern over the new threat by noting some emerging markets are displaying “signs of overheating” and agreed to study the forces behind surging commodity prices.
The G-20’s statement maintained last year’s decision to enhance currency flexibility trying to avoid at the same time volatile movements in exchange rates.

[COLOR="Green"]The economists have different estimates of the summit’s results.[/COLOR]

Analysts at UBS claim that the statement of G20 finance ministers’ meeting brought nothing new. In their view, the group itself is losing relevance as there's no sign of the establishment of a binding global imbalances supervisory system anytime soon. In their view, the currency markets are still driven mainly by policy normalization, the sovereign debt crisis and global inflationary pressures.

Strategists at Goldman Sachs Group note that there’s slow but steady progress towards better international policy coordination aiming at reduced global imbalances. Economists at TD Securities believe that the list of indicators will give the rich countries an alternative to telling emerging markets to stop manipulating currencies.

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  #126  
Old 24-02-2011, 15:21
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[COLOR="Green"]Demand for franc and yen keeps growing[/COLOR]

As the tensions situation in the Middle East escalate, investors keep buying so-called safe haven currencies – Japanese yen and Swiss franc. Analysts at Bank of Tokyo-Mitsubishi UFJ underline that the uncertainty is now too high and it's unknown what will happen from now. The specialists say that if Libyan leader Moammar Gaddafi steps down, the situation may briefly return to normal. However, the things may get even worse if oil refinery equipment is destroyed, note the strategists.

According to Bank of Tokyo-Mitsubishi, the pair USD/JPY may fall below 82, but it's unlikely to deviate from the recent range between 81 and 84.
Currency strategists at Commerzbank believe that as the pair USD/CHF fell below the key support at 0.9309, it’s poised for further declines lowering to 0.9120 and then possibly 0.9000.
[COLOR="Green"]
Commerzbank: short-term GBP outlook
[/COLOR]

The pair EUR/GBP managed to get above resistance in the zone between 0.8448 and 0.8482. Technical analysts at Commerzbank note that downside momentum for the single currency is decreasing. Euro’s trying to recover versus sterling and resistance is found at 0.8530 and 0.8588.

The pair GBP/USD stalled ahead of 1.63. The specialists say that as pound went down below support at 1.6160, it risks falling down to 1.61. Below that level support will lie at 1.5963 and 1.5822 (the 55-day MA).

[COLOR="Green"]WestLB: Aussie will gain on carry trades[/COLOR]

Analysts at WestLB note that Australian dollar performed surprisingly well despite the natural disasters that were tormenting the continent since the end of last year.

The specialists believe that even though RBA assistant governor Philip Lowe claimed that the country’s GDP could be about 1% lower this quarter, the total 2011 growth will still be almost 4.25% – more than in other developed nations.

WestLB underlines that such growth will be obtained while the Reserve bank of Australia’s benchmark rate is already at 4.75%, that’s 450 basis points above the Fed’s one, 425 bps above British rates and 375 bps above ECB’s rate. It’s also necessary to note that the Bank of Japan is unlikely to tighten its policy and lift the rates from current 0.1% level.

As a result, the analysts expect that Aussie is going to strengthen getting strong stimulus from the carry trades: investors will borrow in countries with lower interest rates investing in higher-yielding Australian assets.

[COLOR="Green"]BNP Paribas: EUR, GBP, AUD and CAD will grow[/COLOR]

Currency strategists at BNP Paribas note that Brent crude is positively correlated with the value of euro, British pound, Australian dollar and Canadian dollar.

As the technical outlook for Brent is bullish, the specialists believe that the pair EUR/USD may reach 1.3950/1.4000, the pair GBP/USD can go up towards 1.6460, the pair AUD/USD will come back to resistance in the 1.0200/55 area and the pair USD/CAD may retest strong support at 0.9820/00.
[COLOR="Green"]
RBC: USD/CAD is trapped between 0.98 and 1.00
[/COLOR]

Currency strategists at RBC Capital Markets note that the pair USD/CAD had peaked on Wednesday just below 0.9960 before falling back to last week's minimums in the 0.9817 area. The specialists think the greenback will find firm support at these levels. According to RBC, the range between 0.98 and 1.00 within which US dollar is trading versus its Canadian counterpart this year seems hard to break.

[COLOR="Green"]MIG Bank: USD/CHF under bearish pressure below 0.9506[/COLOR]

Technical analysts at MIG Bank note that as the greenback dropped below 0.9400 versus Swiss franc it lost the support of practically all positive technical factors. The specialists believe that only if the pair USD/CHF manages to rise above the week’s maximum at 0.9506, it will be able to experience some sort of rebound. According to the bank, as long as US currency’s trading below this level, it risks slumping to 0.9100 and 0.9000.

[COLOR="Green"]Mizuho: GBP/USD may rise to 1.6500[/COLOR]

British pound went down from 1.6255 to the support at 1.6140 and then rose back to 1.6200. Technical analysts at Mizuho Corporate Bank note that sterling’s consolidating below November maximums at 1.6300.

The specialists claim that the pair GBP/USD will get support from the 9-day MA. According to Mizuho, pound’s rate will get higher before a significant short-covering occurs.

The bank advises investors to buy on the rate’s decline to 1.6160 stopping below 1.6100 and expecting pound to climb to 1.6260/1.6300 and then to 1.6500.
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  #127  
Old 25-02-2011, 15:09
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[COLOR="Green"]Citigroup: EUR/USD will rise to 1.4283
[/COLOR]

Technical analysts at Citigroup claim that the single currency may rise above 1.4000 versus the greenback after it formed the reverse “head-and-shoulders” pattern that consists of 3 bottoms with the deepest in the middle. The figure began on February 2.

According to Citigroup, the pair EUR/USD may climb to 1.4030 and 1.4283.

The specialists note that the expectations of the ECB’s rate hike made the market players reconsider their previous bearish sentiment of euro.

[COLOR="Green"]Morgan Stanley: upward revision of euro forecast[/COLOR]

Analysts at Morgan Stanley increased their forecasts for the European currency versus US dollar and Japanese yen.

As the reason for the forecast revision the specialists named more hawkish comments that keep coming from the European central bank. The ECB officials have spoken so far about the necessity to tighten monetary policy in order to fight rising inflation. In addition, the bank underlines that the European authorities have shown more efforts to solve the euro area’s debt problems and managed to reduce the risk of the region’s contagion.

Morgan Stanley changed target for the pair EUR/USD from $1.25 to $1.32 by March 31 and raised euro forecast from $1.20 to $1.24 by the end of the year. The pair EUR/JPY will trade at 111 yen at the end of March, while the previous estimate was at 108 yen. The year-end target for euro against yen was switched from 112 to 115 yen.

It’s also important to note that the economists reduced their March-end prediction for the pair USD/JPY from 86 to 84 yen keeping the year-end forecast at 93 yen.

[COLOR="Green"]Sumitomo Mitsui: euro may climb to $1.4200[/COLOR]

Currency strategists at Sumitomo Mitsui Banking Corporation believe that the single currency may keep gaining in the next few weeks.

The specialists expect that the oil prices will remain very strong due to the tensions in the Middle East driving euro’s rate up as inflation in the euro area will increase encouraging the expectations that the European Central Bank will lift up interest rates.

Of course the inflationary pressure in the United States will strengthen as well. The analysts, however, think that the Fed will fall behind the ECB in the monetary tightening as higher oil prices could have a very negative impact on the American economy and the US monetary authorities will remain keen on the stimulus policy to support the country’s economic rebound. In addition, there are the political concerns affecting the greenback: investors are worrying that the popular protests against pro-US governments in countries like Egypt and Saudi Arabia signal that US global power is waning.

According to Sumitomo Mitsui, the pair EUR/USD may climb above 1.4150 and, possibly, even above 1.4200.

[COLOR="Green"]Commerzbank: comments on EUR/GBP[/COLOR]

The single currency rose from Friday’s minimum at 0.8360 to new month maximum at 0.8575 just below the resistance of the middle-term trend line connecting October 2010 to January 2011 maximums.

Technical analysts at Commerzbank believe that the pair EUR/GBP has already reached its peak. In their view, it will ease down to support at the levels between 0.8530 and 0.8490. Above these levels the near-term outlook for euro will be bullish.

[COLOR="Green"]Zuercher Kantonalbank: comments on EUR/CHF[/COLOR]

The European currency went down this week from Monday’s maximum versus Swiss franc at 1.2975 to yesterday’s minimum at 1.2705.

Analysts at Zuercher Kantonalbank claim that in order to obtain a chance of recovery the pair EUR/CHF has to close this week above 1.2800. In such case euro will be able to rise to 1.2890.

On the contrary, if the pair ends today’s trade below 1.2730, next week it’ll be poised for declines.

[COLOR="Green"]Mizuho: euro will rise in case of weekly close above $1.38[/COLOR]

The single currency rose versus US dollar from the 1.3430 zone in the middle of February to new 3-week maximums in the 1.3840 region today.

Technical analysts at Mizuho Corporate Bank note that the pair EUR/USD has closed on Wednesday and Thursday above 61% Fibonacci retracement resistance at 1.3740 and above the upper edge of the “flag” pattern that indicates continuation of the trend.

The specialists claim that momentum is bullish and euro may keep appreciating if it manages to close the week above 1.3800. In such case there will be the second round of short-covering.

[COLOR="Green"]HSBC: RBA rate forecast[/COLOR]

Economists at HSBC believe that the Reserve Bank of Australia won’t raise the interest rates in March. However, the specialists note that the risks of inflation surge remain. In their view, in 2011 the RBA will increase its benchmark rate by 50 basis points from the current levels of 4.75%.

Although the markets are currently pricing in the rate hike in November, HSBC thinks that it will happen earlier. According to the analysts, Australian inflation has constrained by the strong national currency and low consumer demand. Now the situation’s changing and these factors won’t be holding down inflation anymore.

While the global inflation is going up, the country has an undersupply of housing and power stations that’s boosting rents and electricity prices. In addition, wages in Australia are also increasing.

Taking into account the current strength of the country’s economy, the central bank’s policy may be not tight enough. RBA is aware of these risks, HSBC. As a result, there a bunch of factors that that can justify the next rate hikes.

[COLOR="Green"]UBS: use yen and franc to fund carry trades[/COLOR]

Analysts at UBS AG claim that it became profitable to use Japanese yen and Swiss franc as funding currencies for carry trades to invest in higher-yielding assets.

The specialists advise investors to borrow in yen and franc to buy Swedish krona, Norwegian krone, euro and Canadian dollar. Norwegian krone and euro are included in this list as because the potential move in yields is going to be bigger because they’re coming from a lower base.

As exchange rates volatility may derail benefits from carry trade, it’s necessary to wait until turmoil in the Middle East and North Africa fades before elaborating such strategy.

Borrowing in yen and selling it to buy SEK, NOK, CAD and EUR has returned 33% this year. The same trade, funded by the franc, has returned 17%. Last year carry traders lost 11% on yen and 7.6% on franc.
Economists surveyed by Bloomberg News expect the EBC to increase the rate by 25 basis points in the fourth quarter and Canada’s and Norway’s central banks to raise rates by the same amount in the second quarter. Sweden’s Riksbank that has already lifted up borrowing costs for 5 times since the beginning of July may hike by 25 bps 4 more times this year.

[COLOR="Green"]S&P: New Zealand’s rating won’t be lowered for now[/COLOR]

New Zealand’s dollar gained versus its US counterpart for the second day in a row as the Standard & Poor’s claimed that in the near term at least the country’s credit rating isn’t affected by the earthquake that broke out on February 22.

The rating agency said that it’s too early to make judgments about the extent of damage to New Zealand’s economy. According to S&P specialists, New Zealand’s financial system remains operational and will support an inevitable period of increased activity associated with the extensive reconstruction and repair work.

The pair NZD/USD went up from Wednesday’s minimum in the 0.7430 area rising above 0.7500. Strategists at ANZ National Bank expect that kiwi’s rate will get support from the coming short-covering.

Never the less, the bank says that the county’s GDP will lose minimum 0.5 percentage points because of the earthquake. The analysts at CMC Markets note that from growth and interest-rate point of view, New Zealand’s will likely remain under pressure. 4 out of 8 economists surveyed by Bloomberg News predict that the Reserve Bank of New Zealand will cut its 3% benchmark rate by at least 25 points. A central bank spokesman yesterday refused to comment on speculation about the unscheduled meeting that may be held to consider potential rate change.

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  #128  
Old 28-02-2011, 15:30
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[COLOR="Green"]UBS: EUR/CHF will rise to 1.3500 in 3 months
[/COLOR]

Analysts at UBS recommend buying the single currency versus Swiss franc at 1.2800 with 3-month target at 1.3500.

The specialists believe that the interest-rate gap between Switzerland and the EU may widen as the Swiss National Bank’s official keep giving dovish comments while the European Central Bank’s authorities seem to be rather hawkish so far.

Franc was boosted by risk aversion over the past few days. According to UBS, however, unless the political tensions spread to some of the larger countries in the Middle East, market may calm down and demand for Swiss currency will decrease.

[COLOR="Green"]Commerzbank: USD/CHF under bearish pressure
[/COLOR]

Swiss National Bank President Philipp Hildebrand claimed yesterday in an interview to the newspaper Der Sonntag that in his view Swiss economic growth may positively surprise the market. The policymaker added that he doesn’t think that rising commodity prices will affect price stability in the short term. According to Hildebrand, there’s nothing new in the moves of the currency market as investors as usual increase demand for franc due to high uncertainty. It’s important how long this is going to last, said the SNB head.

Analysts at Commerzbank believe such comments from Switzerland’s central bank mean that the country’s monetary authorities seem to be comfortable with the current situation. As the Hildebrand expects to see strong economic growth this means that the impact of franc’s appreciation on the real economy is limited. Consequently, the SNB may not regard franc as the most important factor formulating its further monetary policy, note the specialists.

From the technical point of view, the pair USD/CHF finds itself near the record minimum at 0.9233 hit on February 24. The greenback is under bearish pressure. The only remaining target is 0.9120 and, possibly, the psychological support at 0.9000, claims Commerzbank.

[COLOR="Green"]Commerzbank: comments on EUR/USD[/COLOR]

Technical analysts at Commerzbank say that the European currency opened the week in a bullish mood trading versus the greenback.

In their view, the pair EUR/USD is heading up to the key resistance at February maximum of 1.3862 and further towards the 1.3950/1.4000 area representing 78.6% Fibonacci retracement of the decline from November maximums and the 200-day MA. The specialists expect that when euro reaches the target zone, it will fail.

On the downside, the single currency will find support in the near term at 1.3705/45 and then at 2-month support line at 1.3635/11.

[COLOR="Green"]Emerging currencies will keep outperforming[/COLOR]

Analysts at Morgan Stanley believe that the emerging markets’ currencies will keep outperforming the currencies of the developed nations. It will happen as food prices have soared to the record maximums, while oil is trading high, at $100 a barrel. According to Barclays Capital, in emerging economies inflation is accelerating at a 6% rate, while in the developed nations this figure is equal only to 2%.

As a result, inflationary pressure in the developing countries increases and their authorities have to raise interest rates – in February rates were lifted up in Peru, China, Colombia, Indonesia and Russia. So, Morgan Stanley favors Russian ruble, Mexican peso and Malaysian ringgit.

Specialists at Nomura Holdings say that the quickest way to stem inflation is to strengthen national currency. If the country’s officials have to make a choice facing such issues as weak economic growth and high inflation, they will have to deal firstly with the latter and here comes monetary tightening.

Strategists at Citigroup believe that the first to hike will be developing countries most reliant on imported oil – fuel and mining products account for about 36% of South Korea’s imports, 25% in China, 27% for Turkey and 24% for Indonesia. These nations can’t afford to keep pursuing loose monetary policy and exchange-rate depreciation.

[COLOR="Green"]China: annual GDP growth target for the next 5 years is at 7%[/COLOR]

Chinese premier Wen Jiabao announced that the economic-growth targets for the next 5 years are lower than the previous ones. China’s annual economic expansion target is set at 7% for the period from 2011 to 2015. From 2006 through 2010 the target was at 7.5%, with actual growth surpassing that each year and equal on average to 11.1%.

According to Wen, the main reason why China will target slower economic growth is its efforts to improve the quality of the growth and reduce inflationary pressures.

Analysts at Royal Bank of Canada note that it’s necessary to regard the new target as a signal of Beijing’s intentions over the medium term. In their view, during the past several years Chinese officials have underlined the need to move China away from a reliance on low-value-added and heavy-polluting export industries and to promote greater domestic consumption.

Wen also said that stronger yuan is in the interest of the country’s economy and people. However, yuan’s appreciation must be gradual because sharp gains of the currency would provoke bankruptcy of a number of Chinese enterprises. RBC economists note that although the comments on the currency revaluation were just a reiteration of what has been said before about gradual strengthening, Wen also made it clear that he sees the currency moving in only one direction.
[COLOR="Green"]
Mizuho: USD/JPY will drop to 80.21[/COLOR]


The greenback went down versus Japanese yen from maximum of the middle of February at 83.95 to the 3-week minimums in the 81.60 area. Technical analysts at Mizuho Corporate Bank claim that all technical indicators signal that the pair USD/JPY will keep declining. Such situation continues since July. In their view, US currency will inevitably go down to retest multi-year minimum at 80.21.

The specialists note that US dollar is trading at the lower part of a triangle and is likely to breach the pattern. According to Mizuho, the next question is how the market will react at the all time low of 79.75 hit in 1995.
[COLOR="Green"]
US dollar under pressure because of rising oil prices[/COLOR]


US dollar was under pressure because of the rising oil prices as investors worried that US economy will be affected more than others taking into account the fact that it strongly depends on consumer spending.

According to Deutsche Bank, a $10 increase in oil reduces US growth over two years by 0.5 percentage point. Last week crude oil reached $112.14 a barrel in London, the highest level since August 2008.

Analysts at Bank of Tokyo Mitsubishi UFJ say that rising oil prices help to widen the perceived policy divergence between the Fed and other major central banks. While the ECB regards rising crude as an upside risk to inflation, the Fed's view is that it will be negative for the economic growth. As a result, the European currency is likely to outperform the greenback in the near term. Strategists at UBS believe that the American currency will stay weak for now and advise investors buying euro, pound and Swedish krona.
The pair EUR/USD rose to 3-week maximum in the 1.3840 area. In order to get more bullish momentum euro has to overcome 2011 maximum at 1.3862.

The major events this week are the congressional testimony by Fed's Chairman Ben Bernanke on Tuesday and the ECB meeting on Thursday.
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  #129  
Old 02-03-2011, 14:36
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[COLOR="Green"]Bernanke: inflation risk in US remains low[/COLOR]

Yesterday’s speech of Federal Reserve Chairman Ben Bernanke allows suggesting that the Fed won’t hurry to raise interest rates after the $600 billion quantitative easing program is completed by the end of June. In his view, inflation risk isn’t high, while the situation on the labor market is still difficult.

Bernanke believes that the surge in commodity prices won’t generate a lasting rise in inflation. For the economic recovery to be sustained, the Fed’s benchmark rate will has to stay low for an “extended period”.
Bernanke pledged to act if higher commodity prices persist, spurring inflation and increasing inflation expectations, though currently the head of US central bank sees no necessity for such actions.

The Fed’s Chairman will continue his monetary policy testimony today. Bernanke will begin speaking in front of the House Financial Services Committee in Washington at 3 p.m. GMT.

[COLOR="Green"]Bof T-Mitsubishi: US dollar will strengthen versus euro by the year-end[/COLOR]

Analysts at Bank of Tokyo-Mitsubishi UFJ claim that the greenback may rise to the levels at which it traded versus the European currency in September. Such forecast is based on the reviving of US economy and possibly waning expectations of the rate hikes by the developed nations’ central banks.

The specialists expect US dollar to climb to $1.27 per euro and 92 yen in a year. The dollar estimates were reduced from the previous prediction of $1.20 per euro made before a surge in oil prices in February led US currency lose 0.8% versus its European counterpart.

US economic growth is going to be strong surpassing economists’ expectations. The data so far seems to be quite encouraging – the country’s manufacturing grew in February at the fastest pace in almost 7 years. ISM factory index rose from 60.8 in January to the maximal level since May 2004 at 61.4. So, according to Bank of Tokyo-Mitsubishi, such solid performance of American economy is going to drive US dollar up.

The bank also underlines that the markets are pricing in too much in terms of the ECB rate hikes in the next 12 months and most likely will get disappointed that will be a negative factor for the single currency.
Bank of Tokyo-Mitsubishi projects that the pair EUR/USD will rise to $1.40 in 3 months due to the increase in oil prices. Japanese yen will decline to 85 per dollar during this period.
[COLOR="Green"]
Mizuho: EUR/USD will rise in March at least to 1.4000[/COLOR]


The single currency advanced from minimums in the 1.3425 area hit in the middle of February and met resistance at 2011 maximum at 1.3860.

Technical analysts at Mizuho Corporate Bank believe that the pair EUR/USD will finally manage to break above this level. In their view, in March euro will climb at least to 1.4000 and possibly to November’s maximum at 1.4281. The specialists underline that momentum for the pair has become bullish.
Bullish pressure will decline if EUR/USD falls below 1.3300. In such case this forecast will have to be revised.

[COLOR="Green"]Commerzbank: short-term outlook for EUR/USD[/COLOR]

The European currency didn’t manage to overcome resistance at 1.3860 and went down to 1.3740.

Technical analysts at Commerzbank claim that as long as the pair EUR/USD is trading above support at 1.3650, it’s under the bullish pressure. The bank sets the target for euro’s growth at 1.3960/1.4000 where there is the 78.6% retracement of the decline from November maximum and the 200-week MA.

On the other hand, if euro breaks below support at 1.3650, it will be poised to fall to the 55-day MA at 1.3450.

[COLOR="Green"]Traders expect RBNZ to cut benchmark rate[/COLOR]

New Zealand’s dollar fell today to this year’s minimum versus its US counterpart as the country’s Prime Minister John Key claimed that the potential reduction of the 3% benchmark interest rate will help the economy recover after earthquake in Christchurch that occurred on February 22. According to Key, the two quakes from which New Zealand suffered during the past half of the year caused NZ$20 billion ($14.8 billion) of damage.

Credit Suisse Group AG index based on swaps shows that traders are sure that the Reserve Bank of New Zealand will cut the rates by 25 basis points at its meeting on March 10. Some investors are even looking forward to 50-basis point reduction.

Although the government is separate from the central bank, such statements made by the Prime Minister certainly affect the national currency.

The market is currently trying to find out where the bottom is going to be. Support is found at 0.7400, while the resistance lies at 0.7439.

[COLOR="Green"]Mizuho: USD/CHF will fall to 0.8300[/COLOR]

Analysts at Mizuho Corporate Bank claim that 8-month downtrend for the pair USD/CHF that has recently pushed the greenback to the record minimum at 0.9235 isn’t over yet. The specialists believe that US dollar will fall versus Swiss franc to 0.9100 next month, lowering to 0.8500 in 6 months and hitting the 0.8300 level in a year.
[COLOR="Green"]
RBC: King won’t manage to prevent the rate hike[/COLOR]


Analysts at RBC Capital Markets say that the fact that British pound reached yesterday 13-month maximum versus the greenback means that investors believe that the Bank of England Governor Mervyn King won’t be able to keep interest rates from rising.

The head of the Britain’s central bank is cautious about raising interest rates as it may hamper already weak country’s economic growth – in the fourth quarter of 2010 UK GDP contracted by 0.6%. However, the number of BoE Monetary policy Committee members in favor of the rate hike increases.

According to the minutes of the MPC meeting that took place on February 10, BoE Chief Economist Spencer Dale joined policy makers Andrew Sentance and Martin Weale in voting for an interest-rate hike from the current 0.5% level as British inflation pace accelerated in January to 4%, 2 times higher than the target level.

RBC specialists underline that since 2003 King has been outvoted already twice. As sterling’s strengthening the market becomes more convinced that King will either be offside again or capitulate.

[COLOR="Green"]Commerzbank: comments on NZD/USD[/COLOR]

During the Asian session today New Zealand’s dollar extended its previous decline from 0.7555 slumping below 0.7400.

Technical analysts at Commerzbank believe that the pair NZD/USD will stabilize right above 0.7376/43. According to the specialists, kiwi will bottom in the area of December minimum at 0.7343 and then struggle next week to crawl up to 0.7555.

If New Zealand’s currency falls below 0.7343, it may decline to June maximum at 0.7161 and to 61.8% Fibonacci retracement of the 2010 advance at 0.7102.

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  #130  
Old 03-03-2011, 14:43
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[COLOR="Green"]Bank of America increased forecasts for EUR/USD
[/COLOR]

Analysts at Bank of America Corp. (BAC) increased their first-quarter and long-term forecasts for the single currency versus US dollar. The specialists explained changes in their projections by rising euro and concerns about America’s fiscal state.

BAC raised the first-quarter euro forecast from $1.23 to $1.30 due to the higher European short-term interest rates and the current surge in oil prices. By the end of 2011 the pair EUR/USD is now expected to trade at $1.35 up from the previous estimate of from $1.30. Euro’s forecast was also lifted up from $1.35 to $1.40 by December 2012. The second-quarter estimate was left unchanged at $1.20 as the market’s attention will once again focus on the euro zone’s debt problems during this period. In the longer term dollar will be weakened by the fiscal crisis in the US.

The pair EUR/USD renewed yesterday 2011 maximum reaching 1.3889.

This year the European currency gained 3.6% on the expectations of ECB rate hike. The ECB rate’s decision will be announced today at 12:45pm. The European Central Bank holds the rate at 1% since May 2009.
The BCA analysts believe that the Fed will keep its benchmark at 0-0.25% as it stays since December 2008, when it meets on March 15.

[COLOR="Green"]UBS: euro will face new challenges in March[/COLOR]

Strategists at UBS expect the ECB to raise its inflation forecast from 1.7% to 2% and give hawkish comments.

