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BNP Paribas: comments on USD/JPY Technical analysts at BNP Paribas claim that US dollar’s advance versus yen has slowed down as the pair USD/JPY approached resistance provided by the bottom of the weekly Ichimoku Cloud at 85.75. Today the greenback won’t be able to overcome this level. In their view, upside momentum for US currency is declining. According to the bank, although yen will continue weakening during the coming weeks, the pair won’t be able to get above the top of the weekly Cloud at 87.94.

Westpac advises to buy AUD/USD Australian dollar once again renewed today the post-flow maximums versus the greenback at 1.0488. Aussie also strengthened to 30-month high against Japanese yen. Australia’s currency was supported by the encouraging macroeconomic data: the unemployment level dropped in March from 5% to 4.9%. The number of jobs increased by 37,800, while the economists were looking forward only to 24,000 increase. Currency strategists at Westpac claim, that for US dollar bears buying Aussie seems to be the best trading strategy. In March the pair AUD/USD gained 3.3%, while the pair AUD/JPY increased by 7.2%.

US government may shut down tomorrow US government shutdown on Friday seems to be more and more likely. It will happen if the American lawmakers fail to come to an agreement on how to finance the government as the Federal budget for the current fiscal year that began on October 1, 2010, hasn’t been adopted yet. Strategists at Bank of America Merrill Lynch aren’t very concerned about the matter claiming that US sovereign debt rating and the greenback won’t be affected much in case of the temporary shutdown. In 1995 such happened already twice. The first time, the dollar was little moved versus euro or yen, while the second time that took place a month later, US currency actually rose against yen. It’s necessary to remember that a much more important deadline is looming for the US government and investors should focus their attention on the outcome of the debate on raising the debt ceiling. Strategists at Citigroup note that it’s possible to shut down the government without defaulting, but the real default would lead to terrible consequences for the greenback. Anyway, the bank says there are few reasons to be long for the greenback unless some global catastrophe makes investors rush to safe havens. According to Citigroup, dollar’s accounting for about two-thirds of global reserves, so the supply exceeds demand and investors will seek opportunities to sell the currency.

Barclays Capital: comments on EUR/CHF Technical analysts at Barclays Capital claim that the single currency has to close the day above the 1.3205 level versus Swiss franc that represents neckline of the “double bottom” formation in order to get chance to rise to 1.38/40. As for the near-term trade, the outlook for the pair EUR/CHF will remain bullish as long as it’s trading above 1.3040. As a result, the specialists recommend buying euro on dips.

Commerzbank: comments on EUR/USD The single currency climbed from last week’s minimum at 1.4020 to the 15-month maximums in the 1.4350 area breaking above the 3-year downtrend. Technical analysts at Commerzbank think that although the RSI indicator has not confirmed the maximum the momentum for the pair EUR/USD will remain bullish as long as it’s trading above 1.4137. The break higher will be confirmed if euro closes the week above 1.4269/83. According to the bank, resistance levels are now found at 1.4425 (long-term double Fibonacci retracement) and 1.4535 (1995 maximum).

Portugal has finally asked EU for help Portugal’s Prime Minister Jose Socrates announced yesterday evening in a televised statement that the country will apply to the European Commission for bailout, reports Bloomberg. Socrates underlined that it’s not possible anymore to put off asking for help as the nation’s political crisis pushed borrowing costs to record levels. Socrates who leads the Socialist Party offered to resign on March 23 after parliament rejected proposed budget cuts, leaving him in charge of a caretaker government with limited powers until a June 5 election. According to the information from the unidentified source, Portugal is aiming for a package that may be worth as much as 75 billion euro ($107 billion). Specialists at Credit Agricole say that Portugal may initially ask for a bridging loan to support its finances until a new government has been formed, while the full package will be delivered only after the elections. Analysts at UBS note that the fact that Portugal will seek for bailout didn’t surprise the markets at all as they have long ago priced in such outcome. Economists at UniCredit also don’t think that Portugal’s announcement will provoke a new wave of the European crisis. Portuguese government bonds due March 2012 were sold yesterday at an average yield of 5.902%. That’s more than Germany pays for 30-year bonds. The yield on Portugal’s 10-year government bond rose to a high of 8.80% this week. The premium that investors demand to hold Portuguese debt over German bunds reached the maximal level since euro was launched of 544 basis points on April 5.

Canadian dollar renewed maximum versus the greenback 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.

Rabobank, Commerzbank: comments on EUR/GBP 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.

Barclays Capital: yen will lose to euro and dollar 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.

Pimco: Portugal won’t be able to withstand on its own 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.

Commerzbank: USD/JPY on its way up to 94.50 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.

UBS, ING: comments on Swiss CPI growth 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.

BofT-Mitsubishi: yen will keep weakening 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.

Nomura: euro risks are still high 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.

Geithner: US debt will reach ceiling by May 16 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.0:00 /07:43How to cure U.S. budget 'stupidity' 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.

OECD: economic forecasts for the second quarter 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 organizations note 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.

J.P.Morgan, Citigroup: pound will rise versus euro 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.

Julius Baer: SNB will follow the ECB in raising rates 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.

Commerzbank: comments on GBP/USD 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.

Ban Bernanke: the Fed is watching inflation 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.

Commerzbank: EUR/CHF is likely to decline 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.

Morgan Stanley: recommendation for AUD/USD 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.