According to the specialists, short-term investors will buy euro versus Swiss franc driving the pair EUR/CHF up towards 1.35. Such trade may last, however, no more than 2 weeks as later in March the ECB will have to make difficult decisions about how to deal with the indebted peripheral countries. As a result, the single currency will be hit by the reemerging event risks.

Analysts at BNY Mellon believe that the ECB will lift up interest rates in July and will certainly support euro. Never the less, the specialists also note that before that the market will inevitably focus on Europe’s debt woes. In their view, it’s necessary to impose more strict fiscal criteria on the euro zone countries, though there’s high uncertainty about what will actually happen by the end of March.

One should also take into account the fact that US dollar’s weakness also contributes to euro’s strength. So, if the greenback starts gaining at the time when investors are worried about the European debt, the outlook for the euro could quickly change.
[COLOR="Green"]
Commerzbank: EUR/USD forecast[/COLOR]


Today’s outlook from Commerzbank is much like what the economists said yesterday.

Yesterday the European currency jumped from 1.3740 and renewed 2011 maximums in the 1.3890 area.
Technical analyst at Commerzbank note that the pair EUR/USD broke above resistance at 1.3860 and is going up to the 1.3960/1.4000 area where there’s the 78.6% Fibonacci retracement of the decline from November maximums and the 200-day MA. The specialists expect euro to fail at these levels.

On the other hand, if euro breaks below support at 1.3675, it will be poised to fall to the 55-day MA at 1.3464/55.

[COLOR="Green"]BNY Mellon: US dollar needs global crisis to strengthen[/COLOR]

Analysts at Scotiabank note that although the market’s risk aversion’s increasing and they turn to safer currencies such as yen and franc, the stage where investors are seeking the real safe havens hasn’t been reached yet. Without a serious crisis and with monetary policy in investors' sights they won’t turn to US currency.

The strategists are bearish on the greenback. In their view, during the next few months US dollar will trade sideways, but by the end of the year it will go down.

Strategists at BNY Mellon share the same views. The specialists note that though dollar's probably slightly oversold now, the geopolitical events in North Africa and the Middle East remain relatively contained. Though investors avoid assets in the Middle East and South Africa, they keep favoring higher-yielding overseas assets in Asia and Latin America. The bank reminds that investors’ demand for US dollar surged in 2008 after Lehman Brothers collapse, so in order to strengthen American currency needs a “good old-fashioned global crisis”.

The VIX, a widely used measure of investor expectations of volatility, now stands at 21-23. That's up from 16 or 17 before the Middle East turmoil began, but still below the 45-50 level reached last summer, when investors were worried about a European sovereign debt crisis.
[COLOR="Green"]
Jyske Bank: GBP/USD will drop to 1.4700 in 3 months[/COLOR]


Analysts at Jyske Bank, the third largest Danish bank in terms of market share, believe that the levels at which British pound is currently trading versus its US counterpart will be the highest in 2011. The specialists believe that the pair GBP/USD is going to cap its gains and survive a sharp decline during the next 3 months slumping to the year’s minimums at 1.4700.

According to the bank, the decision to tighten monetary policy will be very hard to make for the Bank of England. The strategists claim that the central bank won’t announce a hike of 25 basis points until the end of 2011. If this assumption is right, then the markets will be very disappointed.

So, Jyske Bank expects pound to remain around 1.4800 over the next 3 months. After the BoE increases rate to 0.75%, GBPUSD will climb to 1.6500.
[COLOR="Green"]
Morgan Stanley: yen will fall versus US dollar and euro[/COLOR]


Analysts at Morgan Stanley claim that Japanese yen may fall as the Bank of Japan may loosen its monetary policy even more making investors more concerned about the country’s fiscal state. If it happens, yen will again be used as a funding currency for carry trades and investors will sell it for higher yielding assets, for example, the ones in Australia and New Zealand.

According to Morgan Stanley, yen will fall to 93 per dollar and to 115 per euro by the end of 2011.
The BOJ has pledged to hold its benchmark interest rate at 0-0.1% until it can expect stable price gains, which board members see at about 1%. Japanese consumer prices excluding fresh food fell for a 23rd straight month in January, falling 0.2% from 2010 level.

On February 22 Moody’s Investors Service reduced Japan’s debt rating outlook noting that political gridlock will constrain the country’s efforts to tackle debt that is poised to exceed twice the size of GDP.
On March 1 Japan’s lower house of parliament approved Prime Minister Naoto Kan’s record 92.4 trillion yen ($1.1 trillion) budget. Never the less, Kan didn’t manage to persuade opposition lawmakers to authorize 44.3 trillion yen in government bonds to help fund the budget.
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  #131  
Old 04-03-2011, 13:44
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[COLOR="Green"]Nomura: USD/JPY may fall to 80.00
[/COLOR]
Analysts at Nomura Securities claim that the pair USD/JPY is trapped in the 82.30 area as Japanese institutional investors are buying US currency, while exporters are selling.

Although the trading has been quite so far, the specialists warn that the greenback still risks falling below 80.00. According to Nomura, many investors are ready to turn bearish if dollar starts going down towards 80.00, though many of them also say that they'll reverse their positions below that mark.

In the longer term the strategists expect USD/JPY to reach 90.00 if it manages to overcome the 85.00 level. In that case Japanese investors would unwind some of their hedging positions and sell yen.
[COLOR="Green"]
Westpac: NZD/USD is likely to keep falling[/COLOR]


Analysts at Westpac note that the New Zealand’s dollar remains under heavy pressure trading versus the greenback. The specialists say that the key support for the pair NZD/USD lies at 0.7350. If kiwi breaks down through this level, it will be poised to slide to 0.7200.

According to Westpac, it’s necessary to watch US nonfarm payrolls data that will be published at 1:30 p.m. GMT. The strategists expect strong figures here that will add positive momentum to US currency and increase bearish pressure on NZD.

Economists surveyed by Bloomberg News believe that US economy gained 196,000 jobs in February, the most since May 2010. In January the number of payrolls increased only by 36,000 due to the winter storms. US unemployment rate is thought to have risen from 9% to 9.1%.

[COLOR="Green"]BNP Paribas: EUR/USD may rise to 13-month high
[/COLOR]

Technical analysts at BNP Paribas believe that the single currency may rise to the 13-month maximum versus US dollar if it manages to overcome resistance at the $1.40 level representing 80% Fibonacci retracement of the decline from $1.4282 on November 4 to $1.2867 on January 10.

The specialists claim that after getting above $1.40 the pair EUR/USD may go up until full retracement rising to $1.43 and to $1.4450.

According to BNP Paribas, above $1.43 there is a downtrend line from the euro’s record maximum at $1.6038 in July 2008 and the 76.4% Fibonacci retracement of its decline from November 2009 to June 2010.
[COLOR="Green"]
Commerzbank: comments on USD/CHF[/COLOR]


US dollar recovered versus Swiss franc from Wednesday’s minimum at 0.9200 to one-week maximum at 0.9330.

Technical analysts at Commerzbank note that there a divergence on the daily RSI that means that the downside momentum for the pair USD/CHF is decreasing.

The specialists underline, however, that as long as the greenback is trading below the resistance at 0.9340 (23.6% retracement), the outlook for it remains negative and it may drop to 0.9120 and 0.9000.

[COLOR="Green"]John Taylor: EUR/USD forecast[/COLOR]

John Taylor, the head of FX Concepts LLC, the world’s largest currency hedge fund, notes that by June the European currency may climb to 13-month maximum versus US dollar as the European Central Bank will soon lifts up interest rates.

Yesterday the ECB President Jean-Claude Trichet claimed that the central bank may raise next month its benchmark interest rate from 1% level for the first time since 2008 in order to stem rising inflation. That would inevitably lead to euro’s gains, at least temporary, noted Taylor. In his view, the pair EUR/USD may advance to $1.45 per dollar, the maximal level since January 15, 2010.

However, the specialist believes that then, by the third quarter, the European economic growth will slow down and euro will depreciate. In his view, “there’s a recession coming”.
[COLOR="Green"]
Largest asset managers on US dollar’s rate[/COLOR]


Analysts at BlackRock and Pacific Investment Management Company, the world’s biggest bond-management firms, give opposite outlooks for US currency.

BlackRock specialists favor US dollar against euro noting that the sovereign-debt crisis in the euro area will cause volatility in the region, while the European banks are in need of capital. In their view, the tensions in the Middle East will continue escalating. Political turmoil that hit Tunisia only 2 months ago, while now it has already enveloped such countries as Oman, Bahrain and Libya.

BlackRock strategists say that any disruptions in Saudi Arabia could propel the oil price to $150 per barrel in the near term. During the past week Saudi Arabia’s benchmark stock index dropped by 15%. Global equities risk slumping and investors may soon turn to the greenback as a safe haven, while American bond yields will climb by 4%.

Analysts at Pimco, on the other hand, advised investors to avoid dollars and expect US Treasury yields to decline.

[COLOR="Green"]Strong Aussie creates risks for the country’s economy[/COLOR]

Australia’s Prime Minister Julia Gillard claimed that country’s economy is too dependent on commodities exports, while the domestic spending level remains relatively low. As a result, Australia is vulnerable in the current situation of commodity boom.

Australia’s dollar, the world’s fifth-most traded currency, added 12% versus the greenback in 2010. The pair AUD/USD driven by rising revenues from shipments of coal and iron ore to China has reached in December the $1.0256 level, maximum since it became floated in 1983. Strong Aussie affects Australian manufacturing and tourism industries.

It’s necessary to note that unlike the emerging countries from Brazil to China, Australian authorities refrained from steps to stem currency gains, such as through limits on capital inflows letting the market determine Aussie’s rate. So, the nation’s government doesn’t consider the possibility of conducting interventions to weaken Aussie’s rate.

Analysts at National Australia Bank believe that the performance of Australia’s economy may be weaker than expected. In their view, there’s a risk of the Dutch disease effect when the commodities industry grows driving up the national currency and hurting manufacturing as it happened in the Netherlands in 1970s.

Analysts at TD Securities claim that the performance of Australian dollar was practically unaffected by the Trichet’s comments, New Zealand’s earthquake and the oil crisis. The specialists, however, note that the pair AUD/USD will get chance to reach the post-float maximum at 1.0253 only if the RBA signals the rate hike while the central bank indicated no such intention this week. The mentioned level will act as a resistance for now.
[COLOR="Green"]
Rabobank: EUR/USD 3-month forecast lifted[/COLOR]


Analysts at Rabobank increased 3-month forecast for the pair EUR/USD from 1.40 to 1.42 after the European Central Bank President Jean-Claude Trichet claimed yesterday that the central bank may raise the interest rates next month. The specialists still think that the single currency will trade at 1.52 in a year.

According to Rabobank, although the market was expecting hawkish comments from the EBC, the analysts got taken by surprise by such degree of hawkishness.

The pair EUR/USD added 4.3% since the beginning of this year. The pace of euro’s advance was high despite the fact that the euro zone’s debt crisis is far from over.
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  #132  
Old 16-03-2011, 15:22
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[COLOR="Green"]SNB won’t raise rates in March
[/COLOR]

Analysts at UBS expect that the Swiss National Bank will keep tomorrow its benchmark interest rate unchanged at the record low of 0.25% to let interest differentials between the euro area and Switzerland widen pushing the pair EUR/CHF up. All 20 economists surveyed by Bloomberg News share this point of view.

UBS specialists think that the SNB will raise growth and inflation forecasts this week. In their view, the hiking cycle will start in June.

The SNB's rate decision is announced Thursday at 08:30 GMT.

Swiss currency has been driven so far by rising risk aversion amid the events in Japan and the Middle East. The pair USD/CHF renewed yesterday the record minimum falling to 0.9140. The pair EUR/CHF is down from February maximums in the 1.3200 area trading currently in the 1.2840 region.

Economists at Goldman Sachs note that although domestic economic situation clearly argues for a monetary tightening, recent geopolitical tensions have increased the risk of safe haven capital flows into the franc. So, the analysts continue to expect the SNB’s first hike in September.

[COLOR="Green"]HSBC: Japan's disaster won't affect Asian economies much[/COLOR]

Analysts at HSBC claim that Japan's earthquake will neither derail the growth of emerging Asian economies, nor ease inflationary pressure.

The specialists note that Asian monetary authorities may be tempted to postpone any already-scheduled tightening. Such outcome, in their view, would be a mistake. The economic impact of Japanese disaster on the rest of the region will remain relatively limited, so HSBC underlines that the region’s central banks should make fighting inflation a priority.

The economists say that although Japan's consumption will certainly slow down in the coming months, it will be compensated by high government and private spending on reconstruction, especially in what concerns an housing, infrastructure, electricity generation and transmission.
[COLOR="Green"]
Commerzbank: comments on USD/JPY[/COLOR]


The greenback failed in the 82.45 area on Monday and went down to trade below 81.00 versus Japanese yen. Technical analysts at Commerzbank note that US currency is coming close to the lower border of last 5-months trading range.

Support for the pair USD/JPY is found at the base of a 3-month channel at 80.33 and the all time minimums in the 80.00/79.70 zone. The specialists believe that the latter levels will be able to hold the bears.
According to Commerzbank, downside pressure will ease if dollar manages to close the day above 81.15.

[COLOR="Green"]Mizuho: comments on EUR/USD[/COLOR]

The European currency went down from 1.4035 at the beginning of March and then recoiled from support at 1.3750 returning in the 1.4000 area.

Technical analysts at Mizuho Corporate Bank claim that yesterday there probably was a “hanging man” candle formed on the daily chart that hints at the potential “double top”. That means that the pair EUR/USD may reverse down, though yesterday it once again closed above the 9-day MA.

The specialists warn, however, that yesterday's candle could also be the “spike low” ahead of the surge of euro’s rate. Such concept is preferred by Mizuho as it corresponds to the bank’s long-term outlook.

[COLOR="Green"]Commerzbank: comments on USD/CHF
[/COLOR]

The greenback is trading near the record minimum versus Swiss franc at 0.9150 as the demand for Swiss currency rose due to the concerns about Japan and the Middle East.

Technical analysts at Commerzbank note that US currency may extend declines to support line from October to March at 0.9120.

The lowest possible level for the pair USD/CHF is found at 0.9000 representing psychological Elliot wave and Fibonacci projections, believe the specialists. In their view, dollar will manage to hold at this level and reverse upwards.
[COLOR="Green"]
Daiwa: BPJ will have to monetize fiscal deficits[/COLOR]


Analysts at Daiwa note that yen’s rate is strengthening, while the CPI is falling and massive public debt of nearly 200% of GDP leaves Japanese monetary authorities little room for maneuver. In these circumstances the Bank of Japan will have to monetize the fiscal deficits needed to fund reconstruction.
The BOJ will be obliged to be more aggressive on asset purchases to effectively counter the tendency toward a stronger JPY, ensuring positive inflation in 2011.

Southeast Asian nation may initially suffer from reduced Japanese FDI in the second quarter of the year as Japan's corporations focus on domestic market. Korea and Taiwan may be affected by disrupted supplies of key capital goods that they import solely from Japan. However, as the period of deflation is likely to end, Japan will manage to take the road of sustainable by the second half of 2011.

BOJ has already doubled its asset purchase program to 10 trillion yen. The program will last 15 months.
Analysts at UniCredit say that although the BOJ may try to limit the impact of the earthquake on USD/JPY, the pair may still hit record minimums as long as repatriation flows continues, while risk aversion remains high and stocks weak. As a result, the bank advises investors to avoid spot JPY positions.
[COLOR="Green"]
Moody’s cut Portugal's credit rating
[/COLOR]

Moody’s Investors Service cut Portugal’s credit rating to A3. Among the reasons for such decision Moody’s named weaker outlook for economic growth, risks to the government’s deficit- reduction plans and a possible need to recapitalize banks.

Portugal is now 4 steps from junk status. The ratings agency said that id the ECB lifts up interest rates it will become more difficult for Portugal to reduce its budget deficit. The nations funding costs as well as the private-sector borrowing costs will increase. The country’s economy has to survive rising taxes and severe spending cuts in more than three decades as the government tries to convince investors’ in its ability to pay all the debts and diminish the deficit.

According to Moody’s, Portugal’s GDP may decline this year showing weak recovery at best in 2012. The Bank of Portugal claimed on January 11 that as consumer demand is decreasing and the government is cutting spending, the country’s economy will lose 1.3% this year. Portugal’s unemployment rose to 11.1% in the fourth quarter, the highest since 1998.

Portugal intends to sell 20 billion euro of bonds in 2011 to finance its budget and cover the cost of maturing debt. Its 10-year bond yield reached euro-era record of 7.70% on March 9. Portugal has to repay 9 billion euro in April and June.

Analysts at Brown Brothers Harriman say that Moody’s negative outlook for Portugal is justified and further cuts seem to be quite likely.
[COLOR="Green"]
Danske Bank changed 3-month forecast for EUR/GBP[/COLOR]


Analysts at Danske Bank expect the European Central Bank to raise its benchmark interest rate in April by 25 percentage points. The Bank of England, in their view, is less likely to raise the interest rates as the UK economy is too fragile. British central bank may keep the borrowing costs at the current 0.5% level until August.

As a result, the specialists cut their 3-month forecast for pound versus euro from 0.86 to 0.89. The pair EUR/GBP rose from 0.8280 on January 10 to 0.8680.

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  #133  
Old 17-03-2011, 15:08
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[COLOR="Green"]Scotia Capital: loonie and Aussie under pressure for now[/COLOR]

Canadian and Australian dollars have suffered from rising demand for safe-haven currencies, such as Japanese yen, Swiss franc and US dollar after Japan’s earthquake that broke out on March 11.

Currency strategists at Scotia Capital note that there are several factors influencing the loonie’s rate. The specialists underline that Canada’s dollar is a currency that performs well during periods of global growth and underperforming when global growth fades. As a result, the recent rise in risk aversion, a dampened outlook for global growth, a drop in commodity prices and a firming in the US dollar have pushed the pair USD/CAD above the 50‐day MA. The impact on Australian dollar will be stronger as Japan is Australia’s second largest trading partner.

However, in the longer Scotia Capital still expects that Canadian currency will reach 0.95 by the end of the year. Nomura Securities announced earlier that it was closing out its short Australian dollar positions.

[COLOR="Green"]BNY Mellon: investors will sell emerging market currencies[/COLOR]

Currency strategists at BNY Mellon claim that it’s possible to observe the net outflow from higher yielding currencies such as the South African rand, Russian ruble, Hungarian forint, Brazilian real, Argentine peso and Turkish lira. Investors’ risk sentiment has deteriorated after the Japanese disaster. The market’s participants poured their money into Swiss francs, US dollars and even yen.

J.P. Morgan also turned bearish on emerging-market currencies cutting the currency exposure in its Global Bond Index-Emerging Markets portfolio by 10%, with especially large reductions in the Brazilian real, the Chilean peso, and the Russian ruble. According to the bank, there’s the risk that Japanese investors will sell emerging-market currency-related debt to buy yen.

[COLOR="Green"]Credit Suisse: BOJ should lower rates
[/COLOR]

Analysts at Credit Suisse claim that the Bank of Japan has to cut short-term interest rates in order to stop yen’s appreciation to the record maximums. In their view, this would be better than the government intervention in the currency market.

Japanese currency climbed yesterday to 76.31 yen versus US dollar rising above the previous post-World War II maximum at 79.75 yen per dollar reached in April 1995.

The specialists believe that the pair USD/JPY will stay in range between 78 and 79 yen unless the spread in short-term interest rates between Japan and the United States widens.
The central bank should lower the interest rate on a 30 trillion yen ($378 billion) credit program, as well as the interest on excess reserves held by financial intuitions at the BOJ.

On March 14 Japanese monetary authorities doubled the size of its asset-purchase plan to 10 trillion yen and kept the benchmark interest rate at 0-0.1%.
[COLOR="Green"]
Mizuho: Japan, US and Europe may conduct joint intervention[/COLOR]


Analysts at Mizuho Securities think that Japan, United States and Europe may conduct joint currency intervention.

The specialists say that if G7 nations agree that yen is showing excessive volatility and disorderly movements, then Japan, the US and Europe may join their efforts to sell yen for dollars and euro.

Japanese currency climbed yesterday to 76.31 yen versus US dollar rising above the previous post-World War II maximum at 79.75 yen per dollar reached in April 1995. After that the pair USD/JPY managed to recover to the 79 yen area on the expectations that Japanese monetary authorities will intervene to weaken the national currency.
[COLOR="Green"]
Analysts on SNB rates[/COLOR]


Analysts at BNP Paribas note that the markets wasn’t surprised by today’s decision of the Swiss National Bank to keep the benchmark interest rate at the current 0.25% level and increase growth and inflation forecasts as investors were looking forward to exactly the same outcome.

The specialists note that the SNB was very careful not sound too hawkish as Swiss franc is strengthening and there's high uncertainty about the scale and implications of the Japanese crisis.

Economists at UniCredit claim that the possibility of the rate hike has declined. In their view, Japanese earthquake and its impact on the Fukushima power plant introduced a “new element of risk”. UniCredit supposes that the SNB won’t start lifting up rates until September.

Specialists at Moody's also believe that SNB is likely to keep its key interest rate on hold for the next several months as the strong Swiss franc and the euro zone economic weakness will affect Swiss exports.

Strategists at Citigroup expect Switzerland’s monetary authorities to begin raising rates in the third quarter. The exact term depends on how the near-term uncertainties are resolved. The interest-rate bias seems upside as the SNB dropped previous references to the danger of deflation. On the contrary, its statement indicates concern that low interest rates are encouraging undesirably strong growth of credit and broad money.
[COLOR="Green"]
Commerzbank: comments on USD/JPY[/COLOR]


US dollar has compensated yesterday’s decline rising from the new record minimum at 76.60 above 79.00. Then, however, the pair USD/JPY once again headed down, this time at lower pace.

Technical analysts at Commerzbank note that resistance for US dollar is found at 79.78 and 80.60 levels representing 50% and 61.8% Fibonacci retracements of the rate’s decline during the past week.

According to the bank, bearish pressure on the greenback will ease only if it overcomes January minimums at 80.93.

BNP Paribas cut Japan's growth forecast

Analysts at BNP Paribas reduced their Japanese economic growth forecast for 2011 due to the 9.0 magnitude earthquake in northern Japan and the nuclear crisis at the Fukushima power plant.
The projections for the fiscal year growth were lowered from 1.6% to 0.9%, while the estimates for the calendar year were cut 1.6% to 1.2%.

The specialists expect the country’s economy to contract severely in the first two quarters of the year. In the third quarter Japan will likely return to the positive growth. In 2012 Japanese GDP may add 2.9% helped by the reconstruction.

These forecasts are based on assumption that the Fukushima crisis will be contained and the rolling blackouts by Tepco will finish as planned at the end of April.

[COLOR="Green"]Deutsche Bank: QE2 turned out to be efficient enough
[/COLOR]

Monetary stimulus measures conducted by the Federal Reserve have shown rather impressive results.
Since the Fed’s Chairman Ben S. Bernanke claimed on August 27 that it’s necessary to launch additional asset purchase program, the Standard & Poor’s 500 Index of stocks gained 18%. According to Bank of America Merrill Lynch index, the risk premium on high-yield, high-risk bonds decreased from 6.81% to 5.16%. Inflation expectations rose by 44.4%, while the unemployment rate has fallen to 8.9% in February, the lowest since April 2009.

Analysts at Deutsche Bank Securities approve the approach of US monetary authorities noting that the deflation risk has been successfully eliminated that helped the stock market rise.

The QE2 began on November 3 and is scheduled to last until the end of June. The Fed pledged to but $600 billion of Treasuries. The QE1 accounted for $1.7 trillion of asset purchases and finished in March 2010. The QE was criticized by the Republicans who feared the surge in prices. However, core inflation rose in January only by 0.2% in comparison with 2010 level.

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  #134  
Old 21-03-2011, 22:16
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[COLOR="Green"]Barclays Capital: comments on USD/JPY[/COLOR]

Technical analysts at Barclays Capital claim that the spike low to the record minimum at 76.26 seen on the weekly USD/JPY chart indicates the potential stability of the rate in the near term.

The specialists say that the greenback’s likely to move up, although it will be very hard for US currency to overcome the resistance of the 2-year downtrend line in the 83.00/30 zone. In order to ease the bearish pressure in the medium term, the pair has to close the day above 84.50. According to Barclays Capital, support level is situated at 79.40.
[COLOR="Green"]
Commerzbank, Lloyds Bank expect pound to decline[/COLOR]


The pair GBP/USD has renewed 2-week maximum at 1.6293. Technical analysts at Commerzbank say that sterling may fail to rise higher as it faces the 4-year downtrend at 1.63 and the range top at 1.6340. The specialists expect the British currency to drop to February minimums at 1.60/1.5962.

According to the bank, it’s necessary to sell pounds at 1.63 stopping above 1.6430 and taking profit at 1.60.
Analysts at Lloyds Bank Corporate Markets claim that the pound’s rate will keep being determined by the interest rate differentials. In their view, sterling may found itself under bearish pressure until investors’ risk sentiment improves.
[COLOR="Green"]
Commerzbank: ECB may postpone rate hike
[/COLOR]

Economists at Commerzbank claim that the recent events in Japan can make the European Central Bank revise it’s almost made decision of raising the interest rates. The matter is that the Bank of Japan is adding huge amounts of liquidity to the country’s financial market in order to weaken the national currency. The specialists believe that the concerns about rising inflation in the euro area may seem exaggerated in comparison with the inflationary pressure Japan may face in future.

As a result, European monetary authorities may postpone the rate hike. In this case euro will survive a sharp decline. According to Commerzbank, the current levels of the pair EUR/USD in the 1.4200 area seem to be overvalued.

In addition, it’s also necessary to take into account that investors’ sentiment towards the greenback may improve. The bank thinks that US dollar will be weak only in the short term. The analysts think that when yen’s repatriation is over, the market’s attention will once again switch to the Europe’s debt problems, so they recommend buying American currency in the medium term. RBC strategists agree with such opinion. In their view, one more factor in favor of US currency is the tensions at the Middle East that will make investors seek refuge in dollars.
[COLOR="Green"]
Wells Fargo, Bank of Tokyo: yen will drop in 2011[/COLOR]


After the Kobe earthquake in 1995, yen gained 20% in 3 months. In 6 days after the recent disaster that occurred on March 11 the pair USD/JPY lost 3.7% as investors were concerned about yen’s repatriation by the Japanese investors estimated by 10 trillion yen ($124 billion).

Never the less, economists surveyed by Bloomberg expect Japanese currency to lose 8% in 2011 surviving the biggest decline in 6 years as Japanese growth and demand for money will fall affecting yen. On Friday, March 18, G7 nations accompanied Japan in the currency intervention undertaken to weaken yen that had reached the postwar maximum at 76.25 yen per dollar.

Analysts at Wells Fargo and Bank of Tokyo-Mitsubishi UFJ believe that yen will begin depreciating as the Bank of Japan injects cash in the country’s financial system, while the other central banks are getting ready to tighten monetary policy. Last week the BOJ added 38 trillion yen to Japanese financial market in one-day operations. In 1995 Germany’s Bundesbank and US Federal Reserve, on the contrary, reduced interest rates. The specialists think that Japanese policymakers will make enough efforts to weaken the national currency and look forward to further intervention, at least from Japan.

Wells Fargo sees yen’s rate easing to 86 yen per dollar in a year, while Bank of Tokyo predicts that Japan’s currency will drop to 89 by the end of 2011. The median estimate according to Bloomberg survey is at 88 yen per dollar.
[COLOR="Green"]
BNP Paribas: Aussie may strengthen to $1.04[/COLOR]


Analysts at BNP Paribas expect Australian dollar to climb versus the greenback to the maximum since 1983 helped by the growth of the commodity prices.

Benchmark European coal derivatives for next-year delivery gained 8.6% since the beginning of the year to $134.40 a ton on March 16.

The specialists remind that Australia is the world’s biggest coal producer and rising coal prices will increase the country’s income and asset prices.

According to the bank, Aussie may strengthen to $1.04. So far the highest level of the pair AUD/USD was reached on December 31 when it rose to $1.0256.

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  #135  
Old 25-03-2011, 15:03
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[COLOR="Green"]Europe: Portugal’s debt rating reduced, EU summit[/COLOR]

Standard & Poor’s lowered Portugal’s credit rating by two notches from A- to BBB with the negative forecast 2 days after Fitch Ratings cut Portuguese long-term debt rating from А+ to А-.

Analysts at Credit Suisse claim that the country’s downgrade affected the market. In their view, investors don’t want to buy euro while they’re closely watching if there’s any progress at the EU summit. The specialists note that there are still many negative factors for the single currency.

According to Bloomberg, two European officials with direct knowledge of the matter claimed that the bailout for Portugal may total 70 billion euro ($99 billion). The country hasn’t asked for financial help yet.

On the first day of the summit yesterday the European leaders agreed on Germany’s proposal to spread contributions to the future permanent rescue fund – European Stability Mechanism – over 5 years. The initial amount of the fund will be equal to less than the expected earlier 40 billion euro of paid-in capital.

[COLOR="Green"]CharmerCharts: sell EUR/USD on advance to 1.4200/20[/COLOR]

Specialists at CharmerCharts, analytical firm providing technical analysis, note that the single currency jumped yesterday to the 1.4200 area versus US dollar.

In the medium term, however, the analysts regard the outlook for euro as negative and advise investors to sell on the pair’s advance to 1.4200/20. According to the analysts, such trade should be stopped if EUR/USD manages to break above 1.4300.

CharmerCharts says that support for the pair is found in the 1.4030/50 zone. Below these levels euro will be poised for a decline to 1.3860.

[COLOR="Green"]HSBC: ECB and BoE may repeat Japan’s mistake[/COLOR]

European inflation broke above the ECB’s 2% threshold in December rising to 2.4% in February, while the British CPI growth accelerated last month to 4.4%, twice higher the 2% BoE target level. As a result, the European Central Bank announced about its readiness to raise interest rates and more and more members of the Bank of England’s MPC call for monetary tightening. Analysts at HSBC, however, claim that the central banks should take into account Japan’s unsuccessful experience in this field.

In their view, the inflation threat may misguide the European monetary authorities and, as a result, the region’s economy may suffer like Japan did in the past quarter century. At the beginning of 1990s, the Bank of Japan increased its key rate in more than 2 times to 6% as the Gulf War pushed oil prices and inflation to 4.%. However, when inflation was soon eliminated the central bank has to cut back the rate to less than 2% by the end of 1993.

According to HSBC, oil-price surge can create sometimes more deflationary than inflationary risks as it is squeezing spending power. The specialists warn that that’s what may be currently happening in Europe as crude oil approached maximum in more than 2 years above $100 a barrel.

HSBC notes that among the longer term costs of the monetary policy mistake there are stagnation, deflation and economic underperformance. To receive evidence one must just look at Japan: the country has to keep rates at the record low, while its debt is twice the size of the nation’s economy.

[COLOR="Green"]Wells Fargo: the outlook for major currencies[/COLOR]

Analysts at Wells Fargo claim that there are 2 opposing forces influencing the pair USD/JPY. On the one hand, there is the speculative upward pressure on yen due to the anticipation of the repatriation flows. On the other hand, Japanese officials have drawn the line in the sand to prevent further appreciation of the national currency. The specialists believe that this kind of mixed environment for yen is going to prevail for at least several months. The specialists, however, don’t think that Japanese currency will once more test the postwar maximums as it did on March 16 when it reached 76.31 yen.

Wells Fargo says that 80 yen mark is certainly a psychological level below which the intervention risk is high. The economists are speaking not so much about the actions of other central banks, but about the efforts of both the Bank of Japan and the country’s Ministry of Finance. Judging from the degree of momentum at the market the pairs USD/JPY and EUR/JPY will be the primary crosses affected by potential intervention, though the Bank of England and the Bank of Canada have also sold yen.

The strategists note that though the amount of the international participation probably isn’t very strong, it will send a strong message to investors indicating the high degree of the authorities’ commitment.
The market has priced in about a 100 basis points interest rates hike over 12 month – quite significant pricing in – so it can be argued that there’s still some place for Euro to reflect the expectations. The problem is still in the European debt concerns. Wells Fargo believes that some of the euro zone’s indebted nations, especially Portugal, may soon need a bailout.

As for Portugal, April is a very important month in terms of the debt’s refinancing. This could be the point where the forex market will come more in line with the fixed income market. It’s necessary to note that Portuguese bond market is still showing a significant amount of investors’ stress. It’s just the forex market that hasn’t paid much attention to the euro area’s debt problems so far.

The specialists say that the greenback will be on the defensive due to the hawkish signals from the ECB and the Bank of England until the second round of the QE ends in June. Wells Fargo expects June to be an important threshold for the currency market. The transition from easing to neutral policy is going to be significant itself, even if the Fed doesn’t start hiking rates quickly.

[COLOR="Green"]Commerzbank: EUR/GBP eroded long term resistance[/COLOR]

Technical analysts at Commerzbank note that the single currency bounced yesterday versus British pound breaking above the key resistance in the 0.8758 area eroding the long term downtrend.

The specialists say that as long as the pair EUR/GBP is trading above the mentioned trend line it has potential to advance to the 0.8935/45 area representing the 50% retracement of the decline from 2009 and the October 2010 maximum.

According to the bank, bullish pressure on euro will ease only below the short term uptrend at 0.8672 and the pair will be poised lower to 0.8605 then 0.8560.

[COLOR="Green"]Barclays Capital: Australian dollar may rise to 1.09[/COLOR]

Analysts at Barclays Capital note that Australian dollar is under bullish pressure versus its US counterpart as long as it holds above 1.01. In the near term the pair AUD/USD is likely to fluctuate near the post-float maximums in the 1.0260 area. If Aussie decisively breaks up through these levels, it will get chance to climb to 1.0650 and 1.09 in the medium term.
[COLOR="Green"]
SNB quarter report released[/COLOR]


The Swiss National Bank has released today its quarterly report. The central bank announced that the tensions in the Middle East led to the new strengthening of Swiss franc versus the European currency and US dollar.

According to the central bank, franc’s appreciation has so far had only a moderate effect on the import price index. The Swiss franc prices of some import goods react with a time lag to the exchange rate’s moves, as the companies adjust them at irregular intervals.

Switzerland’s monetary authorities also said strong national currency made the country’s exports lose considerable momentum. The SNB expects that Swiss GDP will gain about 2% in 2011.
[COLOR="Green"]
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  #136  
Old 29-03-2011, 13:52
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[COLOR="Green"]Japan’s unemployment rate fell in February[/COLOR]

Japan’s February data released today was surprisingly good: the unemployment rate dropped from 4.9% in January to 4.6% last month (+370,000 jobs, figures don’t include data from Iwate, Miyagi and Fukushima prefectures). The job-to-applicant ratio rose to 0.62 that means there were 62 positions for every 100 candidates in February, the highest since January 2009. Retail sales showed annual increase by 0.1%, while the economists were looking forward to 0.5% drop.

As a result, it’s possible to conclude that the country’s economy was on the improvement path before the March 11 earthquake that damaged northeastern regions.

However, it widely believed that such data is not enough for the bright outlook. Analysts at Goldman Sachs expect that Japanese GDP will contract in the second quarter. The specialists revised downwards their growth forecast for the fiscal year starting April 1 from 1.3% to 0.7%.

The Nikkei 225 Stock Average lost about 10% since the temblor. Economists surveyed by Bloomberg News expect that industrial production that will be published tomorrow declined by 0.1% in January. The government estimates damage from the disaster by 25 trillion yen ($306 billion).

[COLOR="Green"]UBS: bullish outlook for EUR/CHF[/COLOR]

Technical analysts at UBS are still betting on the single currency’s advance versus Swiss franc. In their view, if the pair EUR/CHF breaks above 1.3004, it will manage to climb to the 1.3138 zone. The bank claims that support for the pair is found at 1.2788.

The specialists say that Portugal has low systemic relevance for the euro area as a whole and the fact that the country can count on bailout in case it can’t solve it debt issues on its own, so the country’s problems, according to UBS, won’t have very lasting and strong impact on euro.

[COLOR="Green"]BNP Paribas: bullish outlook for AUD/USD[/COLOR]

Australian currency advanced yesterday versus its US counterpart renewing the absolute maximum at 1.0313. Then the pair AUD/USD corrected dipping to 1.0225 and recoiled up from this level.

Analysts at BNP Paribas think that the pair's dynamics is determined more by the greenback's weakness than by Aussie's strength. In their view, Australian dollar will remain high helped in the short term by Japan’s elevated demand for coal and by rising demand for iron ore in the longer perspective that will be needed for post quake reconstruction.

According to the bank, AUD/USD is going to retest Friday’s maximum at 1.0295.

[COLOR="Green"]Mizuho keeps advising to sell USD/JPY[/COLOR]

US dollar is slowly moving up to the 82.00 area trading versus Japanese yen. Analysts at Mizuho Corporate Bank note that the pair USD/JPY returned above the broken support line of the triangle pattern that held for the previous 5 months.

The specialists, however, claim that weekly and daily Ichimoku charts still suggest short position despite the short-squeeze that started on Friday.

According to the bank, resistance levels for US currency are found at 81.79/81.85, 82.00 and 82.35, while support levels are situated at 81.30, 80.87 and 80.50.

[COLOR="Green"]BNP Paribas: pound under bearish pressure[/COLOR]

Analysts at BNP Paribas and Barclays Capital claim that British pound seems to be under bearish pressure trading versus the greenback. The pair GBP/USD dropped below the key support level at 1.5980 and may now fall to 1.5750.

The specialists note that US economic data that will be released this week is going to be potentially negative for sterling.

[COLOR="Green"]BMO Capital: factors negative for euro[/COLOR]

Analysts at BMO Capital Markets draw investors’ attention to the fact that last week the Federal Reserve announced the beginning of the series of press conferences after policy meetings as it usually happens in the European Central Bank. The specialists regard this as a sign that the US monetary authorities are preparing the ground for the monetary policy change.

According to BMO, the risks for euro could be from more hawkish Fed’s stance and the possibility that the ECB stays on hold longer than the market is anticipating. However, the comments the ECB President Jean-Claude Trichet made on Monday are setting strong market expectations for the rate hike. Trichet claimed that inflation rates are now durably above the common definition of price stability in the euro zone.

The analysts also say that European currency may get under some downward pressure if the US employment data due on Friday, April 1, is better than expected.
[COLOR="Green"]
Barclays Capital raised yen’s forecast[/COLOR]


Analysts at Barclays Capital raised their forecasts for Japanese yen:

3 months: from 85 to 82 yen per dollar;
6 months: from 86 to 83 yen per dollar;
12 months: from 90 to 85 yen per dollar.

The specialists note that Japan’s current-account surplus remains large, while net private capital outflows may decline. According to Barclays Capital, yen will begin weakening only from the third quarter and it will happen more slowly than expected before.
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  #137  
Old 30-03-2011, 13:09
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[COLOR="Green"]TD Securities: Aussie gains versus dollar and yen
[/COLOR]

Australian dollar climbed today to 1.0332, the maximal level versus its US counterpart since 1983 when it began floating freely. The currency climbed to 85.68, the highest since May 5, 2010.

Analysts at TD Securities believe that Aussie will rise to 88 yen by the end of June helped by Chinese growth and surging commodity prices. The pair AUD/JPY gained 6.8% since March 18.

Related data releases (based on Bloomberg surveys):
March 31: Australia’s retail sales (forecast +0.4%);
March 31: Australia’s building permits (forecast +4%);
March 31: US factory orders (forecast +0.5%);
April 1: China’s PMI (forecast: 54 from 52.2 in February).
[COLOR="Green"]
Standard Life Investments are bearish on EUR/USD
[/COLOR]

Analysts at Standard Life Investments believe that the single currency is currently overvalued. In their view, the pair EUR/USD may drop to the undervalued levels before the sovereign debt crisis is resolved.
The specialists note that although the marker is pricing in 100 basis points of the interest rates hike for euro in 12 months, they expect no more than 75 points increase in the ECB rates.

According to Standard Life Investments, EUR/USD fair long term value for indebted countries like Greece, Portugal, and Ireland is found somewhere between $1.00 to $1.10 range and for the euro area as a whole – between $1.20 and $1.25.

The strategists underline that the European authorities need weak euro to cope with the debt crisis, slow trend growth and the necessity of fiscal consolidation.

As for the United States, the economic fundamentals, on the contrary, will be gradually improving, says Standard Life Investments. The analysts think that dollar’s decline won’t last long.

[COLOR="Green"]Sumitomo: comments on USD/JPY and EUR/USD[/COLOR]

Analysts at Sumitomo Trust & Banking claim that US dollar is likely to trade at the upside of the range between 82 and 83 yen. In their view, American currency will be supported by the speculation that the Fed soon quit its $600-billion quantitative easing program fueled by the comments of president of the Federal Reserve Bank of St. Louis James Bullard about the need to normilize the country’s monetary policy. The specialists note that the market’s sentiment has become more optimistic.

As for the pair EUR/USD, Sumitomo expects it to fluctuate today between 1.4050 and 1.4150. The strategists underlined that euro finds itself under the influence of 2 contradictory factors: the expectations of the ECB rate hike and the concerns about indebted peripheral euro zone nations.

[COLOR="Green"]Yen’s under pressure due to the rate differentials[/COLOR]

It’s very likely that the Bank of Japan will fall behind when the world’s major central banks begin normalizing monetary policy.

Japanese yen fell today to 11-month minimum versus the European currency at 117 yen per euro. Analysts ANZ National Bank note that euro keeps getting support from the interest rates differentials. The ECB council member Jozef Makuch claimed yesterday that the possibility of the ECB rate hike next week seems to be high.

Euro strengthened versus yen even despite Standard & Poor’s cut Portugal’s sovereign credit ratings from BBB to BBB- and Greece’s – from BB+ to BB- with negative outlooks. Strategists at UBS claim there can be 2 reasons for such dynamics: either investors were pricing in a lot of the bad news or this pushes Portugal closer to asking for aid that’s regarded as positive.

US dollar managed to get above 83 yen level for the first time since Japan’s earthquake on March 11. Yen got under pressure due to the rising Treasury yields and the recent hawkish comments of the Fed’s members.

[COLOR="Green"]Commerzbank: EUR/JPY will rise to 120.00 yen per euro[/COLOR]

Technical analysts at Commerzbank note that the single currency broke through resistance at 115.69 yen completing the major base. In their view, the pair EUR/JPY will now move up to the 119.65/120.00 zone limited by the February 2010 minimum and the psychological resistance.

The specialists believe that in the longer term euro will manage to climb to 126.00. According to the bank, the European currency will be able to make such advance as long as it stays above the key support in the 114.40/113.55 area limited by the 20-day MA and last week’s minimum.
[COLOR="Green"]
German Deputy Finance Minister: comments on euro zone[/COLOR]


German Deputy Finance Minister Joerg Asmussen claimed that euro zone is ready to face any violent moves of the financial market caused by the region’s debt problems.

The policymaker underlined that the European authorities strengthened Stability and Growth Pact, approved the Euro-plus pact for competitiveness and worked out the permanent crisis-resolution mechanism – the ESM.

Standard & Poor’s cut today Portugal’s sovereign credit rating from BBB to BBB-. According to Asmussen, Portuguese government will decide for itself whether the country needs any financial help. The EU and the IMF will support Portugal if necessary but only if the nation pledges to conduct the required austerity measures.

Portuguese 10-year bonds fell, pushing the yield above 8%t for the first time. Economists at Rabobank estimate that Portugal needs to raise 1.35 billion euro to fund itself to the end of April, including the April 15 redemption spike.

G20 leaders will assemble in Nanjing (China) tomorrow for a one-day seminar on the international monetary system.

[COLOR="Green"]Barclays Capital: comments on USD/CHF[/COLOR]

US dollar reached today 2-week maximum versus Swiss franc at 0.9250 and then eased down to 0.9220.
Technical analysts at Barclays Capital claim that that the advance of pair USD/CHF is limited by the Fibonacci retracement resistance and the old range minimums between 0.9200 and 0.9260. In their view, the greenback’s decline will extend to the 0.9105/0.9090 zone.

The specialists note, however, that if US currency manages to overcome 0.9260, it will be able to rise to the early March maximums in the 0.9370 area.

[COLOR="Green"]Mizuho: EUR/JPY will rise to 126.00 yen in April[/COLOR]

Technical analysts at Mizuho Corporate Bank note that the all elements of the daily Ichimoku chart point at the long positions for the pair EUR/JPY. According to the bank, euro rose above the top of the “pennant” formation, while the 9-day MA went up almost vertically. The specialists expect the single currency to appreciate to 126.00 yen in April.
[COLOR="Green"]
Analysts on Swiss KOF barometer
[/COLOR]

According to the data released today, Swiss KOF barometer rose from upwardly revised February figure of 2.19 to 2.24 in March increasing for the third consecutive month.

Analysts at Credit Suisse note that although the change in the indicator remained rather moderate in absolute terms, it shows that Switzerland’s economic activity remains strong. In their view, exports to the EU and growth of Swiss industry were the main drivers of the KOF index.

Strategists at UniCredit sound quite optimistic as well. In their view, such dynamics of the barometer means that Swiss economy remains in full swing this year. The economists still think that Swiss GDP will add 2.5% in 2011 maintaining 2010 growth pace.

Moody's specialists, however, claim that Swiss economic recovery will slow this year as weaker exports will have negative impact on the nation’s growth. According to them, Switzerland’s GDP growth pace will fall to 2.1% this year. The rating agency believes that situation in the euro zone, Switzerland’s key trading partner, will worsen this year due to severe fiscal tightening and the ongoing sovereign debt crisis. Moody's forecasts that the Swiss National Bank will leave its benchmark interest rate at the current 0.25% level until later this year.

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  #138  
Old 31-03-2011, 13:43
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[COLOR="Green"]Commerzbank: AUD/USD on its way up to 1.0500[/COLOR]

Australian dollar rose from the minimums in the 0.9700 area hit in the middle of March to renew the long-term maximums above 1.0300.

Technical analysts at Commerzbank expect the pair AUD/USD to continue its advance reaching 1.0375 (78.6% Fibonacci retracement of the decline from 1981 to 2001) and 1.0500.

The specialists note that the strong support for Aussie is found in the 1.0203/1.0175 zone limited by the February and early March maximums and containing internal 3-month support line.

[COLOR="Green"]Bank of America: Fed has little incentive to weaken dollar[/COLOR]

Analysts at Bank of America Merrill Lynch claim that as the correlation between import prices and US dollar’s rate seems to be low, the Federal Reserve has little incentive to weaken the greenback in order to encourage inflation increasing competitiveness of the national exports or making its debt easier to repay.
The trade-weighted dollar index lost 5.8% during the past year. It happened due to the Fed’s loose monetary policy of extremely low interest rates.

At the same time, import prices excluding automobiles didn’t change much during this period gaining in February only 1.4% after rising by 1.3% in January.

According to Bank of America, 10% decline of US currency is equal to the percentage-point increase in inflation. Consumer prices excluding food and energy showed in February 1.1% annual advance. As a result, it’s possible to say that the link from a weaker currency to higher prices for consumer goods has still been fairly weak.

[COLOR="Green"]Pimco advises not to invest in Treasuries[/COLOR]

Analysts at Pacific Investment Management Co., the world’s biggest bond fund, believe that US Treasuries have little value due to the rising US debt.

According to Pimco, America owes about $75 trillion in bonds and obligations for Social Security, Medicare and Medicaid. The specialists warn that unless the country’s authorities reform entitlement programs, the United States will face inflation, currency devaluation and low or negative real interest rates.

As a result, the strategists advise investors to sell US debt. In their view, US may have an off- balance-sheet, unrecorded debt burden of close to 500% of GDP. Pimco claims that the situation in the US is even worse than in Greece and that the nation is “out-Greeking the Greeks”.

This quarter US Treasury holders lost 0.1% even after the interest payments, estimates the Bank of America Merrill Lynch. In the final quarter of 2010 the loss was equal to 2.7%. During the presidency of Barack Obama US publicly traded debt rose to the record level of $9.05 trillion.

[COLOR="Green"]Barclays Capital recommends watching euro closing levels[/COLOR]

Analysts at Barclays Capital note that the risk sentiment has improves so far.

The specialists claim that today is the important day for the market as the month and the quarter ends. In their view, it’s important to watch the closing levels of the single currency versus US dollar and British pound: for the pair EUR/USD the key level is found at 1.4185, while for the pair EUR/GBP it lies at 0.8815. If euro closes above these levels, the bulls will likely remain strong during the rest of the year.

The strategists also say that Brazilian real and the Korean won strengthened today versus their US counterpart breaking out of the established ranges. That means, according to Barclays, that dollar may stay weak in the second quarter of the year.

[COLOR="Green"]Commerzbank: comments on USD/CHF[/COLOR]

Technical analysts at Commerzbank claim that as long as the greenback is trading above the support at 0.9140 it still has chances to advance versus Swiss franc.

The specialists note that to confirm its upward potential the greenback has to close above the Fibonacci resistance at 0.9205.

According to the bank, if the pair USD/CHF breaks below 0.9140, it will be poised for a decline to 0.9110 and 0.8980/70 on its way down to the minimums in the 0.8852 area.

[COLOR="Green"]Ireland: the release of stress tests results[/COLOR]

Ireland’s economy minister Richard Bruton commented yesterday on the Irish banks’ stress tests that are released today at 15:30 GMT.

According to the official, investors have to be ready to the fact that the tests will reveal the country’s bank need additional capital. Bruton noted that it’s hard to ease Irish banks' dependence on central bank liquidity as long as they didn’t have enough capital. The minister underlined that Ireland was committed to meeting all its fiscal obligations under the EU/IMF rescue package. The policymaker also spoke against raising the corporate tax rate, saying it would affect investors’ confidence.

Analysts at RBC Capital Markets expect that Irish banks need 15-25 billion euro. So far 10 billion euro of the 35 billion euro provided by the Bank of Ireland has been used. According to RBC, an amount within these parameters would be neutral for euro, while any figure above the 35 billion euro total, that’s though highly unlikely, would be significantly negative for the single currency, while any figure below 15 billion euro won’t be credible.

Financial Times notes that Ireland which is asking the ECB for 60 billion euro in medium-term funding to replace emergency temporary help from Ireland’s central bank won’t get the money. If the stress tests results are discouraging the European Central Bank may cut off existing support of Irish banking sector.

[COLOR="Green"]Mizuho, BNP Paribas: forecasts for USD/JPY[/COLOR]

Technical analysts at Mizuho Corporate Bank note that the greenback has returned to the large “triangle formation” in which it was trading versus Japanese yen during 5 months since November.
According to Mizuho, the record minimum of the pair USD/JPY at 76.31 hit on March 16 will hold at least during the second quarter of the year. The specialists expect the US currency to continue consolidating between 82.35 and 83.35.

Currency strategists at BNP Paribas note that the greenback’s advance has paused due to the month-end rebalancing. The Bank of Japan will undoubtedly keep monetary policy extremely loose and investors increasingly favor yen as a funding currency. According to the bank, US currency will appreciate to 85.00 yen.

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  #139  
Old 01-04-2011, 13:00
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[COLOR="Green"]Ministry of Finance revealed the intervention volumes[/COLOR]

Japan’s Ministry of Finance announced yesterday that it sold 692.5 billion yen ($8.4 billion) during the period from February 25 to March 29 to weaken the yen that hit on March 16 postwar maximum at 76.31 threatening the country’s economic recovery from the strongest earthquake in its history.

Japanese government was helped by the G7 nations which conducted the first joint intervention in more than 10 years. The coordinated actions helped to reverse the pair USD/JPY upwards. The greenback is currently trading above 83 yen level.

Analysts at Barclays Bank regard this intervention as very efficient as it managed to stop yen’s appreciation with amounts of money than those used in Japan’s unilateral intervention in September when the country sold 2.12 trillion yen when its national currency strengthened to 79.75 yen per dollar.

In addition, it’s necessary to note that Japanese central bank pumped 40 trillion yen into the banking system in successive one-day emergency cash operations from March 14 to March 22 to help financial markets restore after the March 11 disaster.

[COLOR="Green"]Nomura, Sumitomo: forecasts for USD/JPY[/COLOR]

According to the Bank of Japan’s Tankan survey published today, the median forecast of large Japanese manufacturers is that the national currency will trade at 84.20 during the year through March 2012. It’s necessary to note that almost three fourths of the responses to the survey came by March 11 when the country was stricken by the magnitude-9.0 earthquake and the following tsunami.

Analysts at Nomura increased their yen forecast expecting the monetary inflows from repatriation of overseas assets owned by Japanese investors. The specialists now think that at the end of June the pair USD/JPY will be at 82.5, while in January they were looking forward to 87.5.

Strategists at Sumitomo Trust & Banking, on the other hand, say that Japanese currency may weaken as the other world’s economies are likely to show sustainable growth that will make investors’ risk sentiment improve.

[COLOR="Green"]Standard Life Investments: euro may retreat downwards[/COLOR]

The European currency rose in the first quarter encouraged by the expectations that the European Central Bank will raise the interest rates. However, euro’s prospects may be not quite optimistic.

According to Reuters, technical analysis shows that the pair EUR/USD is in the middle of correction to the downside after it added 6% rising from February 14 minimum at $1.3428 to last week’s maximum at $1.4249.

Resistance is situated at $1.4249. If euro manages to break above this level, it will be able to rise to November 4 maximum at $1.4283. If the single currency falls below the key psychological support at $1.4000, it will mean that the uptrend for EUR/USD has reversed and euro will be poised down to $1.3850.
The fundamental outlook for the single currency seems more uncertain as the concerns about the indebted peripheral nations are combined with the expectations of the ECB rate hike next week.

Analysts at Standard Life Investments expect euro to weaken in the longer term as rate increases are already prices in the pair. In their view, 25 basis points lift up won’t give euro much support. The specialists think that the euro zone’s central bank will then pause to evaluate the effects of the hike.
[COLOR="Green"]
Mizuho: EUR/USD will advance towards 1.4500[/COLOR]


Technical analysts at Mizuho Corporate Bank note that although the single currency went down from 2011 maximum at 1.4247 reached on March 22, the pair EUR/USD remained above support at 1.4000 and closed the month at the highest level since December 2009.

According to the bank, this will have more impact on euro than the slightly discouraging fact that it formed a spike high and closed inside the “flag formation”.

The specialists believe that the bulls are now strong enough to drive euro to the important long term resistance 1.4500 in coming weeks.

Mizuho notes that in the near term EUR/USD consolidate between 1.4125 and 1.4225 moving randomly.

[COLOR="Green"]BNP Paribas: USD/JPY may climb to 85 yen[/COLOR]

Analysts at BNP Paribas note that the downside correction of the pair USD/JPY has stopped already at 83.40. If the greenback gets above 83.65 versus Japanese yen, it will be able to strengthen rising towards selling offers at 83.80.

The specialists expect some consolidation after the pair’s active growth during the last several days, though they don’t think that such move will last long. In their view, momentum for the greenback is bullish and US currency may climb to 85 yen during the next few weeks.

According to the BNP Paribas, the Bank of Japan has no choice but to keep the interest rates at the record low levels to encourage investors to use yen as the funding currency for carry trades.

[COLOR="Green"]Pimco: yen’s repatriation will exceed market’s expectations[/COLOR]

Analysts at Pacific Investment Management Co., the world’s biggest bond fund, claim that Japan will repatriate more funds than markets expect as the country needs to finance its reconstruction after the devastating earthquake and tsunami.

The specialists believe that Japan will also be forced to increase borrowing and monetize some part of its debt to fund the rebuilding that, according to the estimates, will require $300 billion.

The forecasts that Japan will issue a large amount of debt in coming years are mostly based on the experience of the Kobe quake in 1995, though now the country’s debt situation seems to be much more complicated, notes Pimco.

The strategists underline that the greenback, the European currency and Japanese yen are currently facing many difficulties, so they advise investors to borrow money in these currencies to invest in the better-performing emerging markets.
[COLOR="Green"]
Barclays Capital: bearish view on USD/CAD[/COLOR]


Technical analysts at Barclays Capital claim that the pair USD/CAD came to the target levels at 0.9680/65. In their view, this area will hold the initial bearish attack. As long as USD/CAD is trading below resistance at 0.9745, the bank has negative outlook for the greenback. If US currency falls below 0.9665, it will be poised for a decline to 0.9600.

[COLOR="Green"]Societe Generale: technical forecast for EUR/USD[/COLOR]

Analysts at Societe Generale claim that the pair EUR/USD may still fall to Monday’s minimum at 1.4020 and then to the support in the 1.3755/1.3720 area before bouncing to the new 2011 maximums. When the single currency overcomes resistance at 1.4250/55, it will get chance to advance to November 2009 maximum at 1.5145 breaking through resistance at 1.4580.

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  #140  
Old 05-04-2011, 14:54
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[COLOR="Green"]Ban Bernanke: the Fed is watching inflation[/COLOR]

The greenback is strengthening versus the single currency during the second day: the pair EUR/USD is moving down to 1.4150. US currency is driven by Ben Bernanke’s comments: the Federal Reserve Chairman claimed that it’s necessary to keep a close eye on inflation.

According to Bernanke, inflation expectations are likely to remain stable, while the rise in commodity prices may slow and, consequently, the increase in inflation will be transitory. The policymaker said that if he is wrong in his predictions, US monetary authorities will have to act timely in order to maintain the price stability.

Bernanke noted that the Fed expects many foreclosures this year and this, in its turn, will affect home prices and construction as well as the country’s economic recovery. In his view, the pace of US economic rebound is not as strong as it should be.

Analysts at JPMorgan Chase claim that while Bernanke’s remarks showed the vigilance on inflation expectations, the Chairman was certainly less hawkish than some regional Fed presidents, for example Philadelphia Fed President Charles Plosser and St. Louis Fed President James Bullard.

Economists at Bank of Tokyo-Mitsubishi UFJ say that Bernanke’s comments mean that the market might be underestimating the degree to which the Fed could tighten monetary policy. As a result, US dollar has chances to strengthen. The bank also reminds that the euro zone’s debt crisis is far from being solved and that’s another reason that could push EUR/USD lower.

Specialists at Prestige Economics claim that the Fed seems to be concerned about inflation including the growth of food and energy prices, its monetary policy will depend on what happens with commodity prices. The average price of gasoline in the US rose from $3.07 on January 1 to $3.66 on April 3.

[COLOR="Green"]Morgan Stanley: recommendation for AUD/USD[/COLOR]

Australian dollar has significantly strengthened from 2011 minimum versus the greenback at 0.9705 hit after the Japan’s earthquake rising to its post-float maximums. The market players are now trying to figure out whether Aussie’s surge will continue or it’s time to turn bearish.

On the one hand, there are still many factors in favor of the pair AUD/USD. Firstly, Australia has the highest benchmark interest rate of 4.75% among the developed nations that makes its assets and currency attractive for investors. Secondly, though the analysts don’t expect the Reserve Bank of Australia to raise the interest rates in the nearest terms they think this will happen before the end of the year. Finally, the country’s economy benefits from the advance of commodity prices.

Strategists at Morgan Stanley, however, warn that Australian central bank may cut the interest rates this year as the non-mining part of Australian economy remains weak. In addition, stronger Aussie can also harm the economic rebound.

To sum up, long positions on AUD/USD are to be kept in place though traders should be ready that the market’s sentiment may change very quickly.
[COLOR="Green"]
J.P.Morgan, Citigroup: pound will rise versus euro[/COLOR]


This week there is a lot of information from the central banks: there are all in all seven central bank meetings and nine Fed officials scheduled to speak. The Reserve Bank of Australia decided to keep the benchmark rate unchanged at 4.75%.

The climax is going to be on Thursday, when there will be rate decisions from the Bank of Japan, the Bank of England and, certainly, from the European Central Bank.

Strategists at J.P. Morgan note that the expectations of higher rates is already priced in the single currency, so euro may decline once any rate hike is announced. As for the Bank of England, no one expects it to lift up the borrowing costs, so if the UK monetary authorities sound hawkish, pound may get some support.

Analysts at Citigroup advise investors to buy pound versus the European currency. In their view, the euro area’s credit risk will increase relative to Britain’s. The specialists believe that the pair EUR/GBP will decline to 0.8400. The trade should be stopped if the euro rises above 0.9062.
[COLOR="Green"]
Commerzbank: EUR/CHF is likely to decline[/COLOR]


The pair EUR/CHF rose from the minimums in the 1.2420 area hit after Japan’s March earthquake to last week’s maximum at 1.3184.

Technical analysts at Commerzbank claim that euro was capped by the resistance provided by 200-day MA and February maximum at 1.3203.

The specialists expect some profit-taking and believe that euro may be now poised for a decline at least to 1.3000/1.2965. In their view, it would be better if euro managed to hold above the 38.2% retracement of the move higher from the 1.2400 spike low.
[COLOR="Green"]
OECD: economic forecasts for the second quarter[/COLOR]


Pier Carlo Padoan, the OECD chief economist, claimed today that the European Central Bank's anticipated 25-basis-point rate rise won't have any significant negative impact on the euro zone's economy. According to Padoan, the situation in the US is different as the Fed is not as concerned about inflation as the ECB because it still has to fight high unemployment.

The OECD lifted its annualized growth forecast for the US in the second quarter from November estimate of 2.5% to 3.4%, for France – from 1.6% to 2.8% and Canada from 2.6% to 3.8%. The OECD lowered its second-quarter growth forecast for the UK from 1.3% to 1% and Italy from 1.6% to 1.3%. It forecasts growth of 2.3% for Germany, the euro zone's largest economy.

The organization notes that the developed countries should set budget consolidation as their priority. Padoan said that Portugal's instability remains the main source of worry. The country should hurry to solve its political problems and the new government has to be formed as soon as possible.
[COLOR="Green"]
Commerzbank: comments on GBP/USD[/COLOR]


Technical analysts at Commerzbank note that as the British pound broke through resistance band between 1.6170 and 1.6177 versus its US counterpart, it may now rise to 1.63.

Never the less, the specialists believe that the bears will remain stronger as long as the pair GBP/USD is trading below 2010 maximums in the 1.6465 area. According to the bank, if sterling falls below the February minimum at 1.5962, it will be poised for a decline to 1.56.

[COLOR="Green"]Julius Baer: SNB will follow the ECB in raising rates[/COLOR]

Currency strategists at Swiss bank Julius Baer expect that the single currency will end the second quarter of the year slightly below 1.30 versus Swiss franc. In their view, the Swiss National Bank (SNB) will follow the European Central Bank in raising the interest rates.

The specialists believe that as the euro zone’s debt problems are gradually being resolved, the demand for franc as the safe haven will be limited. According to the bank, during the 3 months from April to June forex market will be dominated by the monetary policy normalization all over the world.
[COLOR="Green"]
Geithner: US debt will reach ceiling by May 16
[/COLOR]

Treasury Secretary Timothy Geithner warned the Congress that US debt will reach the country's $14.294 trillion debt ceiling no later than May 16. Earlier the Treasury Department estimated that the limit will be hit between April 15 and May 31.

If US lawmakers don’t raise the ceiling by this May 16, the Treasury will have to employ a range of extraordinary measures to prevent the United States from defaulting on its obligations. However, Geithner said that these measures could put off the inevitable only for eight weeks or so and the US won’t be able to borrow within the limit after about July 8, 2011.

The data on March 31 showed that the debt subject to the legal borrowing limit was $14.218 trillion, or roughly $76 billion under the legal cap. Typically, that's a little over two weeks of borrowing, although debt levels can fluctuate up or down on a daily basis.

Geithner underlined that the Treasury won’t start a “fire sale” of financial assets such as gold because this will damage financial markets making investors lose confidence in the US solvency. If Congress doesn’t increase the debt limit, a broad range of government payments would have to be stopped, limited or delayed, including military salaries and retirement benefits, Social Security and Medicare payments, interest on the debt, unemployment benefits and tax refunds.

According to the official estimates, American government will need to borrow $738 billion by the end of this fiscal year.
[COLOR="Green"]
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  #141  
Old 06-04-2011, 13:59
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[COLOR="Green"]Nomura: euro risks are still high[/COLOR]

Analysts at Nomura Securities claim that the single currency has been trading so far as if there was no sovereign debt crisis. The market has ignored the issues in Portugal, Ireland and Greece and the risk premium on euro has been declining since January after risk premiums were driving all the EUR/USD moves in 2010.

The specialists note that in case of positive outlook for euro that wouldn’t be a problem, but since the crisis is still unresolved everything may go wrong. In their view, investors have priced in about 85 to 90 basis points of interest rate hikes this year, so if the ECB doesn’t meet the expectations that will certainly harm the single currency.

The strategists believe that the risks of debt restructuring are rather high. According to Nomura, the restructuring solely in Greece, Ireland and Portugal will cost the core euro zone around $235 billion, while a restructuring that also involves Spain would require from the ECB about $480 billion. These numbers aren't insurmountable, but getting to them would be very difficult from the political point of view.
The analysts recommended selling euro versus Norwegian krone and maybe British pound.

[COLOR="Green"]BofT-Mitsubishi: yen will keep weakening[/COLOR]

Japanese yen fell to the 6-month minimum at 85.52 versus the greenback. After G7 nations conducted joint intervention on March 18 to stop yen’s appreciation that hit the postwar record maximum at 76.25 yen per dollar, the currency lost 5.1% surviving the biggest decline among 10 developed-nation currencies.

Analysts at Bank of Tokyo-Mitsubishi UFJ expect that the Bank of Japan will fall behind the other major central banks in ending monetary stimulus measures as the nation’s economy needs support to recover from the biggest earthquake in its history. In their view, yen is likely to remain the weakest currency for a long time.

The BOJ 2-day policy meeting has begun today and it is thought that the country’s monetary authorities may decide on new fund-providing measures. According to Bloomberg that is citing unnamed sources, the central bank is considering offering a credit program to spur banks to lend to companies with cash-flow shortages.

[COLOR="Green"]UBS, ING: comments on Swiss CPI growth[/COLOR]

According to the data released today, Switzerland’s CPI added in March 0.6% from the level of the previous month, while the economists were looking forward only to 0.2% increase.

Analysts at UBS note that such unexpectedly strong growth of Swiss consumer prices was due to the technical factors. The specialists draw investors’ attention to the fact that the CPI basket was revised: clothing was given much heavier weighting and, as a result, the index has become more volatile.

Currency strategists at ING explain the surprising advance of Swiss prices by the seasonal energy and clothing price increases. In their view, these factors are temporary, so there’s still no reason for the SNB to end its expansive monetary policy. The analysts reminded that, according to the Swiss National Bank forecast, the headline inflation won’t break above the 2% threshold before middle of 2013.

[COLOR="Green"]Commerzbank: USD/JPY on its way up to 94.50[/COLOR]

US dollar recovered from the record minimum at 76.31 hit on March 16 reaching the 6-month maximums above 85.00.

Technical analysts at Commerzbank note that the pair USD/JPY is coming closer to the key resistance in the 85.62/84 area, representing the top of the 2007-2011 down trend channel and the 50% retracement of the decline from May 2010.

The specialists expect that although there will be some profit taking at those levels, US currency will manage to get higher to 87.55 and 94.50.

[COLOR="Green"]Barclays Capital: yen will lose to euro and dollar
[/COLOR]

Technical analysts at Barclays Capital believe that the pair EUR/JPY is getting ready to reverse its downtrend that was holding since 2008. In their view, if the single currency breaks above 122.30, it will get chance to advance to 127.95. If euro closed the week above the top of the Ichimoku Cloud at 121.95, the bulls will become strong enough to push the rate higher to 139.00 later in 2011.

As for the pair USD/JPY, its recent advance means that the greenback has formed an important base and may now move up towards the top of the weekly Cloud in the 88.40 area. The strategists expect US currency to consolidate above 83.85, ideally 84.50. According to them, the outlook for the pair will remain bullish. Resistance levels for USD/JPY are found at 85.95 and 87.15.
[COLOR="Green"]
Pimco: Portugal won’t be able to withstand on its own[/COLOR]


Analysts at Pacific Investment Management Co., the world’s biggest bond fund, claim that the increase in the ECB interest rates and the resulting stronger euro will have a very negative impact on Greece, Ireland and Portugal.

The specialists claim that although the European Central bank has to make decisions for the euro area as a whole, it should probably consider the possibility of hiking rates for the strong countries while conducting more loose policy for the weakest peripheral countries.

According to Pimco, the best thing to do for the European monetary authorities is to acknowledge the fact that Greece, Ireland and Portugal face significant solvency challenges and some or all of them will need to restructure their sovereign and sovereign-guaranteed debt. The strategists point out that Greece’s second review of its program with the International Monetary Fund showed that the program is not working.

As for Portugal, Pimco thinks that the resign of the national government last month has only put off the inevitable apply for the bailout.

Analysts at Commerzbank share this point of view claiming that as the Portugal 5-year bond yields are still at 9.9%, it’s only a matter of time until the country has to ask for help. In their view, the outcome of today’s 6-month and 12-month bill auctions doesn’t matter as Portugal won’t be able to deal with its problems on its own.
[COLOR="Green"]
Rabobank, Commerzbank: comments on EUR/GBP[/COLOR]


British pound weakened today versus the European currency as the UK industrial production contracted in February by 1.2% from the previous month’s level, while the economists were looking forward to 0.4% advance. The pair EUR/GBP returned to the trend line support at 0.8775.

Analysts at Rabobank International think that such data means that the country’s economy is still too weak Bank of England won’t lift up interest rates until November. The rate hasn’t changed since March 2009. Bloomberg survey shows that the central bank will likely keep the rates unchanged at its tomorrow meeting.

Strategists at Commerzbank, on the other hand, claim that the BoE will finally tighten its monetary policy and some more hawkish comments from Britain’s monetary authorities will help pound. According to the bank, sterling will strengthen to 83 pence per euro and trade at $1.60 by the end of the year. The median forecast of the economists surveyed by Bloomberg News is that the pair EUR/GBP will end the year at the 84 pence level.
[COLOR="Green"]
Canadian dollar renewed maximum versus the greenback[/COLOR]


Canadian dollar rose to the more than 3-year maximum versus its US counterpart in the 0.9590 area.
Loonie was helped by the growth of the global equities that encouraged the demand for higher-yielding currencies. Strategists at Canadian Imperial Bank of Commerce believe that loonie’s strength is caused mainly by the weakness of US dollar due to the nation’s fiscal problems. In addition, the interest rate differential is in favor of Canadian dollar.

Technical analysts at Commerzbank note that the pair USD/CAD has breached the support line from October to April at 0.9607 and is now poised for a decline to 0.9577 and then to the psychologically-important 0.95 region. The specialists say that they will maintain the negative outlook for the greenback as long as it’s trading below the 55-day moving average at 0.9832.
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  #142  
Old 12-04-2011, 13:19
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[COLOR="Green"]BMO Capital advised to sell New Zealand’s dollar
[/COLOR]

New Zealand’s dollar was rising versus the greenback during 3 weeks reaching yesterday the 0.7846 level. The strategists at BMO Capital think, however, that kiwi’s advance has come to an end.

Among the factors negative for the NZD there are the discouraging consequences of the earthquake, interest rates that were lowered in early March and rather modest fundamentals of the country. So, if stock markets tumble, investors lose risk appetite and the US currency begins rising, it will be gaining at fastest pace versus New Zealand’s dollar, say the specialists.

According to BMO, it’s necessary to sell kiwi at the current levels placing stops above 0.7905 and taking profits at 0.7630.
[COLOR="Green"]
BNP Paribas: Aussie may keep growing[/COLOR]


Australia’s dollar fell the most in 4 weeks against yen and eased from its maximum versus the greenback after Japan raised the severity rating of Fukushima Dai-Ichi power plant, damping demand for higher-yielding assets. According to Tokyo Electric Power Co., the total amount of radiation leaks from the affected power plant may exceed that of the 1986 Chernobyl disaster.

Despite the deteriorated risk sentiment analysts at BNP Paribas claim that the overall outlook for the pair AUD/USD remains positive and Australian currency still has all chances to resume its way up.
The specialists base such assumptions on strong China’s trade data that means the steady demand for Australia’s goods.

In addition the bank draws investors’ attention to the dovish comments of some Federal Reserve members Yellen, Dudley and Evans hinting that the US central bank won’t hurry to raise the rates after the $600-bilion bond purchase program ends in June.

Finally, BNP Paribas thinks that during the meetings of G20 and the IMF the nations will fail to find the solution of the world’s economic imbalances, so the currency reserves diversification is likely to continue encouraging the demand for Aussie.

[COLOR="Green"]Stiglitz: new global reserve currency needed[/COLOR]

Nobel-prize laureate Joseph Stiglitz believes that in order to prevent trade imbalances that are well reflected in the US national debt, the greenback should be replaced by the new global reserve currency.
Last week US dollar fell to the 15-month minimum versus euro at $1.4480, while the US trade deficit widened in January to the 7-month maximum of $46.3 billion.

The famous economist says that the position of the United States could be much worse if the situation in Europe wasn’t so severe.

Stiglitz notes that the existing monetary system creates high risk that the period of low growth, inflationary bias and instability will last long. Such system is fundamentally unfair, says the specialist, as it means that poor countries are lending to the US at close to zero interest rates. To finance its budget deficits, the USA sells bonds to overseas investors and governments, boosting the dollar reserves of those nations. According to International Monetary Fund, overseas holdings of dollar reserves rose to $3.14 trillion in the fourth quarter of last year.

[COLOR="Green"]Commerzbank: bullish outlook for USD/JPY[/COLOR]

The greenback’s advance versus yen stalled yesterday at 85.50 and the pair USD/JPY dropped below 84.00. Technical analysts at Commerzbank note that it happened due to the general strength of yen. In their view, the outlook for US currency is still bullish.

The bank says that the pair paused right ahead of the resistance in the 85.62/84 area representing the top of the 2007-2011 down channel and the 50% retracement of the decline from May 2010.
The specialists believe, however, that after some profit taking dollar may rise to 87.55 and 94.50.

[COLOR="Green"]UBS: US dollar may advance this year[/COLOR]

Analysts at UBS believe that the greenback may climb this year. In their view, the faster-than-expected economic growth and rising inflation will make the Federal Reserve to tighten monetary policy. The bank didn’t specify when it expects US central bank to start lifting up the rates.

The specialists think that when the Fed’s $600-billion asset-purchase program ends in June, investors’ sentiment towards US currency will significantly improve.

According to UBS, the current trading levels of dollar crosses against euro and Australian dollar haven’t priced in the risk that the Fed can end quantitative easing. It has not priced in the risk that US policy will lead to stronger growth in America.

The euro may decline because the market is expecting more interest-rate increases by the European Central Bank than policy makers are likely to deliver. The market is pricing in 5 rate hikes in the next 12 months, says UBS, while the ECB is likely to raise the rates only twice more this year.

The pair EUR/USD added 7.3% this year. UBS forecasts that in a year the euro will be at $1.30.

[COLOR="Green"]Barclays Capital: comments on EUR/CHF[/COLOR]

Analysts at Barclays Capital expect that pair EUR/CHF to decline to the 1.2930/00 area.
The specialists note that the single currency has formed a small “head and shoulders” top on the daily chart.

According to the bank, bearish pressure on euro will ease only if the pair manages to close the day above 1.3205. In such case the 5-month double-bottom will be completed. The strategists, however, think that such outcome is unlikely taking into account the general strength of franc.
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  #143  
Old 13-04-2011, 13:52
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[COLOR="Green"]Societe Generale on ECB, BoE and Fed’s rates[/COLOR]

Strategists at Societe Generale claim that the ECB rates stayed at the record low during the 2 years. In their view, the time has come for ECB to show that the borrowing costs won’t stay at the emergency level forever.

The key question is now the extent of the tension between the core inflation in the euro area, which remains very low at round 1%, and the rising non-core components that, according to the market’s expectations, have driven headline inflation in March up to 2.6%.

The specialists say that it’s necessary to regard the ECB rate hike not as monetary tightening but as transfer from the troubled economies to the successful growing ones. As a result, the tensions that already exist in the euro area will strengthen.

“The British MPC regards inflation as a window to be looked through, while the ECB thinks of it as of a wall to be knocked down” says Societe Generale. The strategists mean that the differences in the approaches of the 2 central banks are a bit exaggerated. In their view, the Bank of England won’t lag the ECB following the European Central Bank in May. The BoE is likely to tighten at the similar pace, hiking rates by 25 basis points.

As for the United States, the end of quantitative easing in June may be regarded as relative tightening. The analysts remind that there is the aggressive fiscal tightening to be delivered. The Fed’s standing point is that the core inflation as well as the headline one seems to be well-behaved in the US, so any rate hike soon is unlikely.

[COLOR="Green"]RBS lifts up forecast for AUD and NZD[/COLOR]

Analysts at Royal Bank of Scotland believe that Australian and New Zealand’s dollars will keep gaining versus their American counterpart during the second and third quarters of the year. Such forecast is based on the assumption that the US Federal Reserve won’t raise the interest rates and, consequently, the greenback will lack strength.

The specialists expect Aussie to reach the maximum of $1.10 by September 30 and then ease to $0.98 by the end of 2012. The kiwi is seen gaining to $0.84 in the third quarter before declining to $0.77 by the end of the next year.

[COLOR="Green"]Commerzbank: technical levels for GBP/USD[/COLOR]

Technical analysts at Commerzbank note that it seem that the British pound is unable to overcome resistance in the 1.6425/65 area trading versus the greenback. The mentioned zone represents the double Fibonacci retracement and the 2010 maximum.

The specialists think that sterling is now poised for a decline to 1.6180 and even lower mowing down towards 1.5963/1.5880.

According to the bank, the bearish pressure will ease if pound breaks above 1.6465. In such case the pair GBP/USD will get chance to rise to November 2009 maximum at 1.6880 and then to 1.7040/50.

[COLOR="Green"]Mizuho: USD/JPY is consolidating in the 83.50/85.50 area[/COLOR]

Analysts at Mizuho Corporate Bank claim that in comparison with the USD/JPY volatile fluctuations seen in March, the pair is now going through a consolidation. As it was expected, dollar bounced from the top of the large “triangle” formation.

The specialists expect the greenback to remain today in range between 83.50 and 85.50. In their view, it’s necessary to buy US currency on the dips to 83.80 stopping below 83.45 and taking profit at 84.50 or maybe at 85.15.
[COLOR="Green"]
BIS: reserve currencies will lose[/COLOR]


Economists at the Bank for International Settlements claim that nearly all reserve currencies may depreciate.

After studying the relationship between foreign-exchange turnover and per capita income the specialists came to the conclusion that the richer the country, the greater the turnover in their currency. As a result, it was shown that there is a relatively consistent relationship between forex turnover, trade, and GDP per capita – practically all the countries are found directly at the regression line.

At the same time, according to BIS, such the currencies of the United States, Japan, Great Britain, Australia and some other nations have far more forex turnover than their trade and GDP would suggest. The economists conclude that the demand for these currencies will fall. China, on the other hand, had turnover well below what its fundamental economic activity would suggest, so the forecast for yuan is quite opposite.
[COLOR="Green"]
Citi: time to cut longs on riskier currencies
[/COLOR]

Analysts at Citigroup claim that during the last several weeks investors’ trading strategies were determined by the positive risk sentiment. However, it’s time to finish such trade now, say the specialists.

According to Citigroup, the market has already priced in all possible encouraging news. The bank underlines that when the majority of players come to the single view, it should be regarded as a warning signal meaning that the situation may change in the unfavorable way quite quickly.

Such factors as the nuclear danger in Japan and Portugal’s applying for a bailout deteriorate the market’s attitude towards risk. The economists say that investors begin thinking that some currencies, like the Australian dollar, have surged too rapidly.

As a result, Citi recommend cutting longs on Canadian dollar and Norwegian krone and reducing shorts on the greenback and Swiss franc.

[COLOR="Green"]The Guardian: 3 possible scenarios for Europe[/COLOR]

EU is going to provide Portugal with bailout estimated by 80-90 billion euro on the conditions of severe budget cuts. Yet these conditions may affect the country’s economy as did those imposed on Greece and Ireland. Nouriel Roubini says that such terms are likely to prevent the problem nations from reducing their debt. Irish GDP lost 11% during 2 years, while Greece's economy contracted by 6.5% during the past year.
British newspaper The Guardian outlines for Europe 3 possible scenarios.

1. The "good news" scenario
The peripheral economies continue to shrink, though the contagion won’t spread to Spain. Spanish banking system looks rather solid, while most of the country's sovereign debt is held by Spaniards. In the wake of Portugal's crisis, interest rates investors are demanding from Spain have actually slightly declined. EU officials keep reassuring the market that Spain won’t need financial support, though it’s necessary to remember that the same was said about Portugal last year.

2. The "bad news" scenario
Spain with its slower growth and higher unemployment than in Portugal may seriously suffer from surging yields. As a result, the country may be forced to apply for the bailout. Spanish government has to pay 4.9% to sell 10-year bonds, close to the 5.5% offered by the European Financial Stability Fund (EFSF) for countries that have been thrown out of the financial market. In addition, Spain would probably need more than 400 billion euro. The EFSF that will exist until 2013 can raise 750 billion in total. But with Ireland and Portugal require at least 160 billion euro. Taking into account the fact that from the political point of view it’s hard to expand the rescue fund, Spanish bailout would drain the fund and Belgium or Italy may become the next weak link.

3. The "really bad news" scenario
Although Spain is unlikely to default in 2011, political protests counter the austerity measures are likely to strengthen, while Greece or Ireland may default. As a result, other peripheral nations will get under threat and there will be the risk of multiple defaults and possible rejection of the single currency.

[COLOR="Green"]MIG Bank: bullish outlook for EUR/USD[/COLOR]

Technical analysts at MIG Bank claim that the single currency has resumed its attempts to break above the multi-month “rising wedge” pattern.

The specialists are bullish on the pair EUR/USD. In their view, the major uptrend from June 2010 is likely to extend and euro may advance to 1.4579 (2010 maximum), 1.4710 and 1.5000 (psychological level).

Support levels are situated at 1.4418, 1.4249 (March 22 maximum) and 1.4000 (psychological level). If the pair falls below this level, it will be poised to fall to the previous reaction minimums at 1.3867 and 1.3752.

According to the bank, it’s necessary to buy euro at 1.4430 stopping below 1.4240 and taking profit at 1.4540/1.4710/1.5000.

[COLOR="Green"]On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets
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  #144  
Old 15-04-2011, 13:43
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[COLOR="Green"]Yen rose on the Chinese data
[/COLOR]

Japanese yen strengthened today versus all of its main counterparts. The pair USD/JPY continued its way down from the maximum at 85.50 reached on April 6 returning to the upper border of the large “triangle” formation.

Currency strategists at Mizuho note that yen rose as, according to Chinese data released today, the country’s CPI added 5.4% in March on the annual basis. The specialists note that the odds that China’s will take more steps to cool growth have increased encouraging demand for Japan’s currency as a refuge.
It’s also necessary to note that Chinese GDP increased by 9.7% in comparison with the previous year level, while the economists surveyed by Bloomberg were looking forward only to 9.4% growth.

Analysts at TD Securities claim that the biggest Asian economy will keep conducting “prudent” monetary policy to stabilize the consumer prices. The People’s Bank of China has raised interest rates four times since the global financial crisis, so even if the approach of China’s central bank becomes less aggressive, it will all the same lift up interest rate and reserve requirement during the next few months.

[COLOR="Green"]Moody’s cut Ireland’s credit rating[/COLOR]

Moody’s Investors Service reduced Ireland’s debt rating from Baa1 to Baa3 with negative outlook. The agency noted that the financial strength of Irish government is poised to decline, while Irish economic growth prospects seem to be weak and may deteriorate more.

The main reason of the downgrade was the uncertainty created by ESM solvency test conducted to decide on the provision of future liquidity support to the nation. It’s quite possible that Ireland may need additional consolidation measures to meet the established fiscal targets, says Moody’s.

In addition, the specialists underlined that the ECB rate hike to 1.25% made on April 7 may have negative impact on the indebted nation.

As for some way out of the current poor state of things, the agency said that upward pressure on Irish rating may appear if the country’s budget reduction manages to reverse current debt dynamics. According to Moody’s, despite all the negative factors the Ireland’s long-term potential growth prospects remain higher than those of many other advanced nations.
[COLOR="Green"]
Commerzbank: comments on EUR/USD
[/COLOR]

Technical analysts at Commerzbank note that that the pair EUR/USD has been staying below resistance at 1.4535 during 3 days. In their view, this means that euro’s target may now be lower at the 4-month uptrend support line found at 1.4258.

The specialists note that if the single currency drops below these levels, the bullish powers will weaken and the pair may ease to the minimum of the end-March at 1.4021.

Never the less, the bank still thinks that EUR/USD will finally manage to break above 1.4535.

[COLOR="Green"]Roubini: Greece will be forced to restructure debt[/COLOR]

Nouriel Roubini, professor of economics at New York University famous for predicting 2008 global crisis, says that Greece’s debt to GDP ratio is at “level of insolvency”, so the restructuring of the country’s debt seems inevitable. The same outcome is possible for Portugal’s and Irish banks’ debt.

Roubini thinks that Ireland’s government rescue package designed to finance national saving banks may deepen the country’s debt crisis.

The economist also claims that ECB may raise benchmark rate 50-75 basis points this year. In his view, in 2012 the borrowing costs in the euro area may reach 3%.

According to Roubini, the deviation in the monetary policy between the Federal Reserve and the European Central Bank may be quite destabilizing for financial markets.
[COLOR="Green"]
Mizuho: comments on EUR/USD[/COLOR]


Technical analysts at Mizuho Corporate Bank claim that bullish pressure on euro will strengthen if the pair EUR/USD manages to close the week above the important 1.4500 level. The specialists claim that the greenback’s suffering from the broad weakness, especially versus Swiss franc and Singapore’s and New Zealand’s dollars.

According to the bank, it’s necessary to buy the single currency at 1.4465/1.4400 stopping below 1.4350 and taking profit at 1.4520 and then at 1.4800/1.5000.
[COLOR="Green"]
Technical levels for GBP/USD[/COLOR]


British currency eased down from 1.6375 at the beginning of the Asian session trading versus the greenback. However, sterling’s decline was limited by the 1.6315 level and the pair GBP/USD managed to rise returning to 1.6370 where it all began.

Resistance levels for pound are found at 1.6375/85 (April 14 maximum/session maximum), 1.6425/30 (April 8/11 maximum) and 1.6500. Support levels are situated at 1.6315 (day minimum), 1.6285 (intra-day support) and 1.6220/25 (20-day MA/April 12 minimum).
It seems that GBP/USD isn’t ready for the break higher and the trend seems to be neutral, though volatile.
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George Papandreou: Greece won't restructure its debt[/COLOR]


Prime Minister George Papandreou claimed today that Greece will be reducing its budget deficit, but not restructuring its debt. “Greece’s problems won’t be solved by restructuring its debt but by restructuring the country,” said Papandreou. The policymaker underlined that the country needs serious reforms concerning not only economic, but also social and politic problems.

According to the official, the deficit-trimming measures, most of them in spending cuts, will account for than 22 billion euro ($32 billion) through 2015. Papandreou announced that Greece is going to cut spending from 53% in 2009 to 44% of GDP in 2015. The government is also expected to unveil plans to raise 15 billion euro by 2013 through state-asset sales.

Last year Greece got bailout from the European Union and International Monetary Fund on the conditions of cutting the deficit to less than 3% of GDP by 2014. The nation itself has set a goal of diminishing the deficit to below 1% by 2015. The government expects to get the deficit down from 15.4% of GDP in 2009 to 7.4% this year. It’s necessary to note, however, that the first-quarter revenue missed the target by 1.4 billion euro.

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  #145  
Old 18-04-2011, 14:11
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[color=#009900]Analysts forecasts for AUD/USD
[/color]
Analysts at Royal Bank of Scotland expect Australian dollar to gain about 4% by the end of September versus the greenback climbing to $1.10 helped by the surging commodity prices – the Standard & Poor’s GSCI Index of 24 commodities was rising during 3 quarters in a row. Strategists at Credit Suisse think Aussie will show such advance during a year. Deutsche Bank believes Aussie may appreciate to $1.08.
Australia is reach with resources and its currency will benefit from China’s and Japan’s high demand on its raw materials that account for about 60% of the country’s exports.

The pair AUD/USD is also getting much support from the interest rates differentials. Australian 4.75% benchmark rate is the highest among the developed nations while the Federal Reserve is likely to keep the borrowing costs at the record minimum in order to stimulate US economy.
So, according to Credit Suisse, the fundamental picture for Aussie over the next year seems to be quite encouraging.

In the first quarter Aussie lost 1.8% against its US counterpart. The OECD, however, notes that AUD is overvalued by 38% versus US currency as it added 50% since 2008 reaching $1.0584 on April 8.

Specialists at Credit Agricole warn investors that although the momentum is in favor of Aussie, it’s very vulnerable to the declines in raw-material prices. In their view, the market is now much positioned one way, so people are getting increasingly nervous about the risks of a substantial retracement.
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J.P.Morgan: US dollar will remain weak
[/color]
Analysts at J.P. Morgan claim that the world has got used to the weaker dollar. In their view, the current market’s sentiment is much different from what was just 6 months ago when Brazil’s Finance Minister Guido Mantega complained that weak dollar was creating a global currency war. The emerging markets seem to be more concerned about rising inflation when about exports, so they're letting their currencies strengthen.

As a result, for those investors who are holding longs for the currency of a country with relatively high inflation, such as Brazil, Mexico or Singapore, the specialists advise keep buying this currency keeping short positions in US dollar.
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Commerzbank: negative outlook for EUR/USD[/color]

The single currency advanced versus the greenback from the minimums in the 1.4020 area hit at the end of March limited by the 1995 maximum at 1.4535.

Technical analysts at Commerzbank claim that the outlook for the pair EUR/USD has now turned negative. In their view, as long as euro is trading below 1.4535 the bears dominate the market and the pair risks falling to the key support at 1.4279 that is the 4-month uptrend channel support line.

The break above 1.4535 will be confirmed if the European currency closes the week above this level. According to the bank, the bulls will eventually win and EUR/USD will manage to overcome the mentioned resistance. In such case the outlook will change to neutral/bullish.

[color=#009900]Deutsche Bank: EUR/USD won’t rise above $1.50[/color]

Last week the single currency was performing well enough trading in the $1.45 area against its American counterpart.

Analysts at Deutsche Bank think that euro's strength is caused by the greenback’s weakness. The specialists say that investors are using US dollar as a funding currency in carry trades borrowing in dollars and investing in the higher yielding currencies. Euro, on the other hand, isn’t used for that purpose since the European Central bank hinted on the rate hike.

According to the bank, the pair EUR/USD has potential to climb to $1.50. Then the situation may rapidly change, note the specialists, as the rate expectations are probably not going to shift much more in favor of the euro. As the sentiment about US currency has become too negative any signals from Federal Reserve may reverse the pair.

Economists at Brown Brothers Harriman also think that EUR/USD advance will be limited by $1.50 as the market will inevitably get aware about the debt problems of Spain and Portugal.

Currency strategists at Nomura Securities are the most bearish on euro as they advance to sell the currency against Swedish krona and Norwegian krone. As the reasons for being short on euro the specialists cite the excessive pricing in of the ECB hike and the possibility of oil prices decline.
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Goldman Sachs keeps longs on EUR/USD
[/color]

The advance of the single currency versus the greenback has stalled so far. Analysts at Goldman Sachs claim that as the risk sentiment has deteriorated, the bears may take profits on US currency.

The bank, however, is rather optimistic about the longer-term prospects of the pair EUR/USD. The strategists remind that euro was supported by the expectations of the ECB rate hikes. The bank still expects that the European Central bank will lift the rates by 50 basis points this year, but think that in 2012 the key benchmark rate will reach only 2.5% as the inflation rate may ease and there will be a lot of spare production capacities.

According to Goldman, euro was driven mainly by the broad dollar weakness and the factors negative for US currency are still in place. In addition, the bank expects that in the near future EUR/USD will get support from the further reduction of the fiscal risk premium. The strategists underline that when the debt problems escalated in the early January investors priced in sufficient risk premium for euro. While the Greek issues have once again got in the center of market’s attention, the narrowing yield spreads on Spanish and Italian bonds that are much more important from the systemic risk point of view allow looking for some contraction of this premium.

As a result, Goldman Sachs remains bullish on euro and keep the existing long positions at $1.4085 from the March 18 targeting $1.50.
[color=#009900]
ECB officials hint at further tightening[/color]

European Central Bank officials signal that the central bank will keep tightening monetary policy this year in order to fight rising inflation as the euro area’s economy’s improving, even though the ECB President Jean-Claude Trichet said that the rate hike to 1.25% conducted on April 7 wasn’t necessarily the start of a series.

Ewald Nowotny (Austria): investor expectations that the benchmark interest rate will be increased by another 50 basis points in 2011 are well-founded. The central bank will revise its inflation forecast after estimating in March that it would average about 2.3% this year. It’s quite obvious that both ECB interest-rate regime and our liquidity regime have been in crisis mode for quite a long period of time. The euro area as a whole is no longer in the crisis situation and this development will be reflected in the ECB’s policy.
[color=#009900]
Luc Coene (Belgium): monetary conditions are too accommodative.
[/color]

Axel Weber (Germany): there is a significant increase in inflationary pressure and current policy is supportive of the economy and expansive.

Yves Mersch (Luxembourg): the growth dynamic is carrying on and is firming and that policy remains “very accommodative.

Vitor Constancio (ECB Vice President): Portugal is likely to be the last country to require help.
Trichet underlined that economic growth is now self-sustained and risks are balanced.

The IMF raised last week its growth prediction for the euro region to 1.6% in 2011 and 1.8% in 2012.
[color=#009900]
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  #146  
Old 21-04-2011, 14:02
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[color=#009900]Scotia Capital: dollar still has potential for decline[/color]

Currency strategists at Scotia Capital note that there are a lot of US dollar bears at the market. The greenback is losing both versus the commodity currencies (Australian dollar reached 29-year maximum above 1.7000) and the safe havens (see the pair USD/CHF that renewed the absolute minimum at 0.8850).

The specialists say that the purchasing power parity analysis shows that some major currencies are significantly overbought: Aussie, for instance, is overvalued by 34%, Swiss franc – by 28%, euro – by 22% and the Canadian dollar – by 21%. According to Scotia Capital, this data should with no doubt be taken into account.

The analysts note, however, that currencies can trade at overvalued levels during some time, especially taking into account the Fed’s loose monetary policy and Standard & Poor's negative outlook for US debt.
As for the short term trade, the relative strength index (RSI) shows that no major currency is overvalued, so investors may keep selling dollar looking for its counterparts to set new highs.
[color=#009900]
Sumitomo: long-term forecast for USD/JPY[/color]

Analysts at Sumitomo Life Insurance believe that the pair USD/JPY will once again drop below 80 yen in the first quarter of the next year. In their view, currency interventions didn’t put an end to yen’s strengthening.
At the same time, the specialists underline that this move will be the final round of the currency’s appreciation. Sumitomo forecasts that during the next few years the greenback will be able to climb to 120 yen. American currency will get support from the US economic rebound and Federal Reserve's policy normalization that, in its turn, will widen the gap between Japanese and US interest rates.

[color=#009900]Commerzbank: EUR/USD on its way to 1.5145/50[/color]

The single currency advanced from the week’s minimums in the 1.4150 area overcoming the key resistance in the 1.4535 area (1995 maximum) and getting above 1.4600.

Technical analysts at Commerzbank believe that the pair EUR/USD is on its way to 1.5145/50. If euro manages to close the week above 1.4535, the positive outlook for the currency will be confirmed.
Resistance for EUR/USD is provided by the upper border of the 2-month uptrend channel at 1.4660.

[color=#009900]Aussie renewed maximums versus the greenback[/color]

Australian dollar rose to the record maximum versus the greenback above $0.7000. There were many factors that had positive impact on the currency.

Firstly, investors’ risk appetite was encouraged by US the advance of stocks. Then the interest rate advantage is still in favor of Australia: the RBA benchmark rate is at 4.75%, while the Fed and the BOJ keep the borrowing costs at the record low, close to zero.

In addition, according to the data released today, Australian producer prices added 1.2% (q/q) the first quarter in comparison with the last 3 months of 2010 when they rose only by 0.1%.

The country’s Foreign Minister Kevin Rudd claimed yesterday that Australia won’t “manipulate” the national currency ruling out the intervention prospects.

The pair AUD/USD gained 16% during the past year due to the high revenues from coal and iron ore exports to China, hurting though such spheres as tourism, manufacturing and education.

[color=#009900]RBC: assumptions on Greek debt restructuring[/color]

Analysts at Royal Bank of Canada claim that Greek debt restructuring would most likely consist of maturity extensions and the coupon payments’ reductions. In their view, the primary goal of this process will be to reduce redemptions in 2013-2016 to less than 10 billion euro a year.

In order to accomplish that the country will need the agreement of the International Monetary Fund, the European Union and European Central Bank that hold around 28% of outstanding Greek debt.

According to RBC, the unilateral forced restructuring by Greek authorities or a negotiated restructuring with significant reductions in principal repayments would be too tough for Greek and European banking systems. The bank specialists believe that Greece’s authorities have to incite the national bank to agree to restructure their debts in return for recapitalization, possibly with the funds provided by the EU.

Greece’s 2-year bond yields rose above 20%, while the 10-year yields approached 15%, reports Bloomberg.

[color=#009900]Commerzbank: negative outlook for USD/CHF[/color]

US dollar tried to recover versus Swiss franc in the first part of the week but failed in the 0.9000 resistance area. Then the pair USD/CHF renewed the record minimum falling below the previous absolute low at 0.8884 hit on March 16 to 0.8810.

Technical analysts at Commerzbank say that the pair’s rate fell due to the broad weakness of American currency. In their view, the greenback is likely to fall to the base of the 5-month downtrend channel at 0.8730.

According to the bank, any attempts of the bulls to improve the current state of things will be limited by 0.9017 and 0.9167 (2-month downtrend). As long as USD/CHF is trading below these levels, the outlook for it will remain negative.
[color=#009900]
Rabobank: market underestimates debt risk in US and Japan
[/color]

Strategists at Rabobank International believe that the financial markets underestimate the degree of the sovereign-debt crises risk in the United States and Japan.

Bloomberg cites the Rabobank’s sovereign vulnerability index in comparison with the ranking based on the credit-default swaps:
CDS Spread Ranking Rabobank Index
Greece 1 1
Japan 7 2
Portugal 3 3
Ireland 2 4
U.S. 11 5
Italy 6 6
Spain 4 7
Belgium 5 8
France 9 9
U.K. 12 10
Austria 8 11
Netherlands 10 12
Australia 12 13
Germany 13 14
Finland 15 15
Denmark 17 16
Switzerland 14 17
Sweden 18 18

It’s easy to see that Rabobank regards Japan as the second most vulnerable economy after Greece that’s not surprising taking into account the fact that the country’s external debt accounts for more that 200% of its GDP. The market, however, puts the Asian nation only at the seventh place as the second position is occupied by Ireland which is followed by other euro zone members – Portugal, Spain and Belgium.

According to the bank, large structural deficit of the United States makes it riskier than Spain and Italy. The analysts think investors should be less concerned about the situation in Europe.

It’s necessary to note that Rabobank index is based on eight indicators: interest-growth differential, cyclically-adjusted primary budget balance, interest payments, and weighted average years to maturity, net public debt, external debt, current account balance and World Bank governance indicator.

[color=#009900]Roubini: comments about US debt and deficit[/color]

Nouriel Roubini, professor of economics at New York University famous for predicting 2008 global crisis, says that US current fiscal balance can be restored easily and fast enough, as federal, state, and local revenues as a percentage of GDP are still relatively low. As a result, the effect of fiscal tightening would be quite impressive.

To deal with the accumulated deficits that form the public debt will be, however, much more difficult and require strong political will, so America will be able to start serious fiscal reforms only after the 2013 elections.

Commenting on the S&P’s recent outlook downgrade for the Unites States, the economist claimed that it’s not easy to agitate such bond market as the American one because the nation is still regarded as the safest investment destination in the world. According to Roubini, unlike other indebted countries, the United States benefits from risk aversion, even at the domestic market, through a stronger dollar and lower bond yields.
[color=#009900]
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  #147  
Old 22-04-2011, 13:44
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[color=#009900]Mizuho, Okasan expect USD/JPY to move down
[/color]
Analysts at Mizuho Corporate Bank expect the greenback to lose grounds to Japanese yen as soon as the next week. In their view, the market will once again start talking about the potential intervention of Japan’s Ministry of Finance.

The specialists say that US dollar bulls will be disappointed after the FOMC meeting scheduled on Tuesday-Wednesday. Taking into account rather modest US recent economic data it’s possible to assume that the Fed’s Chairman Ban Bernanke may sound rather dovish, so US monetary authorities will likely refrain from tightening during the rest of the year. So, the pair USD/JPY may fall to 80.00, believes Mizuho.

Strategists at Okasan Securities believe that USD/JPY may fall below 81.00 in the near term as many investors may get rid of their long positions on USD ahead of the Easter weekend as there's some risk that China will let yuan appreciate against the greenback in order to stem rising inflation. According to Okasan Securities, weaker USD/CNY will put US dollar under pressure against versus currencies.
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Morgan Stanley: nations will keep diversifying reserves from USD
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Analysts at Morgan Stanley note that although Standard &Poor's worsened the outlook for US sovereign debt rating, it hasn’t so far affected the greenback’s dynamic. In the longer term, however, S&P's move will encourage the world’s nations to diversify their foreign exchange reserves away from dollars.

The specialists underline that that any concrete action of rating agencies may trigger faster reallocation away from the US currency.

In the near-term the market’s attention will be focused on the next week's FOMC meeting, though it’s useless to wait for the hints on of when the policy tightening is finally going to start.

The bank also says that dollar will remain a funding currency until the Fed begins quitting its extraordinarily loose monetary policy.
[color=#009900]
BNY Mellon about potential Greece’s debt restructuring
[/color]

Analysts at BNY Mellon believe that Greece will soon restructure its debt. In their view, it may happen over the next few weeks.

However, the specialists think that this event won’t hit the market as strongly as it’s widely thought now. BNY Mellon believes that the restructuring will consist of the extension of debt maturities accompanied by the reduction in interest rates, so for the country’s creditors all will be going in the least painful way.
As a result, the bank claims that euro has even chance to benefit, though if it’s not clear whether the restructuring is really able to solve Greece's financial problems.

The results of the latest Reuters poll on the matter show that the majority of surveyed economists expect that Greece would have to restructure its debt during the next 2 years.
[color=#009900]
Westpac: US dollar will keep declining[/color]

Currency strategists at Westpac claim that there are enough reasons for the greenback to be weak versus other major currencies.

In their view, US dollar’s rate is so low because the Federal Reserve is keeping the borrowing costs at the record minimum of 0-0.25% while other world’s central banks tend to hike the interest rates.

The specialists say that although the news that Standard & Poor’s put US credit rating on negative watch didn’t derail the nation’s bond market, American currency was broadly weakened. The Dollar Index, which tracks the greenback against 6 major US trading partners, fell to 73.735, the weakest level since August 2008. US dollar fell to record minimum against Aussie and multiyear lows versus at least five other currencies.

Westpac forecasts that dollar will drop to $1.50 per euro, 80 yen and the low-90s Canadian cents.
[color=#009900]
Forecasts on British economy, BoE rates and sterling
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According to the prediction of economists surveyed by Bloomberg News, UK GDP rose by 0.5% in the first 3 month of 2011 after contracting by the same amount in the final quarter of the last year. The data will be released on April 27.

Minutes of this month’s Bank of England meeting showed that British policymakers think that the country’s economy is still in a very vulnerable state, so that the rate hike would harm consumer confidence. As a result, analysts at Societe Generale, Barclays Capital, Nomura International, National Australia Bank and Citigroup pushed back forecasts for the first rate increase this year.

The pair GBP/USD, however, rose today helped by the encouraging figures published yesterday. Retail sales added 0.2% in March while the analysts were looking forward to 0.5% decline, while the budget deficit turned out to be 18.6 billion pounds versus 20 billion-pound forecast.

Strategists at Commerzbank said that the Bank of England will anyway outpace the Fed in raising rates. In the end BoE is expected to lift up the borrowing costs sooner or later, but this year, while the Fed will hike not earlier that in the beginning of 2012. So, the bank thinks that sterling is going to strengthen against the greenback.
[color=#009900]
Societe Generale: EUR/USD will continue gaining
[/color]

Technical analysts at Societe Generale claim that as the greenback let euro strengthen and consolidate above the resistance at $1.45, US currency may fall to $1.51.

According to the specialists, resistance levels for the pair EUR/USD are now found at $1.47 and $1.4830 as euro is poised up to 2009 maximum at $1.5145.

US currency is weakening for the fourth day in a row. Yesterday it hit 16-month low at $1.4648 per euro. The bank notes that dollar’s downtrend has begun in June 2010 when it started easing from the maximum of $1.1876.
[color=#009900]
PBOC may let yuan significantly appreciate
[/color]
Wang Yong, a professor at the Chinese central bank’s training center, claims that in order to stem inflation the People’s Bank of China has to widen yuan’s daily trading band, reports Bloomberg.

Faster yuan appreciation is a direct and effective way of curbing imported inflation, which tend s to determine the upward dynamics of consumer price. The specialist also said that Chinese government should strengthen supervision of capital flows as yuan gains may also attract hot money boosting liquidity and increasing inflation pressure.

Such opinion corresponds to the recent comments of China’s authorities – Premier Wen Jiabao prices and deputy central bank governor Hu Xiaolian – who have both underlined so far that more yuan flexibility would help to fight inflation.

The Chinese currency is currently allowed to deviate from a daily reference rate set by the People’s Bank of China by 0.5%. Today’s mid-point for the pair USD/CHY was established at the record minimum of 6.5156.

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  #148  
Old 25-04-2011, 16:38
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  #149  
Old 26-04-2011, 13:20
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[color=#009900]Hans Tietmeyer about the euro area and the ECB policy [/color]

Former Bundesbank President Hans Tietmeyer says that European Commission should have determined the criteria of joining the euro area more strictly. In his view, the currency union now faces the consequences of its development during the last 10 years.

Tietmeyer claims that Greece has a chance to get out of the crisis without restructuring. In his view, that depends on how competent the actions of the country’s policymakers will be. The indebted countries have to address their problems and take all necessary measures to restore their competitiveness in the euro area and worldwide, Tietmeyer says.

The economist thinks that the ECB was right to raise the interest rates.

[color=#009900]Commerzbank: ECB rates forecast[/color]

Strategists at Commerzbank think that the ECB will lift up the rates 2 times more – in September and in December. In addition, by the middle of the year the European policymakers may also change the allotment modes that may also be regarded as a tightening move.

The specialists think that the peripheral nations won’t be affected much by the rate increase, at least in the long term. According to the bank, looking at Portuguese or Spanish sovereign 5- or 10-year bond yields it’s possible to see that the real ECB interest rate expectations component of these yields is rather small as they are determined primarily by the sovereign credit risk.

However, the economists expect that in the longer term divergence trend in the euro area will intensify.
[color=#009900]
HSBC, Westpac: comments on NZD/USD
[/color]

Analysts at HSBC note that the New Zealand’s dollar is trapped in the 0.7970/0.8040 area versus the greenback.

The specialists underline that investors are waiting for the results of the 2-day FOMC meeting due to be announced tomorrow. It’s also necessary to watch the Reserve Bank of New Zealand’s rate decision on Thursday. Official Cash Rate is currently at 2.50%. According to the consensus forecast, the central bank will start raising rates at the beginning of 2012.

On Monday the pair NZD/USD reached the 3-year maximum at $0.8037. Kiwi has been up so far despite the nation’s weak economic fundamentals and technical barriers.

Currency strategists at Westpac say that if New Zealand’s currency fails to break higher during the next few days, it will correct downwards at least to $0.7800. On the other hand, if kiwi succeeds, it will manage to climb to the post-float maximum at $0.8215. The specialists also say that the broad US dollar weakness is likely to provide New Zealand’s dollar some support in the near term.
[color=#009900]
Comments on AUD/USD
[/color]

Australian dollar eased down versus its US counterpart from the 29-year maximum at $1.0775 reached yesterday. The currency was affected by the fall in commodity prices. It’s also necessary to note that the trading volumes are very low as Australia’s markets are closed for a holiday.

Support for the pair AUD/USD is situated at $1.0677, while resistance levels are found at $1.0775 and $1.0800.

Important data for Aussie is first quarter inflation rate due on Wednesday. According to economists’ forecasts, US consumer prices growth accelerated by 1.2% in the first 3 months of the year after gaining 0.4% in the final quarter of 2010.
[color=#009900]
Trichet: ECB has to stem inflation expectations’ growth
[/color]

ECB President Jean-Claude Trichet said in an interview to the Finnish press that it’s necessary to act counter any increase in inflation expectations.

The policymaker warned that there’s the risk of second-round effects. In other words, rising consumer prices may start triggering bigger wage growth that, in its turn, will accelerate inflation. According to Trichet, in the current situation of high uncertainty at the markets, monetary authorities make all the efforts to constrain inflation expectations.

The ECB chief repeated that the central bank’s non-standard measures such as purchases of government bonds from the secondary market are temporary. The official underlined that decisions on these measures are independent from interest rate decisions, which are based on the central bank’s views on price stability.
[color=#009900]
Commerzbank: euro on its way up to $1.5145/50
[/color]

Technical analysts at Commerzbank note that the single currency has advanced last week versus the greenback overcoming the key resistance of the 1995 maximum in the 1.4535 area.

In their view, the medium-term outlook for euro has become positive. The specialists think that the pair EUR/USD is now poised up to 1.5145/50.

According to the bank, support levels for the pair are situated at 1.4535/00, 1.4445 and 1.4370.
[color=#009900]
Switzerland’s trade surplus decreased
[/color]

According to the data released today, Switzerland’s trade surplus narrowed from 2.38 billion in February to 1.09 billion in March.

Analysts at Credit Suisse claim that though last month the nation’s exports weakened, demand for Swiss goods is still high. The matter is that the country’s exporters were forced to reduce prices because stronger national currency made their products less competitive. If franc keeps appreciating, this will certainly affect Switzerland’s export sector. As a result, the specialists don’t think that the Swiss National Bank will conduct any rapid tightening measures.

Economists at Zuercher Kantonalbank also note that the sales of Swiss goods abroad remain robust. In their view, it seems that Swiss exporters accept profit squeeze in order to maintain or expand their market share. The analysts say that Swiss companies have shown that they can leave with the strong franc. If Swiss currency weakens versus euro in coming months, then there probably won't be any significant decline in export growth levels.

[color=#009900]Greece’s deficit rose above the forecast[/color]

According to the EU data released today, the actual Greece’s 2010 budget deficit exceeded the forecast level. Greek shortfall rose to 10.5% of GDP, while the European Commission was looking forward only to 9.6% figure. The nation’s debt surged to 142.8% of GDP that’s above 140.2% estimate.

Despite the fact that a year ago the EU and the IMF provided Greece with 110 billion euro ($160 billion) bailout, the country keeps struggling to raise its revenue as its economy’s contracting.

Greek bond yields remain at the maximal levels – 2-year yields reached at 21.87%, while 10-year hit 15.18%.

Most economists think that the country will eventually have to restructure its debt either by extending the maturity or even by lowering the total amount of obligations.

Analysts at BNP Paribas think that Greece will need either a new loan from the EU/IMF or primary market bond purchases by the EFSF. The specialists are sure that the country won’t be able to fund itself in the markets in first quarter of 2012.
[color=#009900]
Scotia Capital: bearish outlook for US dollar
[/color]

The market’s sentiment about US dollar remains very bearish. Now the focus has switched to the FOMC meeting and the following Fed’s press conference.

Currency strategists at Scotia Capital note that Bernanke may potentially say a lot to support the greenback. In their view, it’s important to watch the central bank’s forecasts, especially on inflation.

Never the less, the specialists don’t think that the Federal Reserve will deviate from its extremely loose monetary policy taking into account dovish comments from the Fed’s officials during the last few weeks.
According to Scotia Capital, US interest rates will remain at the current levels between 0% and 0.25% until the first quarter of 2012. The economists expect US currency to fall to $1.50 per euro.

Analysts at Deutsche Bank keep favoring the Australian dollar versus its US counterpart. According to their comparative analysis of current accounts and other fundamentals, US dollar is much more overvalued than Aussie.
[color=#009900]
Juergen Stark: it’s vital to avoid debt restructuring in euro zone[/color]

European Central Bank Chief Economist Juergen Stark claimed in the interview to German TV station ZDF that debt restructuring euro area member state may lead to more severe consequences than those of the Lehman Brothers bankruptcy that market 2008 crisis. In his view, such move would result in new banking crisis failing to solve the budget and structural problems in individual nations.

According to Stark, the county that restructures its debt risks being thrown out of capital markets and foreign financing for an unforeseeable time.

The economist is sure that the only way out for the indebted European economies is to conduct fiscal reforms and fully repay their debts.
[color=#009900]
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  #150  
Old 27-04-2011, 14:02
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[color=#009900]Barclays Capital: Canadian dollar forecast[/color]

Canadian dollar added 11.8% versus the greenback since the end of June reaching $0.9453 on April 21, the maximal level since November 2007.

Analysts at Barclays Capital think that loonie may climb even higher. In their view, Canada’s currency will show the best results among the commodity currencies such as Australian and New Zealand’s dollars as those nations more depend on China the growth of which may slow. In addition, Canadian economic growth is gaining pace and the specialists expect the bank of Canada to conduct 2 rate hikes this year.

Barclays warns, however, that later sluggish productivity growth and troubling current account deficit will come into focus. There’s also the evidence that loonie's strength is affecting exports of some goods to the United States. As a result, in the longer term USD/CAD may reverse its downtrend.

It’s also necessary to note that, according to The Economist's Big Mac Index based on the purchasing power parity Canadian dollar may be overvalued by at least 12%.

[color=#009900]Sumitomo: US dollar will keep declining
[/color]
Currency strategists at Sumitomo Mitsui Bank expect the greenback to remain weak for some time due to the results of the FOMC meeting announced today at 8:30 pm (GMT + 04:00) and Ben Bernanke’s press conference scheduled at 10:15 pm (GMT + 04:00).

The specialists say that if the comments of Fed’s Chairman are neither dovish nor hawkish, US currency will keep gradually moving down during the next week corresponding to the possible decline in US market interest rates.

According to the bank, support for the pair USD/JPY is situated at 80.50 yen, while EUR/USD may advance to 1.4750.
[color=#009900]
Analysts increase forecasts for Aussie
[/color]

Australian dollar reached today the record maximum at 1.0852 as the CPI data showed that inflation rate increased by 1.6% in the final 3 months of 2010 from the previous quarter, making the biggest advance since 2006. As a result, the expectations of the Reserve Bank of Australia’s rate hike have strengthened.
In addition, Aussie benefited from the speculation that US FOMC will keep the interest rates at the minimal 0%-0.25% levels.

Analysts at Bank of America Merrill Lynch think that Aussie may add more in the short term. In their view, the market doesn’t have much rate rises priced in at least for the next few months.

Specialists at Ueda Harlow think that the pair AUD/USD may strengthen to $1.10. Economists at Commonwealth Bank of Australia raised their forecast for the Australian dollar. The analysts now expect Aussie to climb to $1.12 by the end of September, before declining to $1.04 at year-end. Earlier the bank projected that the pair will decline to 0.9400 by the end of September.

According to the Credit Suisse Group AG index based on swaps, the RBA will lift up the borrowing by 26 basis points in the next 12 months.

[color=#009900]Zuercher Kantonalbank: negative outlook for USD/CHF[/color]

The greenback hit today the absolute minimum versus Swiss franc at 0.8671. Technical analysts at Zuercher Kantonalbank claim that there’s no sign that USD/CHF downtrend is going to reverse. On the contrary, the specialists underline that it will be very difficult for the bulls to break above strong resistance at 0.8765 and 0.8810.

[color=#009900]S&P's lowered outlook for Japanese debt[/color]

Japanese yen weakened today versus the greenback – the USD/JPY recovered today from 81.26 getting above 82 yen per dollar. It happened as the Standard & Poor’s changed the outlook for Japan’s AA- local-currency credit rating from stable to negative. The agency explained such more by the increased risks associated with the consequences of the March earthquake and tsunami.

However, economists don’t think that S&P’s decision will have strong or long-lasting impact on the market. Analysts at Citi remind that the major part of Japanese government securities is held by domestic banks, so it’s unlikely that the news cause the nation’s debt sell-off by foreigners. In addition, when Moody's said on February 22 that Japan's Aa2 rating may be reduced yen didn’t lose much.

Analysts at Societe Generale claim that S&P’s action will force Japanese authorities to look for the ways of increasing revenue. Strategists at RBS Securities Tokyo say that taking into account the scope of the earthquake, it’s clear that the government spending will be huge. According to S&P estimates, the reconstruction after last month’s disaster will cost the country’s economy 50 trillion yen ($613 billion).

[color=#009900]UK economy went out of the dip[/color]

According to the data released today, UK GDP added 0.5% in the first 3 months of 2010 after losing the same amount in fourth quarter of 2010. Analysts at Capital Economics claim that British economy has only reversed the dip without going forwards.

As a result, the opposition’s criticism of the government's austerity measures is likely to strengthen, while the possibility of the BoE rate hike may decline though inflation twice exceeds the central bank's 2% target.
Never the less, pound managed to gain on the news as investors were preparing for worse outcome, says Danske Bank. The market was also pleased with the encouraging readings of the key indicators that showed the 0.9% quarter advance in services and 1.1% manufacturing growth. The weakest link was the construction that contracted by 4.7%.

Resistance levels for the pair GBP/USD are found at 1.6600 (April 21 maximum), 1.6715 (December 2009 maximum) and 1.6750 (November 25/2009 maximum). Support levels are situated at 1.6550 (April 25 maximums), 1.6515/20 (previous day maximum) and 1.6430 (April 26 minimum).
[color=#009900]
Dollar and yen are funding currencies for carry trade[/color]

Current situation at global financial market favors carry trades. The UBS V24 Carry Index increased from 486.5 in March to 510 in April.

As the rate differentials tend to widen (US and Japan will likely keep the borrowing costs low for an extended period to stimulate national economies, while Europe, commodity exporters and emerging markets are on the hiking path), investors will borrow in low-yielding currencies such as dollar and yen and invest in higher-yielding assets in New Zealand, Australia, Brazil and other countries with high rates.

Specialists at Mizuho Corporate Bank note that Japan’s population will be forced to seek the better returns abroad. In their view, this will trigger yen’s depreciation in the longer term. That, in its turn, will make Japanese currency more attractive for carry traders as it will make their repayments cheaper. As for the greenback, it’s already very weak. The dollar index (DXY) is expected to fall to the record minimum at 70.698 hit in 2008.

However, analysts at Bank of Tokyo-Mitsubishi UFJ say it’s necessary to be cautious as one shouldn’t forget about such factors as European sovereign problem, geopolitical risks in Libya and Middle East and Japan’s radiation problem that can make investors return to the safe havens.
[color=#009900]
Commerzbank: German exporters expect euro to fall[/color]

According to Commerzbank’s monthly survey of German exporters, the majority of respondents still think that the single currency will soon drop.

The sentiment of German companies about euro has worsened this month in comparison with March: 66% of participants now expect EUR/USD to fall during a year, while last month this figure accounted for 46%.
As a result, the bank says that if the current uptrend for the pair doesn’t reverse in the coming months, some firms may record significant losses.

Respondents also expect the single currency to fall versus Swiss franc, pound, Polish zloty and Russian ruble.

[color=#009900]On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets[/color]
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  #151  
Old 28-04-2011, 13:49
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[COLOR="Green"]ZK, Commerzbank: comments on USD/CHF[/COLOR]

Analysts at Zuercher Kantonalbank think that the greenback is oversold versus Swiss franc, so the further decline of the pair USD/CHF is limited. The specialists say that if support at 0.8670 (record minimum hit on April 27) manages to hold the bearish attacks US dollar will be able to rise to 0.8760.

Strategists at Commerzbank, however, believe that USD/CHF will fail ahead of 0.8850. In their view, while the pair’s trading below this level US currency will remain under bearish pressure. According to the bank, dollar may even drop to the support line of the downtrend from December to April at 0.8603.
Commerzbank: euro will rise to $1.5150

Technical analysts at Commerzbank note that the single currency managed to overcome the 4-month resistance line at 1.4720 trading versus the greenback. The pair EUR/USD renewed 16-month maximums in the 1.4880 area.

The specialists believe that in the next few weeks euro will reach 1.5000 and then the 1.5145/50 zone (2009 maximum and 78.6% Fibonacci retracement of the decline from 2008 maximum). If EUR/USD breaks hire here, it will be able to advance to 1.6040.

According to the bank, the pair remains under bullish pressure as long as it’s trading above the minimum of the middle of April at 1.4156.

[COLOR="Green"]The Fed keeps monetary stimulus[/COLOR]

As it was expected, yesterday the FOMC left borrowing costs at the record low levels of 0-0.25% (since December 2008) and indicated that the $600-billion bond purchasing program will be finished as planned in June.

The Fed has also cut the forecast for US 2011 economic growth from 3.4-3.9% (January estimate) to 3.1-3.3%. The weakest spot is the housing industry, said the central bank.

US monetary authorities noted that the country’s economy is recovering at moderate pace and the situation at the labor market is gradually improving. Payrolls added 149,000 a month on average during the part half of the year, while the unemployment rate fell by 1% since November to the 2-year minimum of 8.8%.

The Fed’s Chairman Ben Bernanke underlined that the central bank will maintain record stimulus until job growth accelerates and the recovery is robust enough to withstand tighter credit. In his view, the increase in inflation is temporary, caused by the transitory surge in commodity prices – such position differs from the hawkish comments of the Fed regional bank presidents (Richard Fisher of Dallas and Philadelphia’s Charles Plosser) we’ve heard during the last several weeks.

Analysts at UBS expect US economic to improve, so that in few months the Fed will have to start gradually tightening. The specialists reminded that the central bank takes into account core inflation which doesn’t include such volatile components as food and energy prices. This indicator is rising, though isn’t high enough yet to lift up the rates.

Economists at Mizuho note that the market took Fed’s statement as very dovish. According to the bank, investors’ risk sentiment improved and the demand for dollar and yen declined. The dollar index (DXY) hit the minimal levels since June 2008, while the pair EUR/USD renewed maximums climbing to $1.4880.

[COLOR="Green"]St. George Bank: AUD/USD will climb to $1.15[/COLOR]

Australian dollar rose today above $1.09 as investors think that the Reserve Bank of Australia will lift up interest rates before the Fed does so.

Such belief strengthened after yesterday’s FOMC announcement and Ben Bernanke’s press conference (http://www.fbs.com/analytics/news_markets/view/7160). The likelihood of RBA hike, on the contrary, increased as Australian CPI added 1.6% in the first 3 months of 2011 from the previous quarter making the biggest advance since 2006.

The yield spread between Australia’s 2-year government notes and similar US papers rose to 4.35 percentage points on April 18, the widest since February 9.

Analysts at St. George Bank raised their forecast for the pair AUD/USD from $1.11 to $1.15 in the first half of the year. In their view, Aussie will be driven by stronger growth and improving terms of trade.
[COLOR="Green"]
Westpac: NZD/USD will soon resume growing[/COLOR]


The Reserve Bank of New Zealand decided today to leave the key interest rate at the record minimum of 2.5% to help the national economy recover from the most devastating earthquake in 80 years. The central bank underlined that the economic outlook for the country is very uncertain. According to RBNZ, higher oil prices and the elevated level of the New Zealand dollar will affect the nation’s economy.

Such announcement made NZD ease down from the maximums against its US counterparts. Kiwi has been trading at high levels so far due to the rate differential between New Zealand and the US in favor of the former.

Strategists at ANZ National Bank, however, say that kiwi will keep strengthening due to strong Aussie and general weakness of US dollar.
Analysts at Westpac claim that support for the pair NZD/USD is situated at 0.8000, while the initial resistance is found at 0.8100. The specialists think that New Zealand’s currency may pause for some time but then resume its advance in the next few days breaking above the post-float maximum at 0.8213.

[COLOR="Green"]GBP/USD rose to 2-year maximum[/COLOR]

British pound surged today versus the greenback rising above $1.6700 for the first time since 2009. It was encouraged by yesterday’s FOMC announcement and Ben Bernanke’s press conference (http://www.fbs.com/analytics/news_markets/view/7160) that made the market think that the Bank of England will tighten monetary policy earlier than the Federal Reserve despite all the economic difficulties the UK is currently facing.

It’s necessary to note that the pair GBP/USD climbed even though Britain’s consumer confidence fell to the 2-year minimum: according to the data released today, GfK Consumer Climate index of sentiment dropped from minus 28 in March to minus 31 in April, the lowest level since February 2009.

Economists surveyed by Bloomberg News think that the BoE may raise its benchmark rate already the next month, while the Fed is thought to stay on hold until the first quarter of 2012.

After reaching maximum at 1.6750 sterling has eased down to the 1.6650 area. Support for GBP/USD is found at 1.6620 (day minimum), 1.6580 and 1.6500. Resistance levels are situated at 1.6690, 1.6750 (day maximum) and 1.6800 (psychological level).

[COLOR="Green"]BofT Mitsubishi: BOJ May meeting will be important[/COLOR]

As it was expected, the Bank of Japan left the benchmark rate at 0-0.1%. At the same time today’s meeting didn’t pass without surprise: deputy governor Kiyohiko Nishimura proposed expanding the BOJ's pool of funds for asset buying and market operations by 5 trillion yen ($61 billion) to 45 trillion yen. However, all other 8 members of the central bank’s policy board rejected this idea.

Yen, however, wasn’t affected much by this news. The pair USD/JPY fell today erasing yesterday’s advance due to the broad weakness of US currency.

Strategists at Bank of Tokyo Mitsubishi UFJ say that such situation was totally unexpected. The specialists note that it’s a very rare case in the BOJ history when the views of the governor and deputy governors diverge. Nishimura probably regards the medium- and long-term risks from the quake as bigger than the other board members do.

According to Bank of Tokyo, after today’s events the BOJ May meeting will be watched very closely.
[COLOR="Green"]
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  #152  
Old 04-07-2011, 15:43
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[color=#009900]Rabobank: franc’s decline won’t last long[/color]

Currency strategists at Rabobank claim that taking into account the improved investors’ risk appetite it’s possible to assume that Swiss franc will decline in the near term.

As the same time, it’s necessary to realize that Greek debt crisis isn’t over yet. The specialists are sure that there are another periods ahead with high risk aversion.

According to the bank, the appreciation of Swiss currency during the recent months was provoked by the US economic weakness and the economic slowdown in China. The analysts warn that these factors will likely keep influencing the market.

As a result, one may probably use the current franc’s decline to buy it on the dips. Rabobank believes that the pair USD/CHF may face resistance later this week.
[color=#009900]
BMO Capital advises to sell pounds versus Aussie

[/color]
Analysts at BMO Capital note that these week there are several central banks’ meetings scheduled. The most important ones are, in their view, the meeting of the Reserve Bank of Australia on Tuesday, July 5, and the one of the Bank of England on Thursday, July 7.

The specialists are sure that both central banks will keep the borrowing costs unchanged. However, there are some differences in Australian and UK situation. The banks points out that there are many concerns about weak British economy, while Australia’s prospects seem to be much brighter.

As a result, the specialists advise selling British pounds versus Australian dollars at 1.5025, stopping above 1.5225 and taking profit at 1.4025.

Strategists at J.P. Morgan share the positive outlook for Aussie. The specialists underline that better than expected economic data from Japan means strong demand for Australian commodities. In addition, investors may still be pricing in some expectation of an interest rate cut in Australia this year and this is very unlikely to happen.

[color=#009900]MIG Bank: EUR/CHF will keep growing
[/color]
Technical analysts at MIG bank believe that the single currency is going to keep moving up versus Swiss franc.

The specialists note that there are bullish MACD divergences in the daily and weekly timeframes and a “bullish engulfing” candle on the weekly chart.

According to the bank, the pair EUR/CHF is poised up to 1.2560.
[color=#009900]
Commerzbank: comments on EUR/USD[/color]

Technical analysts at Commerzbank note that the single currency has found support in the $1.4305/1.4407 area trading versus the greenback. In their view, the chances that the pair EUR/USD will manage to hold above the important level at $1.4129 have increased.

The specialists claim that further support is situated at the 200-week MA of $1.4021, the May minimum of $1.3968 and the intersection with 200-day MA of $1.3887.

According to the bank, as on Friday the pair EUR/USD has closed at the top of the weekly trading range, it’s now more likely be able to break above $1.4732 and climb later to $1.4940/ $1.5145.
[color=#009900]
Commerzbank expects USD/CHF to rise
[/color]

Technical analysts at Commerzbank note that the greenback may rise versus Swiss franc if it overcomes key resistance in the 0.8540/54 area limited by May 31 maximum and May 4 minimum.

The bearish pressure on US dollar will ease, only if it closes above these levels. In such case USD/CHF will be able to rise to 0.8612/30 – the 55-day MA and 23.6% Fibonacci retracement of the decline from the February 11 maximum of 0.9776.

The specialists note that the pair is correcting higher, following the recent divergence of the daily RSI. According to them, there’s a triple divergence now that allows looking forward to strong rebound of US currency. Today the index climbed to the maximal level since May 13 of 52 points.
[color=#009900]
BlackRock doesn't recommend buying AUD/USD
[/color]

Analysts at BlackRock, the world's largest asset manager that’s in charge of about $3.65 trillion in assets in its stock, bond and hedge funds, think that after Australian currency has gained 28% versus US dollar during the past year that’s the most than other greenback’s major counterparts it doesn’t have much potential to keep appreciating.

The specialists point out that to buy Aussie one has to be very optimistic about global economy that’s rather difficult in the current circumstances.

The pair AUD/USD used to be supported by the increasing interest rate differential between Australia and other developed nations and high demand from China for the nation’s commodities. However, Chinese manufacturing growth fell to the minimum since February 2009, while the pace of services industries’ expansion declined to lowest level in 4 months. In addition, according to the data released today, Australian retail sales declined today.

Aussie dropped from $1.0789 on July 1, the maximum since May 11, to trade in the $1.0720 area.
Economists surveyed by Bloomberg News expect Australian currency to weaken to $1.04 by the end of [color=#009900]2011.

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  #153  
Old 08-07-2011, 13:30
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[color=#009900]ANZ: EUR/USD may fall to $1.3903[/color]

Analysts at ANZ Banking Group claim that if the single currency falls versus the greenback getting below the 100-day MA at $1.4273, it may slump firstly, to June 16 minimum at $1.4074 and then to $1.3903 (50% Fibonacci retracement of this year’s advance from $1.2867 to $1.4940) that is the 3 1/2-month minimum.

The specialists claim that the euro has formed consolidation pattern since May 23 to July 4 between the uptrend line connecting the minimums of May 23, June 16 and June 27 and the downtrend line linking the maximums of June 7 and July 4. In their view, the pair EUR/USD currently risks to survive another decline of the similar magnitude as at the beginning of May.

Yesterday the European currency hit the lowest level since June 27 at $1.4220 before returning to the levels above $1.4300.
[color=#009900]
BNP Paribas: USD/JPY up head of NFP report[/color]

There are, finally, some improvements on the USD/JPY chart. Japanese yen’s declining versus the greenback as the market looks forward to optimistic figures of US Non-Farm Payrolls report.

Economists surveyed by Bloomberg News think that NFP rose by 105,000 in June after adding 54,000 in May. The unemployment rate is expected to remain at 9.1%.

Analysts at BNP Paribas note that the greenback may benefit from NFP data released today at 1:30 GMT if the number of jobs added in June shows either a massive upside surprise or a big disappointment for the market. Otherwise it’s going to be neutral to positive for risk.

The pair USD/JPY went up from last week minimums at 80.25 breaking yesterday above resistance in the 81.00/15 area. The next resistance levels are situated at the 100-day MA of 81.60 and the 200-day MA at 82.09. Support levels are found in the 81.10/00 and 80.80/77 zones.
[color=#009900]
NAB: buy Aussie on the rate’s decline[/color]

Analysts at National Australia Bank claim that if Australian dollar falls back to the $1.0400 region trading versus its US counterpart, investors should use it as possibility to buy Aussie.

The specialists are optimistic about the world’s economic outlook. In their view, the soft patch in growth will be over by September. In their view, China will go through soft landing, Greece will go further somehow and there will be no recession in the United States – that will secure the ground for Australia's commodity prices supporting Aussie.
[color=#009900]
BBH: euro may be able to strengthen to the recent maximums[/color]

Analysts at Brown Brothers Harriman note that the single currency hit yesterday support at $1.4220 and managed to return above 1.4300 due to the hawkish comments of the European Central Bank.

The specialists claim that the pair EUR/USD may go up reaching the recent maximums in the $1.4550 zone. In their view, the ECB will likely continue tightening its monetary policy this year, while the EU financial support rules out the possibility of an un-orderly default in Greece.

Never the less, the bank isn’t so sure about further growth of euro. The economists underline that the European currency will still find itself under pressure of the euro zone’s debt crisis. For the pair could reach 2011 maximum in the $1.50 area, it has to break above $1.4550 on the sustainable basis. In any case trading is going to remain volatile affected by the risks associated with peripheral European nations.
[color=#009900]
ECB decided to support Portugal
[/color]
The European Central Bank, as it was widely expected, lifted up yesterday its benchmark interest rate by 25 basis points.

The ECB President Jean-Claude Trichet claimed that the region’s central bank would suspend its rating-requirement standard for Portugal so that nation could continue to use its bonds as collateral for central bank loans despite the fact that Moody’s Investors Service cut the country’s credit rating to Baa1.

According to Trichet, this decision was taken taking into account the fact that the Portuguese government has approved an economic and financial adjustment program which has been negotiated with the European Commission, the ECB and the IMF. Earlier the ECB waived minimum thresholds for Greek and Irish bonds.
Analysts at Bank of New York Mellon note that the fundamental issues and tensions within euro area are still in place. The specialists draw investors’ attention to the fact that Trichet hinted that the rate hike would not be immediate.
[color=#009900]
Commerzbank: EUR/USD prospects after NFP
[/color]

Analysts at Commerzbank think that the greenback won’t be able to gain versus the single currency on the Non-Farm Payrolls data.

The specialists think that even if the data goes in line with the forecasts, US dollar won’t be able to keep moving up.

The bank claims that the market talks about 130,000-140,000. If US economy gets less than 100,000 jobs, investors will get disappointed, especially in the unemployment rate increases.

As the specialists are looking forward to a discouraging result, the pair EUR/USD, in their view, has all chanced to find support.

The European currency returned today below $1.4300. Support levels are situated at $1.4220 (July 7 minimum), $1.4155 (uptrend support from May minimums) and $1.4100 (July 26 minimum). Resistance is situated at $1.4365/75 (50-day MA), $1.4395 (July 5 minimum) and $1.4465 (July 6 maximum).

[color=#009900]JPMorgan recommends buying EUR/GBP on the dips[/color]

Currency strategists at JPMorgan keep advising investors to buy the single currency versus the British pound on the dips because of the economic differences between the UK and core euro zone nations.
According to the bank, the pair EUR/GBP will find support at 0.8905 and then return up to the levels above 0.9020. The specialists think that that euro will ultimately break above 2011 maximum of 0.9080 set on July 1.
[color=#009900]
Reuters poll: experts’ forecasts on GBP/USD
[/color]

According to monthly poll conducted by Reuters among 60 banks and analysts, British pound that has declined versus the greenback from $1.6800 to $1.5900 in the second quarter will remain at these levels for some time.

The respondents think that the pair GBP/USD will trade in the $1.6100 region during the next half of a year. The median forecast shows that sterling will start slowly strengthening only in 2012. The surveyed expects see pound reaching $1.6300 and then pulling back down to $1.6200 by the middle of the next year.

[color=#009900]Commerzbank: comments on USD/CHF
[/color]
The greenback went up versus Swiss franc from Wednesday’s minimum at 0.8365 to the 5-month downtrend resistance line at 0.8495.

Technical analysts at Commerzbank claim that the bearish pressure on the pair USD/CHF will ease if manages to close above 0.8554 (May 4 minimum and May 31 maximum). In this case US dollar will be poised up to 0.8593/8630 (Fibonacci level and the 55-day MA).
[color=#009900]
MIG Bank, Commerzbank: bullish view on USD/JPY[/color]

Technical analysts at MIG Bank claim that as the greenback has overcome resistance at 81.30 trading versus Japanese yen, it’s moving up to 82.25. In their view, the pair USD/JPY will face some resistance at 81.80/85.

Specialists at Commerzbank also note that US dollar has managed to break above the daily Ichimoku Cloud at 81.31. According to them, above this level American currency will be poised up to the 55-day MA at 81.62 and then to the 200-day MA at 82.10. If dollar climbs above the latter, it will go higher to the downtrend line from 2007 to 2011 at 83.13. The bank sees support levels at 80.40 and 80.00.

Economists at Citigroup think that strong US Non-Farm Payrolls data will push USD/JPY to the levels in the 82.00 area.
[color=#009900]
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  #154  
Old 12-07-2011, 14:56
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[color=#009900]Barclays: dollar will rise to parity with Swiss frank [/color]

Analysts at Barclays believe that the greenback will manage to rise to the parity versus Swiss franc in 3 months as the attractiveness of US currency is increasing with the deterioration of the situation in the euro area.

The bank points out that if Europe’s prospects improve, demand for franc as a safe haven decreases. If the state of things in the monetary union, on the contrary, worsens, financial markets will get extremely concerned. In such case dollar will likely be able to strengthen, despite even the weak payrolls data.

As a result, the specialists think that it’s a good chance now to buy USD/CHF at 0.8350 stopping at 0.7900. The last time the pair was trading above the parity was on December 2, 2010. US dollar declined by 10.5% against its Swiss counterpart since the beginning of this year.
[color=#009900]
BNY Mellon: situation in Europe has gone too far
[/color]
Analysts at BNY Mellon believe that the European currency will keep weakening against a range of currencies during the summer even though Germany's finance minister Wolfgang Schauble claimed that there is still time for the euro zone to reach a deal on Greece ahead of the next tranche of money due at the end of September.

In their view, the crisis has gone too far for the markets’ concerns to ease down. In addition, there are other indebted euro zone nations at stake now.

According to the bank, the pair EUR/USD is poised down to cross at $1.3710 the uptrend support line from June 2010 of $1.1876.

Economists at Rabobank warn that the longer it takes for European politicians to find a solution to the region's sovereign-debt crisis, the greater will be the risk of the region’s contagion with the debt crisis. In their view, euro will stay under pressure in the near term.

Strategists at RBC Capital Markets believe that the single currency will keep going down as long as the yield spread between Italian and German bond keeps widening and renewing the record maximums. The yield on 10-year Italian bonds reached today 6.02%.

[color=#009900]Commerzbank: EUR/USD will fall to $1.3685[/color]

The single currency breached the uptrend support line at $1.4161, May minimum at $1.3968, the 200-day MA at $1.3908 and 50% Fibonacci retracement support at $1.3900.

Technical analysts at Commerzbank believe that the pair EUR/USD will slump to the 2010-2011 uptrend support line at $1.3685.

According to the bank, on the upside resistance is found at $1.3900, $1.4076 and $1.4161.

[color=#009900]Westpac: buy kiwi versus euro[/color]

New Zealand’s Q1 GBP figures are released on Wednesday, July 13, at 22:45 GMT.
The economy that suffered in February from the devastating earthquake is rapidly recovering.
Analysts at Westpac expect the nation to show accelerating economic growth gaining 0.3-0.5% in the first 2 months of the year after adding 0.2% in the final quarter of 2010.

The specialists believe that New Zealand’s dollar will get support from the data publication. In their view, it’s necessary to open longs on kiwi against the single currency at 1.7250 stopping at 1.7450 and targeting 1.6900.

Economists at Nomura Securities claim that the People’s Bank of China may be buying NZD. According to the bank, big central banks may get more interested in kiwi.

[color=#009900]The Fed is likely to keep the rates low until June 2012[/color]

According to the study conducted by the Federal Bank of Cleveland, the 3-percentage-point gap between yields for 3-month and 10-year Treasuries means that American economy may add 1.1% in a year through June 2012 – that is less than half of the Fed’s current forecast.

Taking into account pore June labor market figures, it’s becoming more and more likely that US central bank will keep interest rates extremely low in the current 0-0.25% range. The nation’s borrowing costs remain at these levels since December 2008 and may do so for the longest period since World War II.
In February federal fund futures showed 51% chance of increase. This percentage lowered in April to 39% and is now only at 10%.

The yield on the benchmark 10-year notes declined from 3.77% in February to 3.03% on July 8. Strategists at Barclays note that the 10-year yields staying in the 3% area reflect expectations that US lawmakers will reach an agreement on raising the debt ceiling, though obliging the government to conduct spending cuts that will certainly affect US economic growth in the short term.

[color=#009900]Daiwa, RBS: pound under pressure of negative factors[/color]

The prospects of the Bank of England’s rate hike faded today as the annual inflation rate declined from 4.5% in May to 4.2% in June. According to the Office for National Statistics, it may have happened as the producers reduced prices of electronic goods trying to attract customers. CPI inflation has been above the 2% target for the past 18 months. Core inflation that excludes the impact of volatile food and energy prices went down last month from 3.3% to 2.8%.

Analysts at Daiwa note that such CPI dynamics was quite surprising. In their view, the drop, particularly reflected in the core measure, indicates the underlying economic weakness. The specialists now doubt that the BoE will raise the borrowing costs this year and even in 2012.

Pound was also pressures by the fact that Britain's trade deficit increased from 7.6 billion pounds to the maximal level since December of 8.5 billion.

Moreover, British currency suffered from external factors, particularly from the escalation of concerns about Italian debt that worsened investors’ risk aversion.

Analysts at RBS claim that pound will be affected by the euro-negative comments (bearish for GBP/USD), though noting that, on the other hand, as investors will be selling euro, they may regard UK as an alternative (bearish for EUR/GBP).

The bank economists expect GBP/USD to fall to $1.55. Sterling hit 5-month minimum versus the greenback and 3-month minimum versus Japanese yen.

[color=#009900]HSBC: euro’s decline could be much stronger[/color]

Analysts at HSBC note that as the negotiations of US government and the lawmakers on the debt ceiling increase gave reached a deadlock the greenback doesn’t surge versus euro undermined by the debt crisis as much as it could have.

The specialists claim that euro’s fair rate is found at $1.25.

The pair EUR/USD fell today breaching the 200-day MA at $1.3908 and hitting the 4-month minimum at $1.3837.

[color=#009900]Westpac: Aussie declined due to the risk aversion[/color]

Australian dollars hit today 2-week minimums versus US dollar and Japanese yen on the concerns about the global economic recovery and on the expectations that the European debt crisis will spread more, while the region’s authorities are unable to act decisively to prevent it.

Analysts at Westpac and RBC note that risk aversion has significantly strengthened. In their view, the pair AUD/USD is poised for more declines.

According to the survey of more than 400 companies that took place from June 24 to June 30 conducted by National Australia Bank, confidence index dropped from 6 in May to 0 in June. Specialists at NAB that weaker confidence and slower consumer spending will increase the pressure on the Reserve bank of Australia to keep the rates unchanged at 4.75%.

The pair AUD/USD dropped from $1.0600 to the lowest level since June 29 at $1.0524. The pair AUD/JPY fell from 85.53 to the minimum since June 28 at 84.78.

[color=#009900]MIG Bank: GBP/USD может упасть до $1.5345
[/color]
Currency strategists at MIG Bank note that British pound has breached the pattern within which it was consolidating during the past half of the year.

The pair GBP/USD pulled back after forming a lower maximum at $1.6442 and went down below the 200-day MA at $1.6045. The specialists think that sterling will fall to $1.5345.

Today pound hit 5 ½ -month minimum at $1.5780 after the release of lower-than-expected UK CPI figures. Resistance levels for the pair are situated at $1.5935 and $1.6015, while support is found at $1.5775, $1.5750 and $1.5660.

[color=#009900]On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets[/color]
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  #155  
Old 13-07-2011, 15:08
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[color=#009900]HSBC, BoA-Merrill Lynch: Chinese data was rather strong[/color]

China's second-quarter GDP was in line with forecasts rising by 9.5% after gaining 9.7% in the first quarter. June industrial production increased by 15.1% after 13.3% rise in May versus 13.2% expected.

Analysts at HSBC claim that Chinese GDP and industrial output figures released today are relatively strong. The specialists note that as inflation rate remains high, monetary tightening conducted by China’s monetary authorities seems justified. In their view, the country will be very cautious about raising rates, so this year 1-2 bank reserve requirement hikes are more likely.

Economists at Bank of America-Merrill Lynch believe that Chinese economic growth pace will slow down to 9.0% in the fourth quarter. According to the bank, the nation’s economy’s heading for a soft landing. The strategists think that China’s GDP will add 9.3% in 2011.

[color=#009900]HSBC, Western Union: kiwi’s rate depends on Europe[/color]

New Zealand’s dollar rose versus its US counterpart from the recent minimum at 0.8110 hit yesterday to the levels in the $0.8220 area.

Currency strategists at HSBC claim that taking into account kiwi’s 2011 maximums, the short-term prospects for the pair NZD/USD seem to be negative. The specialists note that the demand for New Zealand’s currency will be stemmed by the market’s concerns about the situation in Europe.

Analysts at Western Union believe that the pair has found support after its decline earlier this week. Never the less, the specialists also think that further dynamics of the cross will depend on how the things go in the euro area. The specialists say that kiwi managed to get higher today on the good Chinese data and is now losing its upward momentum. In their view, support for NZD/USD is at $0.8190, while resistance is situated at $ 0.8240.

[color=#009900]Commerzbank: EUR/USD decline will soon resume[/color]

Yesterday the single currency hit the minimum at $1.3837 versus the greenback and then managed to return back to the levels in the $1.4000 zone.

Technical analysts at Commerzbank, however, expect euro’s recovery to be limited. In their view, EUR/USD is going to resume decline to the uptrend support line from 2010 to 2011 at $1.3685.

According to the bank, the pair tested the levels below the 200-day MA at $1.3909 and the 50% retracement support at $1.3900, though hasn’t yet closed down there.

Resistance levels are situated at the 200-week MA at $1.4024, June 16 minimum at $1.4073 and previous support line at $1.4166.

[color=#009900]Commerzbank: yen hit 4-month minimum versus US dollar[/color]

At the beginning of the day Japanese yen reached 4-month maximum at 78.45 versus the greenback, the highest level since March 17. Then the Asian currency pulled back down as the market thought that the nation’s monetary authorities may intervene selling the national currency as high yen has a negative impact on the nation’s exporters.

Yen’s surge may be explained by the high demand for it as a refuge due to the increased risk aversion caused by the euro zone’s debt crisis.

Technical analysts at Commerzbank expect the pair USD/JPY to consolidate in the near term. The specialists note that close to today’s minimum there is a 78.6% Fibonacci retracement target at 78.23 below which US currency will revisit its March record minimum of 76.25. Resistance for US dollar will lie at 80.26 and 80.49.

[color=#009900]Morgan Stanley: pessimistic view on EUR/USD[/color]

The single currency went up today after hitting yesterday minimum at $1.3837 reaching $1.4100 on the talk that the ECB and China are buying the bonds of indebted peripheral euro zone’s nations.

Yesterday Moody’s Investors Service lowered Ireland’s debt rating from Baa3 to Ba1. As a result, Ireland became the third euro zone nation with credit rating below investment grade with Greece and Portugal already in this group.

The Italian Treasury is scheduled to sell as much as 5 billion euro ($6.99 billion) of bonds tomorrow.
Analysts at JPMorgan Chase are pessimistic on the situation in Europe. The specialists advise to sell EUR/USD on the rebound. The main theme on the market is now the fear of debt crisis contagion.

Strategists at Morgan Stanley think that the single currency still seems to be vulnerable. In their view, euro will slide to $1.36 by the end of 2011. The economists note that there are still big risk events ahead that may affect the European currency such as the bank stress tests.

[color=#009900]JPMorgan Chase: division of opinions within the Fed[/color]

The minutes of FOMC June 21-22 meeting released yesterday showed that there’s the disagreement within the Federal Reserve on the necessity of further monetary stimulus.

It happens that some members of the Federal Open Market Committee believe that the central bank might have to consider the possibility of launching additional quantitative easing measures, especially if economic growth remains weak and insufficient to reduce the unemployment rate in the medium term.

A number of other FOMC members, on the contrary, think that as inflation risks increase it may mean that the economic conditions are likely to improve so that the Fed will be able to normalize its policy even earlier than projected now.

Analysts at JPMorgan Chase note that one camp is worried about what happens if growth slows more than expected, while the other – about what happens if the rise in inflation isn’t transitory. So, the policymakers think that they can’t ease monetary policy because inflation is rising nor tighten it as the unemployment rate is too high.

As a result, the Federal Reserve is likely to wait watching the economic developments and keeping the rates at the record minimum. Economists surveyed by Bloomberg News, that the rates in the United States will remain between 0 and 0.25% until the second quarter of 2012.

[color=#009900]Commerzbank: comments on USD/CAD[/color]

The greenback jumped off the breached downtrend resistance line from August 2010 maximums.
Technical analysts at Commerzbank claim that if the pair USD/CAD closes above the week’s minimum at 0.9565, it will get chance to retest the 200-day MA at 0.9875.

The specialists say that if US dollar drops below 0.9565, the pair will be poised down to 0.9527/0.9449 support area representing the minimums of the beginning of April and the middle of May.
[color=#009900]
Credit Agricole, BofTMUFJ, Investec: negative forecasts for euro
[/color]

Strategists at Credit Agricole claim that the single currency has managed to rebound a bit as the initial panic caused by the surge of Italian yields faded. However, the fact that Italy got in the centre of market’s attention, which was previously focused mainly on Greece, Ireland, Portugal and Spain, seriously undermines euro. In the short term the pair EUR/USD may advance more. Then, however, it will retest 4-month minimum at $1.3837 and will fall to $1.3400 by the end of September.

Specialists at Bank of Tokyo Mitsubishi UFJ believe that Italy may once again make euro slump especially if the nation’s sovereign bond yields keep rising increasing the risk that Italian government will have to apply for external financial help. At the same time, the danger will remain even if the yields temper. The bank is getting more and more convinced that EUR/USD reversed down its uptrend from June 2010 lows. It’s more likely now that the ECB will pause monetary tightening this year.

Analysts at Investec expect the European currency will be gradually weakening during the second half of 2011 to end the year at $1.35. The economists think that in a year EUR/USD may fall to $1.25. According to them, if the situation in the euro area keeps worsening, euro may sink even faster.

[color=#009900]On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets[/color]
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  #156  
Old 15-07-2011, 14:07
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[COLOR="Green"]Commerzbank: EUR/USD on the way down to $1.3911[/COLOR]

The single currency went up from 4-month minimum versus the greenback at $1.3837, but its rebound was capped by the breached 2011 uptrend support line at $1.4247 and the 38.2% Fibonacci retracement of the decline from May to July at $1.4259.

Technical analysts at Commerzbank claim that the pair EUR/USD is now poised down to the June minimum at $1.4073 and the 200-day MA at $1.3911.

[COLOR="Green"]HSBC, Barclays Capital: comments on GBP/USD and EUR/GBP[/COLOR]

Analysts at HSBC note that the rate of British currently is currently determined more by the dynamics of euro and US dollar, rather than be the factors specifically related to sterling.

In their view, pound could gain independence in trading only if UK economic outlook changes either strongly improving or dramatically deteriorating. Until that happens GBP is going to find itself trapped between a rock and a hard place.

All in all, HSBC sees the prospects of British economy and currency as rather pessimistic.

Strategists at Barclays Capital note that the GBP/USD may be in a bear trap. The pattern will confirm if it closes today above $1.6140. As for EUR/GBP, the bank claims that after jumping from support in the 0.8745/40 zone it may be on its way up to 0.90. If euro drops below 0.8740, it will revisit May base in the 0.8610 region.
[COLOR="Green"]
Wells Fargo: medium-term outlook for EUR/USD
[/COLOR]

One more medium-term forecast from analysts at Wells Fargo. In their view, the single currency will fall into the steady weakening pattern versus the greenback.

As the main factors generating negative pressure on euro’s rate the specialists cite euro zone’s slow economic growth (as one may see from the leading indicators) and the increasing likelihood of ECB pausing its monetary tightening.

Wells Fargo expects the pair EUR/USD to stay in range between $1.4100 and $1.4200 during the coming 3 months, then to drop to $1.4000 in the last quarter and slide to $1.3500 by the middle of the next year and to $1.3000 by the end of 2012.

[COLOR="Green"]SocGen, UBS: the risk of euro’s collapse can’t be ruled out[/COLOR]

Economists at Societe Generale and UBS are very pessimistic on the future of the euro area: the former advise investors to buy insurance against the collapse of the single currency, while the latter specify their recommendation say that Danish krone may be used for protection as the situation in the euro zone tends to worsen.

According to UBS, as the European crisis escalates, Danmark grows more and more likely to send the peg of its national currency to euro. After suffering from some volatility in the short-term, krone will later strengthen versus other Scandinavian currencies and euro.

The specialists claim that one shouldn’t lose time and has to hurry and hedge it money as the pair EUR/USD has mercifully returned above $1.40.

[COLOR="Green"]Nomura: EUR/CHF has potential for further decline[/COLOR]

Strategists at Nomura Securities believe that in the current situation of high uncertainty about when the European leaders will come up with a solution of the debt crisis investors should avoid the single currency. The specialists warn that it may take weeks for some developments in dealing with the current problems of the indebted euro zone’s nations.

Nomura notes that EUR/USD is a very liquid instrument. For a long time the pair corresponded to the ups and downs in risk premiums on sovereign bonds. Since February, however, this correlation has become not that clear as the single currency gained versus the greenback on the rates differential between the European Central Bank and the Federal Reserve. Now the risk premium on euro has once again begun increasing, but the state of things in the region has significantly deteriorated.

As a result, the economists draw a conclusion that EUR/USD responds to sovereign risk only when it triggers systemic risk like it’s happening now.

That’s why Nomura recommends trading not EUR/USD, but EUR/CHF regarding short positions on this pair as a sure gain as this cross has been very closely correlated with measures of systemic risk in the monetary union. So, the bank recommends being bearish on euro versus franc even though the pair’s already trading at the record minimums.

[COLOR="Green"]Citigroup, RBS: bullish medium-term outlook for USD/JPY
[/COLOR]

Currency strategists at Citigroup believe that Moody’s giving the US the final warning will make the nation’s authorities hurry to reach a compromise the August 2 deadline. As a result, the specialists expect investors to stop selling the greenback.

The bank especially sorts out the pair USD/JPY that may start strengthening later this year. As for the near term, American currency will likely remain under pressure as traders who used to be short on yen may be trying to cover their positions. In addition, though Citigroup projects that Japanese importers may increase demand for dollars, it won’t happen until September.

However, it’s necessary to note that as Japanese monetary authorities are very concerned about the appreciation of the national currency, Japanese corporations may start buying dollars. According to the bank, USD/JPY will find support and bottom out at 77 yen.

Analysts at RBS Securities are also bullish on dollar-yen. In their view, US economy will add about 3.5% in the second half of the year and that will be enough to push rate expectations significantly higher. Among the other dollar-positive factors the specialists cite Japanese production of autos and auto parts and lower gasoline prices. The specialists advise investors to go long on the pair buying below 79.50 and holding position for 3-6 months.

[COLOR="Green"]On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets[/COLOR]
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  #157  
Old 18-07-2011, 14:58
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[COLOR="Green"]Commerzbank, Barclays Capital: comments on EUR/CHF
[/COLOR]
The single currency has renewed today the record minimum versus Swiss franc by opening in the 1.1410 area, but then managed to restore to 1.1478.

Technical analysts at Commerzbank are bearish on EUR/CHF as long as it’s trading below June minimum of 1.1957. In their view, the pair will face resistance at 1.1555 and 1.1770.

The specialists note that as the European currency reached the base of 1-year downtrend channel at 1.1410, it may consolidate in the near term. However, euro risks dropping to 1.1290 and 1.1000.

Currency strategists at Barclays Capital point out that although there’s a chance that today's gap in EUR/CHF is the so-called exhaustion gap that indicates trend reversal, there should be a great number of long positions being opened in the coming sessions to make this come true. Until it happens the bank bets on EUR/CHF decline to 1.1250.
[COLOR="Green"]
Nomura: EUR/CHF may drop to parity
[/COLOR]

Economists at OECD say that franc is overvalued by the European currency by 38% and by 46% versus the greenback. Never the less, different experts and strategists think that it still has room to continue appreciation.

John Taylor, the founder of the world’s largest currency hedge fund FX Concepts, believes that the single currency will fall to the parity with Swiss franc. The specialist claims that the European leaders haven’t come up with any solutions that would help to improve the situation in the euro zone in the longer term. As a result, demand for Switzerland’s currency as a safe haven is likely to remain high.

Currency strategists at Nomura International lowered their forecasts for EUR/CHF from 1.4 to 1.2 by the end of the year pointing out that the pair is likely to reach 1.10 over the next 3 months. In their view, the parity level is quite possible if the crisis keeps escalating.

The median forecast of economists surveyed by Bloomberg for the end of 2011 declined from April’s estimate of 1.34 to 1.26. The cost to hedge a drop in the euro versus the franc climbed to the maximum since January 2009.
[COLOR="Green"]
Commerzbank: negative outlook for EUR/USD
[/COLOR]

Technical analysts at Commerzbank note that though the single currency has rebounded last week versus the greenback from the 200-day MA at $1.3912, the outlook for the pair EUR/USD remains negative as long as it’s trading below the downtrend line at $1.4496.

Resistance levels are situated at Thursday’s maximum at $1.4282 and the 55-day MA at $1.4343. Euro went below support of June minimum at $1.4073, so the specialists believe that it’s currently on its way back down to the 200-day MA at $1.3912.

According to the bank, if EUR/USD breaches the 4-month minimum at $1.3837 hit last Tuesday, it will slide to the $1.3717/1.3680 area limited by the 2010-2011 uptrend line and the 55-week MA.

[COLOR="Green"]Societe Generale: EUR/JPY may fall to 106.95[/COLOR]

Technical analysts at Societe Generale believe that the single currency is on its way down to last week's minimums versus Japanese yen in the 109.60 area and then to the downtrend channel support at 109.20.

If the pair EUR/JPY breaks even lower, it will slump to the longer-term rising support line at 106.95.

According to the bank, on the upside resistance levels are situated at 111.35 and 112.35.
[COLOR="Green"]
BBH: new rating cuts coming in Europe[/COLOR]


Ratings agencies have great influence on the markets. On the one hand, Moody's and Standard & Poor's shook traders when last week they’ve warned about the potential US downgrade coming unless the debt ceiling is lifted up. On the other hand, such actions may hurry the nation’s authorities to reach compromise before the time runs out.

Strategists at Brown Brothers Harriman note that the agencies have missed their chance in the Asian crisis and during the boom of the dot coms, so they are probably trying to overcompensate that now.

Analysts at BMO Capital think, however, that rating agencies play a very important role in Europe. In their view, as the European Bank Authority released on Friday the results of stress test that turned out to be better than expected but very likely inadequate, only the rating agencies can provide insight in the more realistic picture.

Anyway, BBH specialists note that there will be further downgrades of Spain, Italy, Portugal and Ireland. Emerging markets, on the contrary, have solid chances for upgrades. The bank proposes investors to use this forecast while developing trading strategists in order to act ahead of the rating agencies.
[COLOR="Green"]
On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets[/COLOR]
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  #158  
Old 20-07-2011, 14:27
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[COLOR="Green"]Commerzbank: GBP/USD will face resistance [/COLOR]

The greenback went up from Monday´s minimum in the $1.6000 area to yesterday’s maximum of $1.6177.

Technical analysts at Commerzbank claim, however, that though the near-term outlook has become neutral, the 3-month downtrend is still in place.

As a result, the pair GBP/USD will face resistance at $1.6220 strengthened by the 55-day MA at $1.6213 that is pointing lower. The specialists expect sterling to fall to $1.5778.

[COLOR="Green"]Westpac, Citi about the prospects of AUD/USD this year[/COLOR]

Australian dollar has made significant advance versus its US counterpart gaining 21% this year due to the strong commodity prices and relatively high interest rates.

Apart from other Australian banks analysts at Westpac expect that the Reserve bank of Australia will reduce interest rates that will put Aussie under pressure for the rest of this year. In addition, the specialists express concerns about the euro area’s crisis having a negative impact on Australian consumer confidence.

Currency strategists at Citi, on the other hand, tend to be bullish on AUD/USD. In their view, the massive investments in the metals and the LNG space will provide solid support for Australian dollar during the next 5 years. The bank believes that the RBA rates will stay unchanged this year. The economists underline that the mining industry keeps performing quite well, while housing prices are still very high, so there’s no need for the central bank to cut rates.

As a result, building the trading strategy on AUD/USD one has to decide whether to focus on the miners or the consumers and be ready to adjust quickly.

[COLOR="Green"]Commerzbank, Citi: comments on USD/JPY
[/COLOR]

Technical analysts at Commerzbank are bearish on USD/JPY. Never the less, the specialists think that Fibonacci support at 78.23 will manage to hold the initial attack of the bears. The bank places resistance for the greenback at 79.57, 79.88 and the psychologically important level of 80.00.

Strategists at Citi believe that the Bank of Japan will conduct currency intervention if US dollar drops to 76 yen. In their view, the pair will move higher in a month as the market’s sentiment will probably improve and the uncertainty connected with the European and American debt issues eases. The analysts warn, however, that now it’s too early to start the trade as USD/JPY is likely to slide lower before bouncing on the BOJ intervention.

[COLOR="Green"]ZKB, Commerzbank: comments on EUR/CHF[/COLOR]

Technical analysts at Commerzbank believe that as the single currency managed to break above resistance at 1.1556 trading versus Swiss franc, it may strengthen to 1.1770. Never the less, as long as EUR/CHF is staying below June minimum at 1.1808, the general outlook for euro will remain bearish.

Strategists at ZKB doubt that the pair will manage to rise above 1.1700. In their view, even if it does that euro’s advance will be likely contained by 1.1750. The specialists note that the EU summit that will take place tomorrow may disappoint the market.

[COLOR="Green"]AllianceBernstein: all major currencies have weaknesses[/COLOR]

Strategists at the fund AllianceBernstein revoked their bets versus the greenback changing the outlook to neutral as the euro area debt crisis escalates.

It’s necessary to note that though the fund managers’ sentiment towards US dollar has improved they didn’t become positive on dollar taking into account high indebtedness of the United States and its budget problems. In addition, the economists don’t think that the economic growth will slow down making dollar popular safe haven. AllianceBernstein expects slow and uncertain economic recovery and is cautiously bullish on the market.

The specialists are now bearish on the single currency and British pound and bullish on Scandinavian currencies and Swiss franc. According to them, the downside pressure on euro is stronger due to the ECB policy that is keener on targeting inflation while some economies of the currency bloc are too weak to bear tighter monetary policy.

Analysis conducted by the OECD on the basis of the purchasing power parity shows that US dollar is 8.3% undervalued versus euro. American currency lost 5.8% this year versus the European one. The situation has a bit improved as it managed to gain 2.3% in July.

All in all, the specialists say that it’s not the time for long-term trade and investments as all major currencies – dollar, yen and the European currencies – have their drawbacks, so it’s necessary to adjust to the changing conditions.
[COLOR="Green"]
UBS: the odds of QE in the UK declined [/COLOR]


British pound rose today versus the single currency and US dollar after the minutes from the Bank of England’s MPC meeting showed that the number of QE advocates has reduced.

The policymakers voted 7-2 to keep the benchmark interest rate unchanged this month as the majority of them said that the recent data shows that the near-term tightening isn’t necessary.

In contrast to the June meeting, there was no mention of other the MPC members calling for more bond purchases this month.

Right after the release of the minutes GBP/USD fell to the daily minimum of $1.6067, but soon recovered getting up to the $1.6130 area. Currency strategists at UBS claim that the outlook for the pair will become bullish if it manages to overcome resistance at $1.6194. Support for sterling is situated at $1.6006.

[COLOR="Green"]JPMorgan: EUR/GBP is trapped in the narrow range
[/COLOR]

Analysts at JPMorgan believe that EUR/GBP is trapped at the current levels as in the short term both the euro zone and the UK faces serious risks that are affecting their currencies.

While in Europe the main threat comes from the debt crisis, Britain is in danger of economic recession.

The specialists expect euro to remain in a very tight trading range versus its British counterpart during the coming months between 0.8550 and 0.9100.
In their view, the trade’s volatility has heightened due to the unexpected crisis of confidence to Italy seen so far and the pat situation in America where the policymakers are trying to reach compromise on the debt ceiling.
According to the bank, when the pair EUR/GBP finally comes out of this range it will break it on the upside.

[COLOR="Green"]On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets
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  #159  
Old 22-07-2011, 15:31
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[COLOR="Green"]SocGen, BarCap: euro may rise to $1.50[/COLOR]

Analysts at Societe Generale believe that though the negative factors for euro are, of course, not all gone, the single currency may climb in the short term to $1.50 versus the greenback after the EU summit was successful enough.

Strategists at Barclays Capital advise investors to buy EUR/USD on its slide down to $1.4300/1.4280 or on the break above $1.4460. In their view, the pair may rise to the trend line resistance at $1.4580. If euro manages to overcome this level and close the week above it, it will be able to strengthen to $1.4700 and possibly $1.4950. The specialists note that the outlook for the pair will turn negative if the rate falls below $1.4180.

[COLOR="Green"]Westpac: the pair NZD/USD has renewed the record maximum[/COLOR]

New Zealand’s dollar reached today the record maximum versus its American counterpart at $0.8674.

The sentiment all over the world improved after yesterday’s EU summit and investors seem to be optimistic on Greece. Analysts at Westpac claim that market’s attention will now switch to the US debt problems. In their view, the greenback will be declining until American debt ceiling is lifted up.

In the near term resistance for the pair NZD/USD is found at $0.8700, while support for the pair is situated at $0.8575.

Credit Suisse Group AG index based on swaps shows that the market expects the Reserve Bank of New Zealand to raise the interest rates during the next year by 94 basis points – that’s the maximal estimate since November.
New Zealand’s CPI rose gained 5.3% in the second quarter on the annual basis making the biggest advance since 1990. The RBNZ will hold a policy meeting on July 28.

Never the less, it’s necessary to be cautions with the long positions as kiwi is currently overvalued and technical indicators show that it’s rate has risen too quickly and risks to reverse.

[COLOR="Green"]UBS: EUR/USD will drop to $1.40 in a month[/COLOR]

Currency strategists at UBS are bearish on the single currency versus the greenback. The specialists expect EUR/USD to slide to $1.40 in a month. The 3-month target of the bank is at the same level. The specialists expect euro to decline despite yesterday's decisions of the European leaders to provide Greece with the second bailout.

Here are UBS targets for some other major currency pairs:
- EURCHF: 1-month 1.20; 3-month 1.25;
- USDCAD: 1-month 1.00; 3-month 1.00;
- EURGBP: 1-month 0.90; 3-month 0.86.

[COLOR="Green"]BarCap, Commonwealth: bullish forecast for Aussie
[/COLOR]

Australian dollar is on its way up versus the greenback and Japanese yen.
According to the data released today, Australia’s import prices added 0.8% in the second quarter while the economists were looking forward to 1.1% decline.

The CPI data due next week may show that inflation pace rose to the maximal level in more than 2 years – economists surveyed by Bloomberg expect consumer prices to 3.4% in Q2 from the 2010 level. As a result, the chances of the Reserve bank of Australia’s rate hike increase.

Analysts at Commonwealth Bank of Australia are very bullish on Aussie. In their view, after the inflation report there will be no more speculation about the reduction of Australian borrowing costs. Strategists at Citigroup also think that the next move of the RBS will be to raise the rates.

Specialists at Barclays Capital note that AUD/USD has manage to break above the upper border of its trading range at $1.0810 rising to 2-month maximums in the $1.0867 zone. The analysts think that the pair may go higher and climb to $1.0890 and then to May maximums in the $1.1010 area. The bank says that the outlook for Australian currency will remain bullish as long as it’s trading above $1.0765.

[COLOR="Green"]BBH, Saxo bank on the prospects of EUR/USD[/COLOR]

Currency strategists at Brown Brothers Harriman believe that the single currency has strong chances rise to $1.47 versus the greenback if it manages to overcome $1.46. The specialists base their assumptions on the data from the CFTC and Tokyo Financial Exchange.

Analysts at Saxo bank add, however, that euro won’t be able to get higher than that and will fall to the $1.35 zone by the end of the summer.
In their view, the market’s optimism encouraged by the second bailout for Greece will fade away during the next few weeks. The bank underlines that the summit didn’t change enough as the insolvency issues are still solved by increased liquidity.
[COLOR="Green"]
Commerzbank: outlook for pound has improved [/COLOR]


British pound advanced yesterday versus the greenback gaining more than 170 pips. Sterling was encouraged by the improved market’s risk sentiment due to the EU summit that managed to show that the European authorities have made progress bringing the second bailout for Greece.

Technical analysts at Commerzbank claim that GBP/USD has overcome the 3-month downtrend at $1.6211, the 55-day MA at $1.6206 and the 50% Fibonacci retracement at $1.6265. As a result, the pair has got above the key short-term resistance levels and the bias switched from negative to neutral.

According to the bank, British currency may rise to the 78.6% Fibonacci retracement of the decline from April and May maximums in the $1.6540/47 area.
[COLOR="Green"]
The main results of EU summit [/COLOR]


The European leaders agreed yesterday on the 159 billion euro ($229 billion) second bailout package for Greece inducing the private bondholders to take part in financing the indebted nation.
109 billion euro will come from the euro region and the International Monetary Fund, while the rest 50 billion euro will be brought by the financial institutions after a series of bond exchanges and buybacks that will also reduce Greece’s debt burden. Investors will have the option to exchange existing Greek debt into four instruments: 3 will be fully collateralized by AAA-rated zero-coupon securities and have a 30-year maturity, and the fourth will be for 15 years and partially collateralized by funds held in an escrow account.

The 440-billion euro European Financial Stability Facility was authorized to buy debt of the peripheral euro zone’s nations in stress. In addition, the fund was enabled to help the problem banks (the stress tests showed that 24 out of 90 banks have financial difficulties) and offer credit-lines for the European nations that are losing investors’ confidence (the practice used by the IMF).

All in all, it's necessary to note that the European policymakers tried to compromise and develop a strategy to support Greece and make sure that Greek crisis doesn’t spread.

Analysts at UniCredit believe that the measures taken by the EU officials create the best possible conditions for Greece and other peripheral countries. The specialists point out, however, that the market will keep pricing in some probability that these steps won’t be enough to stop the contagion.

[COLOR="Green"]UniCredit: optimistic outlook for EUR/USD
[/COLOR]

Currency strategists at UniCredit claim that the single currency gained 335 pips versus the greenback having risen from Monday’s minimum of $1.4014 to Thursday’s maximum of $1.4434.

The specialists claim that though EUR/USD may now consolidate a bit the odds of its slump below $1.40 from the technical point of view have decreased as the pair has strengthened its base.

According to the bank, euro is likely to gain when US monetary authorities lift up the debt ceiling at last encouraged by the stock markets.

As a result, assuming that the risk sentiment remains positive enough, the analysts expect that the European currency may reach the target for the third quarter at $1.46 earlier than they had projected.
[COLOR="Green"]
On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets[/COLOR]
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[COLOR="Green"]RBS: sell EUR/AUD and EUR/NZD[/COLOR]

While the market’s attention was focused on the development of US debt debates, there’s a good chance to benefit from trading Australian and New Zealand’s dollars.

Strategists at Royal Bank of Scotland believe that both nations are likely to lift up the interest rates rather soon. The specialists note that there was a flow of encouraging economic data so far. That includes strong growth and confidence figures from New Zealand and higher than expected CPI in Australia. In addition, Aussie and kiwi will be driven by the demand for rising neighbouring Asian assets. The greenback, on the other hand, has little upward potential as there aren’t many positive factors to encourage it.

RBS also thinks that the problems in the euro area are going to escalate as the regions will be struggling to implement the second bailout for Greece. It will be very difficult for Europe to regain the market’s confidence as it may be seen from the rising Italian sovereign bonds.

The bank advises investors to sell EUR/AUD at 1.3010 stopping above on a 2-day close above 1.3500 and targeting 1.2000 by the first quarter of 2012. RBS recommend as well going short on EUR/NZD at 1.6500 stopping above on a 2-day close above 1.7000 and targeting 1.5000 by the first quarter of next year.

[COLOR="Green"]Commerzbank: comments on GBP/USD[/COLOR]

Technical analysts at Commerzbank note that this week for GBP/USD was quite volatile due to the high uncertainty at the market.

British pound didn’t manage to rise above $1.6380 and then eased down versus the greenback to the levels slightly above $1.6300. The bank thinks that the pair’s consolidating above June 22 maximum at $1.6260.

The specialists say that as long as sterling is trading above this level, it has chance to recover to the 78.6% Fibonacci retracement of the decline from April and May maximums in the $1.6540/47 zone.

[COLOR="Green"]Lloyds: USD/JPY may test 76.00 yen
[/COLOR]

Japanese yen keep strengthening versus the greenback and the single currency.

The pair USD/JPY is under negative pressure as it seems that Japan’s monetary authorities won’t intervene before the uncertainty associated with US debt debates clears up. The deadline on the matter scheduled on August 2 is approaching.

Dollar fell to 77.45 yen, the lowest level since March 17 when it hit the postwar minimum at 76.25 yen.

Strategists at Ueda Harlow say that there seems to be no end of the debt ceiling discussion in America. In their view, the risk sentiment will keep worsening, so it’s necessary to buy Swiss franc and Japanese yen.

Analysts at Lloyds believe that yen is likely to gain more and even test 76.00 yen per dollar.

[COLOR="Green"]BarCap: comments on the situation in the US[/COLOR]

Analysts at Barclays Capital note that situation at the FX market is going to be more complicated than the one at the stock market.

While in case of the worst outcome in the US equities just pick up the bad news, the currency markets will face 2 impacts: the big negative shock to the US in particular and the global risk shock. The former to some extent offsets the latter when it comes to the overall influence on US dollar. The bank still thinks that the liquidity of American market and the dollar’s safe haven status will play its role.

The specialists believe that US authorities will reach a short-term deal before August 2 as it’s impossible to find long-term solutions ahead of that. The long-term deal is very important though, firstly, because of the potential S&P downgrade and, secondly, as this is a very serious issue and if US doesn’t get its fiscal house in order, the global economy will suffer.

BarCap says that further out on the time horizon, fiscal tightening will weigh on growth and weaken US currency as the Fed’s monetary policy will remain looser for longer than the market is currently expecting.

According to the bank, Barack Obama and the Congress speaker John Boehner aren’t willing to compromise now putting the decision off to the last moments as each of them hopes that the other will back down fist.

The economists believe that it’s not the time to get too risky and adventurous at the forex market. Barclays Capital says that at the moment the most attractive currency is yen as it allows enjoying the classic risk-off trade.

[COLOR="Green"]Reuters: Japanese authorities on stronger yen[/COLOR]

As yen keeps appreciating versus its American counterpart and the markets are speculation on the potential intervention of Japanese monetary authorities, here are the key statements of the nation’s top officials as they are cited by Reuters.

Yoshihiko Noda, Finance Minister:

- “I am aware of various calls from the business sector and the severe situation Japanese companies face. We hope to take appropriate action with the cooperation of the Bank of Japan.”
- “We will take decisive action against excessive exchange rate volatility. I'd like to carefully examine how long we can leave current (exchange-rate) moves unattended.”
- “Movements have been one-sided. I think intervention has a certain effect temporarily. We should respond to excessive volatility and disorderly movements but it's not about (currency) levels.”
Kaoru Yosano, Economics Minister:
- “The yen's rise is not driven by domestic factors but by changes in global money flows ... The changes are occurring for a limited time period until August 2 so I hope the yen's rise will prove temporary...”
- “The government could counter a strong yen mainly by extending financial support to subcontractors and other firms suffering from the yen's rise... We have never thought about manipulating currency levels.”
- “Friday's economic data overall indicates the economy remains on a recovery trend, although employment is in a severe condition.”
Conclusion: if yen’s slump accelerates the intervention will come but it may happen at lower levels and after August 2.

[COLOR="Green"]BNP Paribas: euro zone’s inflation has unexpectedly slowed down
[/COLOR]

According to the data, released today, euro zone's inflation slowed this month from 2.7% in June to 2.5% in July on the annual basis, while economists surveyed by Reuters expected consumer prices to gain 2.7%.
As a result, the possibility of the rate hike in the euro area has decreased.

The European Central Bank got more room for manoeuvre: now it has reasons to pause the tightening cycle due to the signs of the economic slowdown in the region and the elevated risks related to the debt problems both in Europe and in the United States.

The ECB’s mandate is to keep inflation slightly below 2%. The central bank lifted up the benchmark rate twice this year to 1.5%.

Today’s data were quite surprising taking into account that German’s CPI growth rate reached in July the 3-month maximum of 2.4%.

Analysts at BNP Paribas claim that the main reason of inflation’s slowdown may be the changes in Eurostat's methodology in January when the list of factors regarded as seasonal was enlarged.

Economists at IHS Global Insight, the world's largest economics organization, believe that though interest rate hike in the fourth quarter is very possible the slowing European growth and debt issues will force the ECB to keep the rates on hold. It may also turn out that the second round inflationary effects from higher energy and commodity prices are being contained. The specialists project that the ECB will keep rates at 1.5% through the rest of 2011 and then lift them gradually to 2.25% by the end of 2012.

[COLOR="Green"]Credit Suisse: SNB once again posted losses[/COLOR]

Swiss National Bank has posted the loss of 10.8 billion Swiss francs ($13.5 billion) in the first half of the year as euro’s decline devalued the central bank’s currency reserves.

The exchange-rate-related losses accounted for 11.7 billion francs, while 1.55 billion francs were lost on gold holdings. During the same period last year the SNB lost 2.78 billion francs. All in all, in 2010 its balance sheet contracted by 21 billion francs.

During the 15 months through June 2010 the central bank increased its international reserves in 4 times through currency interventions as it was trying to stop excessive appreciation of the national currency.
Analysts at Credit Suisse doubt that the SNB will intervene in the coming months unless the franc gains sharply again.

Swiss currency gained 9.2% versus the single currency and 17% against the greenback this year.

[COLOR="Green"]Moody’s put Spain's credit rating on revision[/COLOR]

Moody’s Investors Service announced that it may lower Spain’s Aa2 credit rating. According to the agency, although Spain has relatively low public debt ratio compared to other European Union nations, “challenges to long-term budget balance remain due to Spain's subdued economic growth and fiscal slippage within parts of its regional and local government sector.”

The nation’s Prime Minister Jose Luis Rodriguez Zapatero claimed that the elections will be held November 20 instead of March in order to ease political tensions in the country. The ruling Socialist Party became unpopular as Zapatero began conducting austerity measures.

Analysts at Commerzbank pointed out that the concerns about the euro area are still very high that makes the single currency very vulnerable. The specialists are bearish on the single currency.

Spanish 10-year bond yields rose by 5 basis points to 6.09%, while Italian ones increased by 8 basis points to 5.92%, nearing the 6% mark seen as unsustainable in the long term. The pair EUR/JPY fell to 110.32, the lowest level since July 13.

[COLOR="Green"]On-line analytics from FBS always is available on: http://www.fbs.com/analytics/news_markets[/COLOR]
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